Robinhood App DANGER – Investors AVOID THIS! Robinhood Stock Market & Crash Problems

by birtanpublished on August 16, 2020

Robin hood has been one of the biggest winners of this whole ccpv crisis you know everybody's at home they're getting these stimulus checks they put them in the markets we talked about this a lot now there's two ways to look at this there's one side that says this is great

We're democratizing finance it's a wonderful thing to have everyone invest because there's no fees and everybody could just you know download an app and throw money in no more is it just the rich who can

Invest in the stock market that's why it's called robinhood right take from the rich give to the poor sure okay fine but then there's also the bad side of robin hood when you have all these people coming into the market

You know markets are dangerous there's a lot of risk and there's a lot of people getting hurt and we're about to talk about this new york times article that has examples of just that robin hood has lured young

Traders sometimes with devastating results now i said it before i think that most people shouldn't invest not because they don't deserve to reap the gains from the stock market but

Because investing yourself in the stock market is a professional activity it's the same reason i wouldn't recommend that just anyone perform surgery there's a reason doctors go to school forever so unless

You're a doctor you shouldn't be doing surgery and unless you're a professional you shouldn't be investing directly in the stock market so in a perfect world we would all have financial advisors that

Do this for us or at least guide us in the right direction but unfortunately it's tough to find one of those that is not a crook so at the end of the day even if i think people shouldn't be investing in the stock market they have

To because there's no other option because it is so difficult to find someone good so if that's the case though then everyone at least needs to know the basics like the basics of how markets work how to

Put a strategy together because if you don't learn those basics and you don't learn the methodologies that you need to know you are for sure gonna get screwed eventually that's just what the market is set up to do so whether you end up

Trading for yourself or you have enough knowledge to find someone who's actually good like a good financial advisor that's up to you but the education for everyone is essential as we're gonna see

In this article what happens when you don't have the education and that's why i'm sure you guys get annoyed with me pushing this training all the time but it's really what you need if you're going to be in markets

And i honestly don't care if you get it here or somewhere else just get that education and in this training you know i go over my strategy and the one that a bunch of our fallible members use and it saved us

A lot of pain in these markets it's free so if you haven't taken it definitely do it now there's nothing to lose worst case you learn something that ends up saving you a ton of money down the line link in

This video and down below in the description and comments now let's get into this article with this guy richard right here he signed up for robin hood in 2017 and he lost 860 thousand dollars in march alone it's

Crazy as we said this article is going over the dark side and quick disclaimer this article talks about robin hood but a lot of this isn't just robin hood specific it's basically the same thing that happens with any

Brokerage because what are brokerages motivated to do to make you trade so that they can make money so as you've seen this article robin hood is going to take the hit because they're the most popular right

Now but no brokerage is going to save you it's just up to yourself to learn so mr richard who is now 32 said he'd been charmed by robin hood's one-click trading easy access to complex investment products and features like

Falling confetti and emoji filled phone notifications that made it feel like a game after finding his account with 15 000 in credit card advances he began spending more time on the app yeah one of the worst things is when you

Start feeling like the stock market is a game because it's not in fact it's supposed to be really boring that's when you know you're investing well now if you have some small account with money you don't care

About losing that you're gambling with in the stock market to me i'd say that's fine but if you're swinging real money like your real savings then no it is the opposite of a game and this right here

Funding your account with fifteen thousand dollars in credit card advances is a huge red flag if brokerages were really on your side they wouldn't let you do this if credit card companies were really on your side

They wouldn't let you do that either but again at the end of the day this is a business for these people but you should never be trading with money that you can't afford to lose you should not be going on margin which

Is basically what this is you're borrowing money to throw it in the market professionals are able to do that after years or decades in the market but even them they screw it up too

No way a beginner on robinhood should be doing that but richard didn't stop either he took out two thirty thousand dollar home equity loan so he could buy and sell more of those specular stocks and options hoping to pay off his debts

And his account actually shot up above a million dollars this year but he almost lost all of that recently this week his balance was almost seven thousand dollars that's it from a million to seven thousand and again do i even need

To say this you should not be taking out home equity loans to be trading that's insane when he's doing his trading he won't want to eat is what his wife said he would have nightmares about it another lesson here is if you're having

Nightmares about your trading positions and you can't sleep you're doing something wrong it usually means you're in way too big you need to reduce the size and how much money you're investing you should never

Ever be having nightmares about trading and as you can already see richard here did a lot of stupid things this isn't robin hood's fault is it robin hood's fault that they allowed it i guess kind of but every

