Robinhood Trading Exposed: Steal from the Poor and Give to the Ultra Rich - Katusa Research
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A cautionary tale for new users. Because of its simplicity, Robinhood has quickly become the go to trading platform for a generation of new investors.

This is a good read, but the most important bit is this: Robinhood is able to offer commission free trading because they essentially skim money off of every trade you make. This is called frontrunning. It's complicated, but essentially they (via third party market makers) will execute your trades at a little above (or below) the best price and then pocket the difference.

This is a crime, and they've been caught and fined in the past, but how else are they going to make money?

Since many people here are excited about the Gamestop fiasco (everyone is making money now, but even more people will be badly hurt when this is all over) I thought it would be good to emphasize this.

To reiterate ROBINHOOD STEALS FROM THE POOR AND GIVES TO THE RICH

The wealthy hedge fund investors that Re getting pwned right now are getting multibillion dollar bailouts, that's not going to happen to unlucky retail investors when this is all over.

  • PhaseFour [he/him]
    ·
    4 years ago

    The "I Trade With Robinhood, How Do I Protect Myself?" section was really helpful. Thanks for the post.

    everyone is making money now, but even more people will be badly hurt when this is all over

    That depends on how the short squeeze plays out. It is entirely possible that the GME short squeezers end up walking away with a profit, given the degree to which short sellers over-played their hand. They are on the hook for every GME stock bought thus far.

    The last short squeeze of this magnitude was with Porsche in 2008, and the short squeezers walked away with a bounty.