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Comment by superfrank | Hacker News Reader

> Am I reading this correctly and he really wasn't in the hole badly, but a crappy presentation of information broke him?

Yes, but I think it's important to note that every other broker I've used presents the information in the same way and the way they are displaying the info is an accurate representation of the state of the account at that moment.

Blaming bad UI is the easy way out here. Robinhood should take the blame for this, but not because of bad UI. Robinhood should be at fault because the knowingly allow tons of "investors" to have options trading access with little or no screening and verification.

Blaming the UI here would be like blaming a single specific gun maker for a mass shooting, when the real question you should be asking is how did this person get a gun at all?

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There is a rather large difference between how you do interfaces for people with training who are experts and the amateurs that Robinhood is targeting. It is the difference between a full cockpit and the interface you put on something like Garmin's autolanding system[1].

So, yeah, I'm blaming the interface people at Robinhood because they are targeting a non-broker segment of the population and need to find a way to put that information a broker would give you into the interface. This information includes things like "you do not own this much money" at a minimum. Facts are amazing things, but eventual truth might of save this person.

If you target a group of people, its your responsibility as a UI designer to make sure your interface is actually safe for that group of people.

1) https://www.garmin.com/en-US/autonomi/

> There is a rather large difference between how you do interfaces for people with training who are experts and the amateurs that Robinhood is targeting.

But regulation requires that you do self-certify as (to a certain extent) an expert who understands the more sophisticated product in order to trade it.

I suppose I don't disagree that they're targeting people who in many cases probably shouldn't be passing that screen, but I suppose I think that's the problem, rather than it not being dumbed down enough.

Sure, but I would not necessarily blame the UI designer since the breakdown could have come from a number of places: requirement changes, implementation differences, miscommunication, etc. I mean who knows unless you're behind the scenes? Just blame the company.

I agree with what you're saying, but I'd like to note, I'm not a professional trader or anything. All the other platforms that I'm using mentioned (Tastyworks, Schwab) are available to retail investors and are targeting the same non-broker segment.

Could the UI be better? Probably. My point isn't to absolve them here, it's just to point out that this same issue exists across most of the platforms. That leads me to believe that, while the UI may have contributed, it's not the root cause of the issue.

You have to actually go through a short process to be "approved" to trade options, including checking off a box saying "I know how to trade options". Maybe there should be additional warning signs, but RH does make it pretty clear that there are many options trades where you can lose much much much more money than you put in. Just take a look at what happened with oil and USO recently for an example of how stupid this can get.

Like I said elsewhere, its horrible this kid killed himself over something as transient as this, and RH's interface is pretty dumb, but if you're selling uncovered put spreads, and covering them with call spreads and you're doing all of this in RH....well you're either much better at RH than I am, or much worse.

When I applied for options trading approval, I got a phone call from Schwab with a quiz on some hypothetical trading scenarios, like "if you did X what would your maximum exposure be"?

On both RH and TastyWorks all I had to do is check a box saying I knew how to do it. I'm curious about other people's experiences.

For what level of options trading, 3? 4?

How would you suggest to limit option trading?

Going through a mandatory guide

The broker I use has a mandatory quiz you have to pass, not only for options, but for ETFs, etc.

In the EU, before opening a trading account you are forced by law to compile a standard questionnaire to assess your financial knowledge and risk tolerance. Depending on the results, you might not be able to trade certain instruments.

My broker (Scottrade and now TD Ameritrade) called me, asking for a verbal agreement that I knew that options were high risk and yadda-yadda that can lose more value than they are worth after I signed some forms.

These instruments are very high risk and not really meant for average investors. Their primary goal is for hedging and leverage.

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One of the reasons for the "Black Friday" (kicking off the Great Depression) was the proliferation of leverage among people who didn't really understand it. That's why most other companies make you sign forms and ask for verbal agreements before allowing you to have access to things this dangerous.

>"Black Friday" (kicking off the Great Depression)

Black Thursday. Black Friday is the name of the crash in the federal gold market half a century earlier - or more commonly, the yearly American mega-sale event that follows Thanksgiving.

Options are already broken into levels 1-4 (this is an industry thing, not just RH). Levels 1 and 2 don't run the risk of this happening since you can only sell to close. On other platforms that I've used, going from levels 2 to 3 took a while and required some verification steps to try to confirm that I knew what I was doing.

Robinhood already asks for information about your net-worth, income, etc. The problem is that they verify nothing (at least in my experience). I read /r/wallstreetbets all the time, and plenty of 18 year olds say they are making 100k+ and RH just approves them. They need to improve that process.

Just checked and you don't even need to say you're making 100k+.

I marked that my liquid assets are under 25k, net worth is under 25k, and yearly income is under 25k (all the lowest you can select) and they approved me for option trading instantly.

Looking at GOOG the UI shows me put where the max loss is $8.5k. Seems reckless if they really use the information I gave them to determine what level of risk is appropriate.

I just want to point out that at level 1 you can sell to open covered calls.

Trading options already requires extra approval with several levels which determine how advanced, how big, and how risky of a trade you can make.

Better verification of a person's financials and trading knowledge before allowing this access would be helpful.

UI-wise, I'm not recommending we should go back, but that was one advantage of having a licensed broker on the phone when making trades, they could explain account statements to you.

Is there a solution that doesn't involve curtailing the freedoms of people just to prevent them from making bad decisions?

Curtailing the freedoms of people to prevent them from making bad decisions is de rigueur. That ship has sailed. the only question under debate is “how much?”

Guess I was missing the words "even more".

Cryptocurrency.

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