IDK what to think about today's events. Honestly, I'm appalled. I don't agree with halting trading but I get why it's done. That wasn't what happened today though.
Instead of halting trading I witnessed a trading app, one of the largest being used as far a I know, NOT HALT trading but close trading on the buy side while leaving the sell side open.
I suppose if you had a trade open and you suddenly began seeing the price drop you'd be thankful that sell side was an option for you. However, when you close the buy side and only allow selling, the price tends to drop! This is how markets work.
In my humble opinion, they literally balanced the order books. They had to know people would panic sell when the price started dropping, and by leaving the sell side open they gave emotional traders an opportunity to "balance" the order book.
With the buy side closed there was no way for buyers to help prop up the price of the selloff.
I can't imagine this was legal. This is market manipulation of the highest order. If this isn't considered market manipulation, I don't know what would be. On top of that I'd like to know what their motivation was. They had to know a move like this would hurt their reputation immensely.
For the record, this isn't sour grapes on my part. I only held one stock that they "manipulated" on the sell side. SNDL is a cannabis stock bought under 50 cents. I had a small position and even after this shitshow I'm still in the profit zone on this trade.
I'd really like to know the motivating factor in what went down today. The little guy finally got one over on Wall St. and they showed us just how rigged the game is. Nobody tries to balance the order books when our 401K's get wipped out. If you're leverage trading, you're never given the opportunity to readjust your position. There are no do-overs in the trading game! Yet, pure and simple this was the boldest form of market manipulation I've ever witnessed. It wasn't even hidden. Close the buy side and crash this albatross on the sell side.
Anybody who trades on any platform that took part in this should be very vocal about their disapproval of these shenanigans. I think it's going to be very interesting to see how this all plays out now. Will regulators step in? Was their criminal activity? Who profited? Why? Who gave the orders?
I'm fairly new to the stock market but I've never heard of them closing the buy side while keeping the sell side open. There would only be one reason to do that and that would be to dump the price.
As Davey Daytrader said today, they changed the rules in the middle of the game. This was a slap in the face to retail investors. I personally see this as a massive rug pull on the average joe-trader.
Anyway, I just wanted to vent. Here's a lovely letter Robinhood sent. I already took half the money out of my trading account, and I'm honestly considering whether or not I want to continue trading there.
Letter
Final Thoughts
I honestly don't think there was any excuse for what they did. I would have been OK with halting ALL trading. But leaving the sell side open to crash the price is unacceptable. I'm not sure I can feel confidant trading there after all that transpired today. It just felt like a slap in the face, and excuse my language but this was a massive FUCK YOU to the average trader.
That's my take on it. All parties are innocent until proven guilty, but I hope regulators step in and I hope we find out the truth about what actually transpired today. I can't believe this type of activity is legal or anyone could find this acceptable behavior.
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If only sell was left open for the average Joe, somewhere in the world some had the option to buy. For stocks, as I'm not a trader I have a premium account which costs me on trades more but I get premium facilities like free tax fillings, as I live in Europe some documents needed for the USA market to have cheaper trades and all this kind and I've checked it yesterday night and I still had the buy option for this stock. But for me was this a classic pump&dump and we areon the dump curve so I left it open.
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The sheer volume of Robinhood is enough to change market direction. We're seeing this proven time and time again. So yeah, we might have had the buy side open elsewhere in the world but one high volume exchange can manipulate price.
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I think the media coverage of this is leaving out a lot of detail. There are hedge funds on both sides of this trades so it isn't as black and white--wall street vs main street as the media makes it out to be.
When all is said and done a lot of hedge funds that shorted will lose money on the short squeeze. A lot of main street traders will make some money off these hedge funds, but a lot of hedge funds piled into the long side and will make money as well.
A lot of redditors that came late to the game will be left with nobody to sell to once all of the shorts are closed. These redditors will lose a ton of money and I think that is why Robinhood was trying to close the buy side. They don't want retail investors to be the last one in and the last one out on this trade.
I agree with you that they probably should have just left this alone and let the regulators deal with this. I just think they are worried about some reddit traders killing themselves after they lose all their money. This is a lose - lose situation for Robinhood.
