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Comment by gruez

If you read the other threads it's clear what's happening is that robinhood's product isn't designed to cope with high volatility[1]. Is this a flaw in their product? Yes. But then again, they are a discount brokerage for a reason. It's not any different than any other consumer product that shits the bed during 99.9 percentile events.

[1] Specifically, they're required by the DTCC to put up a deposit on every trade their users make. During periods of low volatility this is fine because they can come up with the money, but when volatility goes up so do the deposit requirements, which can cause them to become insolvent. This is further compounded by the fact that their product invisibly hands out margin, eg. "instant" deposits of $1000, or giving you the money before it settles (2 days later).

parent gruez 5 years ago

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