Between this kind of chicanery and their constant coding goofs, keeping your money at Robinhood just seems like a great way to wind up standing in line at SIPC waiting for your account to be reimbursed someday. Now that they've pushed lots of other brokers into fee-free trading I don't know what the appeal is.
I worked in algorithmic trading for about 4 years. In that time, I witnessed the market find and exploit the tiniest, most inconsequential-seeming bugs in my code in ways I could never have imagined or planned for. Finance and "move fast and break things" just do not mix. Someday, I expect to see a news headline about how some HFT sharks on Wall Street found a way to take Robinhood and its clients for billions, and that will be the end of it.
I was an inexperienced coder at the time working at a very small shop, so bear in mind that this kind of thing is less likely (though as Knight Capital demonstrated, not impossible) at larger, professional algo trading firms.
One good example is, I had written some code to automatically stop me out of a position if it ran too far against me. I was trading Kospi 200 options, and about a week after Kim Jong-il died, someone started a rumor that his son had been assassinated and Chinese troops were massing on the Korean border. The market plummeted violently, and all my put offers were instantly lifted and bid very far against me. The code path which I had intended to use to send my stop loss orders was inadvertently disabled by a safety flag which I had applied to stop sending a different kind of entry order known as "electronic eye" trade (which basically tried to pick off mis-valued bids and offers rather than make a two sided market).
So I didn't hedge anything as the market kept crashing and eventually liquidity went poof and I was left to manually close out a bunch of large short put positions. Luckily the market came back after the rumor was discredited, but I still lost about a quarter of my year's trading profits in one day in November.
Wasn’t there a famous broker that also had a bug in their software and it ended up losing them hundreds of millions over a few hours of trading which put them under? I can’t remember any more details than that, anyone knows what I’m talking about?
Knight's clients remained whole from that debacle because they were capitalized enough to absorb the losses, and if I remember correctly another broker stepped in to take on their clients as well. Knight was also not really servicing retail clients.
I wrote and operated HFT algos trading Kospi 200 options, most actively from 2010-2012. I was mostly just making two-sided markets around a Black Scholes value calculated against the futures contract. The KRX was so rickety at the time that you could still do it with a colocated server running Java. A partner of mine handled most of the platform side (exchange connection, order book management, etc) and I wrote the trading logic and operated it; it always needed a modicum of manual tuning, I never quite got it to the point of being fully automated.
I don't have a Robinhood account, but presumably the fact that Robinhood's free trading was what forced all its competitors to eliminate commissions means that lots of people had accounts there before that and kept them due to inertia.
Compared to Schwab and Fidelity, Robinhood still acts mobile first, as opposed to a desktop site condensed for a phone. It's not a good reason to use it for something like this, but the experience is much more fluid and pleasant.
I worked in algorithmic trading for about 4 years. In that time, I witnessed the market find and exploit the tiniest, most inconsequential-seeming bugs in my code in ways I could never have imagined or planned for. Finance and "move fast and break things" just do not mix. Someday, I expect to see a news headline about how some HFT sharks on Wall Street found a way to take Robinhood and its clients for billions, and that will be the end of it.