Brokerage does most of our financial system is made to screw the little guy right now robin hood in particular has been real good at onboarding these new traders that's why they're at this 8.3 billion dollar valuation their silicon

Valley darling and like i said they blew up during this ccpv mess now part of the reason they've been successful is because they've been able to implement the same things that they had in silicon valley with all these apps you know like

On facebook the notifications they took that and applied it to trading so they started doing those behavioral nudges and push notifications all drawing those investors back into the market to trade more

And more and what's one thing that we always talk about this channel over trading the worst thing you can do is have an app that's sending you push notifications to trade more because that's when you start losing money i

Talk about this in that training but i literally spend 15 minutes a month trading as in 15 minutes in my actual account making trades i don't even look at it apart from that

And that's because i know the more i look at the market the more i do stupid things because way before any push notifications or anything the most addictive

Technology there was was the stock market back in the 90s when everything blew up with the tech bubble and everybody was trading it's because they could watch dollars and cents go up and down all day it's so addictive so

Combine that with all the stuff that you know silicon valley has figured out over the last decade and you got something seriously problematic and more than any other retail brokers

From robin hood users trade the riskiest products and at the fastest pace so in the first three months of 2020 robin hood has traded nine times as many shares as e-trade customers and 40 times as many as charles schwab's customers

They also bought and sold 88 times as many risky options contracts look at this difference between robin hood and the rest of the brokerages it's insane robin hood is doing something right from you know the

Perspective of their business owners and their investors because they're getting all these people to trade over and over again and that's how they make money now even in this article it says the more often small investors trade stocks the

Worse their returns are likely to be as studies have shown that's what i was just talking about over trading happens to me too the returns are even worse when you get options involved of course because they're you know

Leverage and what's nuts is that robinhood has had an unusual number of technology issues and some of their employees who didn't want to be identified said the reason those technology issues are there

Are because they fail to provide adequate guardrails and technology to support their customers when you're focused on growth like silicon valley style why would you right and one of the worst things that happened which i'm

Sure all you guys heard about was that suicide of that kid 20 year old kid he logged in and saw his balance dropped to negative 730 000 so the app showed that but he didn't

Actually owe that much you know there's some incomplete trades but the software was showing him that and he was so overwhelmed that you know he committed suicide it's terrible that's why i was saying this isn't a

Game and lately there have been robin hooders straight up confronting the staff at the headquarters about their losses just showing up to the office so this year they actually installed

Bulletproof glass at the front entrance this is insane so again at the end of the day robinhood's core business is to get people to trade more because they get paid through payment for order flow basically every time you know someone

Trades robinhood sells that information to wall street firms so that they could pretty much front run them meaning if they know what stock a robin hooder is about to buy they could buy it at a lower price and then sell it to that

Robin hooder for higher and you know they have the high frequency funds that do this with all the technology it happens in you know split second now that practice is not new

There's a reason why you could have zero commission trades e-trade and schwab do it too but what's interesting is how much more money robinhood makes doing it so for each share of stock traded robin hood makes four to fifteen times more

Than schwab so in total robinhood got paid almost nineteen thousand dollars from the trading firms for every dollar in the average customer account while schwab made 195. look at this difference right here

It's insane how much more the high frequency trading firms are paying robinhood and experts believe it's because robin hood customers are so easy to front run because they're all beginners right so

They'll pay more for those people because they make way more money off of them and of course you know the robin hood founders they're gonna defend it like vlad over here he said young americans risk greater losses by not

Investing in stocks that's where we've gotten these massive inequalities that we're seeing in society which isn't false but it also doesn't mean they need to be trading and they don't need

Notifications telling them to get back into the market and screw around but of course you know these are the founders right here their goal is to democratize finance yeah sure and then they just have stuff that makes it feel

Like gambling so new members they're giving free shares of stock as soon as they sign up for robin hood i'm sure you've seen youtube comments people posting their links oh sign up and i'll get a referral and you get to scratch

Off images to see what stock you got and it's basically like a lottery ticket then the home screen on that app is a list of stocks and if you touch one of them you get to trade it you know it pops up

Right there do you want to trade try and place a trade on ameritrade it's way more steps than that it's kind of annoying but kind of a good thing too because i myself actually go through a long process on ameritrade just to make

A trade and you might think that's a bad thing but when you think about it compared to this it actually slows me down and it makes sure that i'm not over trading but i'm sticking to my system and my strategy

And it makes me be very very careful and robin hood has just had so many problems with that technology like they accidentally reversed the direction of options trades they allowed their users to borrow

Infinite money to multiply their bets and their website went down 47 times since march versus 10 times for schwab and in march the site was down for almost two days you guys probably remember that while people were losing

