it is interesting that they can hold these margins against Robin Hood. how do they do it? they probably appeal to a different kind of investor but what?
I'm pretty sure the article is about profit margins... not the margining system. So... IB vs Robinhood, they make more money, so yes a higher profit margin. Or... IB vs Robinhood... Robinhood is not focusing on the bigger traders and has less (no) tools etc. So yes, IB can demand a higher margin on trades...
Well in that case, Robinhood is a no-fee platform isn't it? So that would pretty much put lots of pressure on their profit margins compared to a fee charging broker. And they are still new, so lots of costs and not yet enough revenues I would guess.
Yea, seems like Robinhood would be easy to beat, at least in the near term when Robinhood is not making anything, or much, presumably they are relying on some long-term advertising thing to pan out (could be wrong). But what I REALLY want to know is how IB makes so much money, charging so little for trades and margin interest. Sure, TD ameritrade might be only $4.95 per trade, but IB is like 300% less lol. Just some slightly made up numbers, but you get the point.
Cost plus business model, good risk management, and lots of automation to keep down on the people needed to run the operation.
Seriously not trying to be rude. But what kind of trader would choose RH over IB? They don’t offer near the tradeable markets(futures, multiple leg option strategies, can’t short stocks). RH Offers virtually no tools. Sure you could potentially swing trade or position trade using ETFs and their counterpart inverse ETFs. But doesn’t RH charge for their margin accounts? Why would someone pay for a margin account with RH? IB commissions are like $.70 for option contracts, $.005 per share, less than a $1 for futures. What kind of trader would be so distraught by those fees that they’d give up all those tools offered by IB to use RH. Idk it just bugs me why anyone would try to trade with RH especially day trade. Why? It’s like scratching your nails across a chalk board. Just don’t do it. lol Now for those who invest key word invest or hold for multiple days and use 3rd party resources I can see using RH. But I’m afraid most people see commission free and think of all the round trips they’ll save by short term trading with RH and they’re not even trading, buying and praying is the term I’d use. Anyone that has enough to open an IB account would be silly choosing RH as their broker.
you were not being rude. you just misinterpreted the purpose of the question. it was to motivate RH customers to explain why they chose RH. my goal was to understand why private venture capital have placed a market value of one billion plus on RH. if RH went public went public at the current time I would be the first one to short them.