Yeah, Robinhood is mentioned quite a bit on his site, including a sign up referral link. Seems like their referral program gives you $10 for each signup.
Also he says if it hits $25K, then the game is over. So it's only $25K at real risk, not $50K. (True, the stocks could fall further before he liquidates.)
Also: anyone have an idea as to what regulations he is citing when he says if it drops below 50% he has to close the account? Is that a Robinhood thing, or an equities trading thing? As far as I know, there is no regulation limiting how much a person can lose on the market...
Makes me wonder if perhaps his account balance is $25k personal, and $25k matched by Robinhood for the stunt.
If I were Robinhoood, I'd try to be the facebook of financial startups- give every high school student a starting portfolio of fake stocks to manage through high school so they learn how to invest and manage money, then have avenues to have different "tabs" in their portfolio for real stocks they have gifted by family, and another for real ones they buy...
They can play with purchase what ifs in the stock sandbox, and plan and grow in the real tabs... among many many other things...
I did that with google finance about a decade ago and the financial crisis wiped me out. I wasn't even good at managing fake money.
Disclosure: I have started putting away some money in a vanguard Roth IRA now. I don't think about it too much because it is the minimum vtsax would let me invest anyways.
In my middle school course when we played "the stock market game", I just picked a spread of reasonable stocks at the start. Every time we could rebalance our portfolio, I just read. I didn't care about the game. Got first or second in the class, and thus free pizza, for it. Kinda continuing that with in my current investment life; invest in index funds, walk away.
But is investing in stocks something you would want high school graduates to pick up?
I always thought of stock-picking as something that the average Joe should be careful with. Trading on less information than insiders and slowly being eaten by fees and taxes. It's an under EV game.
Besides that there's the wisdom of crowds that will eventually follow the trends and invest irrationally (pump and dump). That's how bubbles are created.
When I was in highschool, I was attempting to corner the market on commodities - specifically wheat!
Every day I would log in and manage my account - I was a commodities broker and I managed to build a pretty powerful little empire with my savvy transactions.
While not as powerful when it came to ore... my wheat holdings were no laughing matter... that was until the day I smoked pot, dialed in and accidentally sold all my wheat holdings as opposed to buying up all the other supply - thus eliminating my monopoly on the galactic wheat trade...
Man, Trade Wars was a blast in the early nineties.
That's an interesting story and I'm sure you learned a lot through the experience. I'm also sure there are plenty others like you, to whom trading was educative.
But on the other hand I'm sure there are a whole lot of young people on the other side of things. Those who start learning about stock-trading and soon see it as a way to make money fast by taking huge risks. They get spammed by 500$ signup bonuses to various stock-trading platforms, they're presented with 100x leveraged trading options and such. I don't see much benefit in that.
What I think is young people should be taught how the market works with a huge grain of salt. Definitely not by letting them go wild with play-money since we all know what will follow up.
The Financial Industry Regulatory Authority (FINRA) in the U.S. established the "pattern day trader" rule, which states that if a stock trading customer makes four or more day trades (opening and closing a position within the same day) in a five-day period the customer is considered a day trader and must maintain a minimum $25,000 account balance.
I think you need $25k to be a day trader on Robinhood. So if it drops below that he can't trade the same way he would unless he adds more cash which I guess he isn't prepared to do.
You can trade with less. You can't day trade, defined based on the number of trades in a certain period. Some brokerages may enforce additional limits, but I've personally traded on NASDAQ via US brokerage accounts with less in them than that, so you certainly can do it.
Day trading has a specific definition in this context (can't remember if it's SEC, FINRA, or some other acronym), and refers to the buying and selling of the same security with a single day. That $2.5k Fidelity account will go out of its way to tell you that you're not allowed to do that.
Stopping you from trading on the account doesn't protect the value in the account (and makes it harder for you to take action that would protect it, too!)
Typically you're forbidden from increasing your equity loan on a margin call - closes are completely fine (So you can buy shorts, or sell longs, but the inverse is against the rules). I've never used robinhood, but I've been declared a PDT before.
No, that is not what stop-loss orders are for. A stop-loss order only puts a sell offer into the market when the market prices falls below a certain threshold, there is no guarantee as to what price someone will actually buy your shares at, or that anyone will buy them at all.
If you want to have a hard limit on the loss, you'll have to buy a put option.
Not sure why this is being voted down. A counterparty in an option agreement can become insolvent. This is typically analyzed under the name counterparty risk.
Much much much less common than a stock going down, but when large counterparties become insolvent, a lot of people start needing to write off big chunks of their positions.
A stop loss with no limit means "if the price hits X, then sell my shares for as low as 0.01/0.001" (same as a market sell order). You can verify this by imagining a single trade below the stop loss, then the only buy order being at 0.01.
If you put a limit on the stop loss then there's no guarantee it'll clear, but at least you won't sell for some ridiculously low amount.
The exchange might have circuit breakers that won't let a particular symbol change more than X% in a given period of time.
Also he says if it hits $25K, then the game is over. So it's only $25K at real risk, not $50K. (True, the stocks could fall further before he liquidates.)