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Comment by firebaze | Hacker News Reader

Smelled like scam, is a scam. So glad I didn't fall into the robinhood trap, I was really close to.

Edit: yes this comment isn't related to the linked article.

Fidelity and every other brokerage of which I have knowledge would let you do the same thing (get into a bad trade, and then liquidate your position when you exceed margin limits). This isn't a "Robinhood" thing, this is an "ignorant gamblers who shouldn't be allowed anywhere near a margin account" thing.

except for the line where they prevented trading on said stock.

I believe you mean they prevented buying. Obviously the positions could be liquidated (sold).

Yes. Understand that if you buy on margin, and the stock goes down too much, you owe the broker money. The broker can ask you to deposit more money to cover a margin call, or sell out your position.

What's unusual about RobinHood is that they make buying on margin very easy. It's a feature of a "Robinhood Gold" account.[1] "You can try Gold for free for the first 30 days. Sign up anytime from your account settings." This gets people trading on margin who probably shouldn't be trading on margin. Many of them are going to be busted down to zero. Those prices aren't going to stay up once the fad is over.

Here's RobinHood's margin agreement.[2]

[1] https://robinhood.com/us/en/support/articles/gold-overview/

[2] https://cdn.robinhood.com/assets/robinhood/legal/RHS%20Custo...

They changed margin requirements intra-day, started liquidating positions no questions asked, and stopped buying of the stock. How many coincidences do you need to say that this was the planned outcome?

Kinda....

1) I'd expect a credible brokerage to treat me like a human being. Call me up. Talk to me. Allow me to add money to my account if need be. Simply liquidating my position with no notice with an automated script isn't how I'd like my money to be treated.

2) This is among a rather large number of sketchy practices.

I have no horse in this game. My money's mostly in index funds and mutual funds, with maybe 1% actively managed. There's a certain way I expect solid financial institutions to behave with my future. There's a different way fly-by-night institutions behave. This very much sets of my fly-by-night detector....

You should really read up on finance before making any of these decisions. It's no scam, it's margin.

I didn't lose a cent, i made over 60% the last few days. If i was using robinhood, i'd be blocked from doing that.

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