I had a position in WPG which is a REIT and you buy REITS to hold onto them for a long time so that you can collect monthly rents and hope that there is a recovery in shopping centers. A week ago my position was at a -10% and this week it was at a +40%. I got lucky and made money, but I didn't buy WPG to be a speculator and manipulate markets. I bought it because it was cheap and it would recover one day with the vaccine.
I am just a regular trader that buys really safe stuff and holds onto them for a long time. I exited this position and just moved my money to Verizon which yields only half the dividends of a typical high yield REIT, but I don't want to be in a REIT that is being price manipulated because there is a lot of downside risk.
This market manipulation is bad for everybody and its going to lead people like me who play the long game to retreat toward safety to reduce volatility. I guess if I were just in index funds then the rest of the stocks in the index would dilute a lot of this single stock manipulation.
I do agree with you that Robinhood should just leave it alone and let it play out even if it could hurt their investors. Let the regulators deal with this. Sometimes you just got let people get burnt. Brokers are not suppose to take a sides. They are supposed to be indifferent. There is a class action lawsuit against Robinhood starting now.
I really don't think Robinhood is trying to purposely hurt their customer to protect hedge funds. Robinhood the story character stole from the rich and gave to the poor not the other way around. They are just trying to do what they think is right, but they are fucked either way. Excuse my language lol. Great article!
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Thanks for another perspective. I've no idea what's going on to be honest but I appreciate reading a different view that many aren't considering.
!ENGAGE 100
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WTG on that REIT trade. Well done!
I hope you're right and there wasn't a more nefarious side to all this. You make a great point to with the people that took the long side of the hedge.
I somewhat agree with you about the reddit traders but think most people knew the risks of this trade entering. I even sent out a warning tweet about "dumb money" losing when the bottoms fall out of these trades and they would have eventually. Someone would have been stuck holding the bag. It was absolutely inevitable in this situation.
I don't think Robinhood or any other platform involved tried to hurt their customers intentionally, but I am soooooo suspect of the way they left the sell side open like that and closed the buy side. Honestly, had they just halted all trading or set a cool off period I probably would have been OK with that. Leaving the sell side open is where I take serious issue.
Like you said, lawsuits have been filed and we'll have to see what the regulators say about all this. I think we're going to be hearing quite a bit about this over the next week or so. This was another history making event 😆
Thanks for this terrific comment.
!ENGAGE
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I don't think a full halt is a good idea either because the hedge funds can trade directly on the market through their own brokers and then Robinhood people will be stuck holding shares with no way to sell or buy because of the full halt.
I did read that the NASDAQ is considering halts. That kind of halt would be fair cause then it would be a halt to both the hedge fund and retail people.
If I had to put the options in order of best to worst it would be:
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ENGAGEtokens.Buy Bitcoin and ETH and learn to trade on DEX's let these companies know they don't get to make the rules of a free market and go where you are treated best
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I like this. Good point. I like hedging (maybe not the appropriate term with this) some of my crypto gains in the stock market though. I agree though, this probably will pull a lot of people away from traditional markets now.
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Well, that's disturbing.
I can't speak with any authority because I'm very new to the stock market myself and also never used Robinhood - I don't even think they operate in my country - but, is switching brokers an option? I'd try to steer away from such a company if it wasn't too much of a hassle!
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Probably what I'll be doing shortly. It's a pain in the rear. I switched from TD Ameritrade to Robinhood a couple years back and it's not a fun process. Most likely what I'll do now. I still have a TD account but the fees are terribles. Seems they have a fee for everything.
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Right... I haven't considered the fees... It's probably gonna be a pain in the rear indeed...
Anyway, good luck with the switch if that's the way you go!
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You can change brokers and have all of your shares transferred. I have done this before. I was actually selling my shares through Fidelity--not an endorsement as I have only used Robinhood, Fidelity, and Vanguard. I don't know who the best broker would be.
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I've been thinking about e-trade. I'm going to have to do some research. I really did love the simplicity of the Robinhood app though. I've only got a few positions left open which should make the process much simpler.
Bitches
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It just wasn't right. Why we crypto I guess! 🤣 Could you imagine if one of the shitcoin exchanges did this to a coin they didn't like?
