They closed people's positions who had bought stocks on margin (loan). It is very standard for brokers to automatically closeout margin on accounts that can't cover the underlying debt. If I buy GME at 200 on margin and I sell at 350, I pay back the broker 200 + small interest and I profit 150 easy.
If I buy at 200 and it goes down to 150 and I sell, I have to pay them 50. What if I don't sell? They say "okay you're chill unless it goes low enough that were worried you aren't good for it" the number for how low it goes is different for each stock but generally higher for more volatile and hot stocks.
So GME crashed due to market manipulation and RH closed out positions because people spent 10k on GME, turned it into 4k and the broker says "sorry I don't trust you, I'm taking it back."
The reason stonk went up after that is because that created available shares to buy, and competing hedge funds outbid each other.
Yes RH is criminal for not allowing people to buy, yes the price was intentionally tanked so that this would happen, but this is a normal thing. WSB has been spamming for a week to not buy on margin for this exact reason.
I only spend so much time spelling it out because this is a movement and proper messaging matters. We need to have the facts straight, because it's a slam dunk case of collusion as long as we don't muck it up. Ifthe message is "they sold people's stocks" the response will be "wow you truly don't understand the market, this was your fault" and you'd say "okay I guess technically you got me there but here's X Y and Z other things they did that were totally illegal" but you won't win people over with that, they'll think it's cope and agree with the boomer.
"Margin" is when you take a loan from the stockbroker to buy stocks. So if you bought "on margin" (loaned money) they force sell your stocks it they go too low. To prevent losing their own money
Fuck Robinhood
buuuut...
They closed people's positions who had bought stocks on margin (loan). It is very standard for brokers to automatically closeout margin on accounts that can't cover the underlying debt. If I buy GME at 200 on margin and I sell at 350, I pay back the broker 200 + small interest and I profit 150 easy.
If I buy at 200 and it goes down to 150 and I sell, I have to pay them 50. What if I don't sell? They say "okay you're chill unless it goes low enough that were worried you aren't good for it" the number for how low it goes is different for each stock but generally higher for more volatile and hot stocks.
So GME crashed due to market manipulation and RH closed out positions because people spent 10k on GME, turned it into 4k and the broker says "sorry I don't trust you, I'm taking it back."
The reason stonk went up after that is because that created available shares to buy, and competing hedge funds outbid each other.
Yes RH is criminal for not allowing people to buy, yes the price was intentionally tanked so that this would happen, but this is a normal thing. WSB has been spamming for a week to not buy on margin for this exact reason.
I only spend so much time spelling it out because this is a movement and proper messaging matters. We need to have the facts straight, because it's a slam dunk case of collusion as long as we don't muck it up. Ifthe message is "they sold people's stocks" the response will be "wow you truly don't understand the market, this was your fault" and you'd say "okay I guess technically you got me there but here's X Y and Z other things they did that were totally illegal" but you won't win people over with that, they'll think it's cope and agree with the boomer.
Yep. TLDR for people:
"Margin" is when you take a loan from the stockbroker to buy stocks. So if you bought "on margin" (loaned money) they force sell your stocks it they go too low. To prevent losing their own money
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whatever you do for the love of god don't short sell on margin
Instructions unclear, now in infinite debt
never short sell with cash either
I forgot a tl;dr thanks!
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