{"id":1935,"date":"2020-12-21T15:47:57","date_gmt":"2020-12-21T20:47:57","guid":{"rendered":"https:\/\/navesinkinternational.com\/Staging\/?p=1935"},"modified":"2023-12-20T02:53:24","modified_gmt":"2023-12-20T07:53:24","slug":"robinhood-s-usd65m-sec-penalty-and-the-gamification-of-trading","status":"publish","type":"post","link":"https:\/\/navesinkinternational.com\/2020\/12\/21\/robinhood-s-usd65m-sec-penalty-and-the-gamification-of-trading\/","title":{"rendered":"Robinhood’s $65m SEC penalty and the ‘gamification’ of trading"},"content":{"rendered":"

\"RobinhoodRobinhood has just been fined $65m for overcharging its customers, despite trades being free of charge – the company sells its order flow, and the net result is that traders are overcharged $35m\/y.<\/p>\n

The firm also mislead its clients in its advertising.<\/p>\n

But in the back of these already serious issues, is the question of ”gamification’ of trading, where inexperienced individuals actively day-trade on margin. They end-up facing professional investors, who are much better informed and equipped than them. A previous note <\/a>showed that most if not all end-up losing money.<\/p>\n

This five-year-old article below still remains a good analysis of what ‘gamification’ entails. It is probably fine for school teaching and corporate training, but feeding a “high-octane gambling need” is probably not ideal for financial markets.<\/p>\n

Robinhood’s documented bubbles, coupled with many new accounts and likely overpriced markets, could turn pretty ugly pretty fast.<\/p>\n

Credits for the article to\u00a0Samuel Miranda<\/a>, but I am not willing to recommend his ventures (advertising for crypto, online trading, casino\/gaming…).<\/p>\n