What a shitshow.
Allow me to paraphrase for you.
Dear average trader,
Fuck You
Robinhood
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I think that sizes it up nicely 🤣
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Totally unacceptable! Short Robinhood!
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Yeah, that was unacceptable for sure.
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The outrage is real everywhere. I don't think they can avoid looking into it. We are not part of the club that is protected.
Well, when you have AOC and Ted Cruz agreeing that it needs to be looked into, I'm guessing you've struck a real nerve. It's going to be interesting to see how this plays out.
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When I see Ted Cruz, AOC, and Donald Jr on the same side it actually only makes me more suspicious of those three people, lol.
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Today's fiasco shows why we need DEXs. Won't have such bs on a whim.
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DEX's will be nice. So will tokenized security trading. I think it will be awhile before we see that though for stocks.
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Webull is just as guilty, they also halted trades
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Shame, I was thinking about looking into them. Thanks for the heads up.
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not a fair practice I would day. Time for robinhood seems over now.
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Seems people are pretty upset about it. I don't see this just going away at this point. Robinhood may become last weeks flavor.
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The fat letters "We stand in support of you, our customers." Is the biggest lie of all...
I hope AOC and/or Ted Cruz are gonna get them fast and good.
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LMAO, you know it's a cold day in hell too when AOC and Ted Cruz agree on anything. Or the fact that I agree with either of them, let alone both! These are crazy times we're living in.
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What they did is totally unacceptable... there was no fraud involved; if there had been I could sympathize with such actions.
A lot of people seem to be wetting themselves over all this, but seem to conveniently forget that stock trading is ultimately a zero sum game. For every willing buyer, there is a willing seller. Every person who sells on the hunch that the stock will go down is matched with a buyer who buys on the hunch that the stock will go up... EVEN IF the whole thing was done on a lark to mess with The Big Players. I don't think anyone had a gun held to their heads...
The IRONY here is that mega-organizations are readily allowed to squash and bankrupt the individual players, but when those individuals push back and suddenly put the mega-organizations in peril by playing their own game against them, it's suddenly UNFAIR, and demands for SEC intervention is requested?
You nailed it. Seems like we're seeing different rules for different people.
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Now at least their users know who their customers are.
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They're not looking out for the small players. This was definitely an eye opener to A LOT of people.
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I got that letter to! What an absolute joke. It makes me want to move my stuff away from Robinhood, but I don't even know how I would do that without liquidating it all. You know darn well that Robinhood will probably get away with this since it didn't really hurt any of the hedge funds and their huge government lobby.
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I pulled out about half my cash already. Trying to decide if I want to completely exit. You can transfer your stocks to another exchange. I believe there is a fee for that though. The last time I moved, I just closed out my positions one at a time and reopened them on another exchange.
IDK, when you've got Ted Cruz, AOC, and Elizabeth Warren all questioning what happened. At the very least, it's going to be interesting to see how regulators respond. You're probably right though, they'll pay a small fine or something and then back to business as usual.
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I might have to look into that. I like many others have very low confidence in Robinhood right now. As I said somewhere today, that Coinbase listing looks interesting, so I would like to have something in place to take advantage of that. Unless it opens at some ridiculous price.
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I'm dying to see what Coinbase IPO price is too. I want in on that as well!
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Someone just posted around $200 in the chat. That puts only one or two shares within reach for me. I still might do it. I think it is one of those ones that could potentially top $1000 as more and more people (especially in the US) get into crypto. It is one of the quickest and easiest ways to get started despite the horrible fees.
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Seems a little steep, but I agree.
this whole thing is just fucking crazy. The world is going freaking insane.
Deeper down the rabbit hole we go.
Total manipulation. They knew that shit was hitting the fan and I am almost positive that the buy halting was not at all in favor of people like you and I but to favor the big hedge funds and banks that are destroying stocks with this method. The way the hedge funds and brokers pay less money is when the stock price goes down. If it doesn't go down, in comes the interest!
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That's pretty much the way I'm seeing it too. Apparently it was on the orders of the Clearinghouse that actually executes the trades. Still, I don't think they had "our" best interest at heart.