I was out of the trading business when Robinhood started(2015) and now hear about them all the time. So I was curious. What makes them so special? Here is what I found; "A user known as u/1R0NYMAN sold a box spread creating a $300,000 credit that should have netted him from $40,000-$50,000 over the course of 2 years. He described the trade as a way to make "risk-free money", but he was unaware of the assignment risk. A few days later some of the options were exercised against him, causing a loss of over $60,000; calculating from the original amount in the user account, $5,000, the return of the trade was -1832.99%. As a result, Robinhood decided soon after that it would no longer allow the trading of box spreads. The user somehow withdrew $10,000 from the account before the positions were closed and it is believed that the brokerage itself took the majority of the loss." The "infinite leverage" glitch "A user known as ControlTheNarrative found a bug in Robinhood's trading platform and exploited it to leverage his original deposit of $2,000 all the way up to roughly $50,000, resulting in a ratio of approximately 25:1 leverage. He sold covered calls and, thanks to the bug, the credit that he received appeared as liquid money on his account. He used the money to buy put options on Apple stock, and the trade led to a loss of $46,000, enormous relative to his initial deposit of only $2,000. He recorded the live reaction to the loss and uploaded it on his YouTube channel." from Wikipedia
Well pretty much worthless nonsense that cannot be verified, authenticated or measured and the magical "bug" in the trading platform, more hot air bordering on fairy tails.
I’m not RH customer, but when Apple came out with iPod, I could not see why people went crazy for that overpriced gadget. RH obviously captured their target audience. More interesting question to me, why established brokers with existing, and seemingly better, mobile apps didn’t?
You answered the question in your remark. Traditional discount brokers were considered old school and didn't have the cool factor. RH is run by people who look like people from their own generation.
If that all it takes, why they couldn't hire some wiz kid in pajamas to promote? They could've created a separate entity to just promote the app. I think it's the same old story ... established companies are resting on their laurels until someone disrupts the status quo. Zero commissions was a brilliant move, but the rest were too greedy and were hoping for RH to disappear. No vision, no passion, just greed.
RH is the greedy one profiting off of clueless customers. Traditional discount brokers are interested in having long term customers with growing assets and do not present trading as a video game or gambling app the way RH does.
RH was first to zero commission long before the other brokers. Regardless of what you hear about "technology". It is really that simple. The marketing was low key. Email invitations like how gmail accounts started. I was bugging this company before the first account was opened. And, I didn't forward an invitation until I was sure I was grandfathered-in first with a funded account. I didn't believe zero would last. I have done 1 trade in 5 years.