Broker Check
The Dark Side of Free Trading

The Dark Side of Free Trading

| April 03, 2020
Share |

Many people have been introduced to investing and the stock market through free trading apps like Robinhood. This is a low capital investors dream as their break-even point is the amount they have invested instead of having to make up the cost of the trade which was anywhere from $5 to $10 per trade. Robinhood has changed the investing industry more than most think. Almost all brokers offer free trading on every investment from mutual funds to ETFs. At first, this seems like a great way to allow anyone with money to start investing and introduce them into the stock market world but not everything is as it seems. Take one look on the WallstreetBets Reddit page and you can see the worst of what free trading has to offer.
There is a wide range of lunatics who hide behind a computer screen offering advice and backing it up with almost witchcraft chart analysis making wild bets. There has also been frequent abuse of the platform with users taking advantage of glitches that allow them to trade on margin that is out of bounds of the regulation. Spending money on trades makes you think twice about entering and exiting a position instead of just throwing money at it. Options are advanced trading strategies that are now being offered at the touch of a screen to anyone that has an account. This could potentially lead to an abuse of margin as these investors may not understand the requirements of margin and could lead to a crisis for users.   
Share |