Money left and right things are crazy in the market and you know the company doesn't have any phone numbers for customers to call because they don't want to you're not gonna get service from a

Company like that that's why people rather go to ameritrade and other brokerages when you have real money on the line your life savings now again a lot of this

Is not just robinhood specific like all these brokerages they're not there to actually help you they're there to make you trade more even when you go to their education sessions like ameritrade sends me emails

All the time it's not actually to help you learn so that you know you could make better decisions it's so that you learn how to make more decisions and more trades because that's how they get paid so the end of

The day you really just got to protect yourself and learn yourself i know it sucks but like you need to know how to eat healthy right it's just the thing that you need to do to live you got to treat investing as

The same sort of thing to learn the basics at least that's why i'm fine being annoying with these trainings and all this other stuff that i talk about because no one thinks about the downside risk because we're not naturally made as

Humans to think about downsides so i will constantly remind you about how dangerous the stock market is but again to grow our wealth we got to be in it so in this training we go over how we do it how we still stay

Safe manage our downside risk don't over trade this is the one type of style where i'm like trade less like barely trade at all make a few trades a month max and the rest of the time manage your risk anyway you'll see what i'm talking

About in the training do it today especially if you don't have a strategy or even if you do have a strategy in the market just make sure that you got everything in line just make sure you're

Not missing anything it's free check it out link in this video and down below in the description and comments do it for your own safety so you don't end up like richard over here and i'm sorry i know this is a serious article

Serious topic but some of the things in this article they just make me laugh like how awkward must it be when they gotta go get these pictures for these articles like for the photographer and the guy

It's like the guy just lost almost nine hundred thousand dollars and the photographer's trying to capture that i just imagine the photographer being like this guy right here okay richard i'm going to need you to look sad like you

Just lost a lot of money but i am sad i did lose a lot of money good good but sad like you're an idiot a stupid idiot who can't do anything right huh yes yes that's much better but i

Didn't do anything ah now you look a little too sad richard we want the audience to know how stupid you are but we don't want to make them depressed what why are we in this park because you're

Poor and homeless richard you lost all your money in the stock market but my house is right over there richard you bloody idiot i need you to pay attention and do

A good job here basically do the opposite of what you've done in the stock market so far hey poor guy leave richard alone i don't know i don't think i would want to be in an article for losing that much money

But this picture just makes me laugh i can't help it i do hope he gets back on his feet though seems like a good guy just need that education though but i also cannot believe they installed

Bulletproof glass at the front entrance like what does robinhood become a restaurant in detroit i remember being in this one detroit bulletproof glass restaurant you know where they got the bulletproof

Between the people taking the money and giving the orders and then the people ordering it's honestly sad but i think it was a popeyes that i was in i don't remember but this lady

Got her order looked inside her bag and went off she looked in her bag and was like what the hell is this you call this chicken and then she took that chicken and threw it

Right at the glass and that's when i realized it wasn't just meant to stop bullets it was meant to stop chicken too but she wasn't done either then she went over to the utensils and where the napkins and the sauce and all that is

And she just takes everything and throws it in the air and she's like what you need forks and napkins for not like you serve real food anyway then she takes the sauce packets and throws them across the restaurant what you need sauce for

This small ass chicken too small to dip into anything anyway then she stormed out and i looked in my bag and i was like you know what i agree with everything she said she was completely valid with how bad

That chicken looked i wish i could do what she did but i mean at this point what could i do like talk to the manager i mean her performance already spoke for the people so i had to just be like oh

Snickerdoodles hopefully next time they'll have better food but the truth is they wouldn't and they never did it's my bulletproof glass theory if you go up to an establishment and they have bulletproof glass

The other person looking at you from across the glass they're gonna be looking at you like this and do you really think you're about to get good food or service then when these people are just trying to live

They're trying to not get shot or at least not get chicken thrown at them why would they focus on good food and service it almost becomes like a terrible cycle because you give bad products and then

People get so mad that they act out like that and then you're in danger so you do need the bulletproof glass and that just leads to a worse product and the cycle keeps going again and again and i can't believe it's happening to robin hood but

Anyway hopefully they figure it out because you do not want to be stuck in that cycle it sucks it's bad for everybody the company and the people and everybody hates terrible chicken but

Anyway check out the training link in this video down below in the description comments and subscribe to this channel so we could talk about more stuff more trading stuff more education make sure we don't get in trouble

In this market that's usually out to try and get us all the time every day so subscribe and i will see you in the next video stay fallible out there bye

you

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