Robinhood Traders Anonymous

Alcoholics Anonymous was founded in 1935 to help members achieve sobriety and stay sober. Gamblers Anonymous launched in 1957 with a mission to help compulsive gamblers stop gambling. Robinhood Traders Anonymous could be started by 2025.

Robinhood’s motto — democratize finance for all — is good PR. If you don’t like it, you’re anti-democratic. But perhaps not everything should be democratized. Weapons of mass destruction for instance. Or derivatives.

Where Are All The Customers Yachts?

Robinhood made trading free and easy, making it popular with consumers. But free products can have pernicious effects. What’s best for the product’s designer may not always align with what’s best for the consumer.

Online products that don’t charge usually monetize user engagement. For example, social media companies like Facebook and Twitter sell ads, so they seek to maximize time spent in their apps. More time equals more ads served. For Robinhood, engagement means trading. The company’s primary revenue stream is payment for order flow. Robinhood makes money by routing customer orders to trading firms like Citadel Securities and Two Sigma, who pay for the right to execute the trades. The more Robinhood users trade, the more revenue it generates and the faster it grows.

This is where incentives between Robinhood and its users could diverge. Regulators are starting to ask if what’s good for Robinhood is also good for its customers. On December 16…