OT: wallstreetbets vs wall street

[chicagoballer]

Wrong place.

There are things in the world bigger than the bulls. This is an eye opening moment in time. I did not buy the stock and was a spectator on the side line, but I cant stop reading about it.

If you dont want to participate in one of the biggest stories of the year, you can just avoid the thread? It says OT on the title. I hope you take a moment to truly understand what happened today, its a battle of the rich vs the average joe. The rich are flexing their muscles and showing us how the world works

How do you guys know when another run is coming? I'm late to the game, and find the wallstreetbets website basically unreadable. Can you not simply buy stocks off old-school online brokers like Fidelity etc?

There are a lot resources out there to learn about investing/stocks. books, youtube channels, etc. I would highly recommend not chasing a "run"

[patagonia]

Yes, the clearinghouse couldnt fill the orders. ... The reason I think the clearinghouse couldnt sell to retail investors, which they cant say openly, are the hedge funds. The clearinghouse pushed the stop button because when they realized the hedge fund debt maybe too much if this continues... it maybe too large to be actually paid up. The hedge funds may go bankrupt, and they wouldnt be able to collect.\[/url]

Clearinghouses don't fill orders.
Clearinghouses don't sell stocks.
Clearinghouses don't care about hedge fund performance.

All they do is process trades.

[chicagoballer]

Yes, the clearinghouse couldnt fill the orders. ... The reason I think the clearinghouse couldnt sell to retail investors, which they cant say openly, are the hedge funds. The clearinghouse pushed the stop button because when they realized the hedge fund debt maybe too much if this continues... it maybe too large to be actually paid up. The hedge funds may go bankrupt, and they wouldnt be able to collect.\[/url]

Clearinghouses don't fill orders.
Clearinghouses don't sell stocks.
Clearinghouses don't care about hedge fund performance.

All they do is process trades.

I’m still learning the proper terminology. Why couldn’t they process the orders?

I don’t mind being corrected. If you know a lot, share with bulls community.

You did say RH didn’t have funds but the CEO said he did. You honestly believe there is no chance nothing suspicious happened here? And a large part of the world is in uproar for no reason?

[Southpaw]

https://www.tweaktown.com/news/77560/this-redditor-turned-755k-into-48-million-thanks-to-gamestop-stock/index.html

So around 2005 or so, I was a big poster on a HS Running message board called Dyestat. My best "friend" on that site was a guy from MA called "wizard".

wizard and I drifted after he deleted his fb sometime around 2010 and AIM became obsolete but earlier today I saw his brother post an article. wizard is deepf*ckingvalue on reddit.

https://www.tweaktown.com/news/77560/this-redditor-turned-755k-into-48-million-thanks-to-gamestop-stock/index.html

But what is absolutely mind blowing about this all is that normal people are getting stinking rich from this entire thing, with Reddit poster u/**** putting in $754,991 and making -- at least according to the last post -- a no-one-in-your-lineage-has-to-work-again $48 million.

From getting banned for saying "penis" on a running message board to transforming how Wall Street works.

Isn't he the one who started all this? He's been posting updates about this on reddit for sometime now.

As someone who's still learning and is intending to try the stock market, this is extra interesting for me. It's like a battle of David and Goliath but through the internet. This will probably made into a movie a la The Big Short.

[patagonia]

I’m still learning the proper terminology. Why couldn’t they process the orders?

I don’t mind being corrected. If you know a lot, share with bulls community.

You did say RH didn’t have funds but the CEO said he did. You honestly believe there is no chance nothing suspicious happened here? And a large part of the world is in uproar for no reason?

Considering technology, you'd think trades happened instantaneously, But there is actually a period of 2 days between the when the trade is placed and when it becomes "official" for lack of a better word. Stocks trade on a T+2 basis, it's dumb and old but this is the way of the world. So when you buy a stock you are essentially promising to pay them in 2 days and they are promising to deliver in 2 days. But, what we see is the stock in our accounts instantly and the money out instantly. We don't see that 2 day transition. This is because the clearinghouse essentially guarantees everything will get processed smoothly. The way they guarantee everything is that the brokers (RH, Schwab, Morgan Stanley, etc) place a bunch of money in what is essentially a giant escrow account. This is mandated by the SEC. Sometimes, when stocks move around a lot the clearinghouse will require extra escrow (this is because there may be a greater difference between the price of the stock when you placed the trade and when it will actually be delivered).

This is what happened last week. The clearinghouse went to RH and said we need more money for these trades. This is not negotiable - there is no bargaining.

So why only Buy orders and not Sell orders? Well, buy orders means money goes out of RH to the other party. This needs to be escrowed. Sell orders means stock out and money in, so it's the other party placing the escrow. That is why these companies were fine with sell, but not buy, orders.

Hope this helps.

[Dominator83]

does robin hood have lower account minimums or something? why is it popular?

I think there is no cost for individual trades, whereas using larger brokerages - vanguard etc - charge for each trade.

the big brokerages eliminated commissions over a year ago. that used to be an advantage for robinhood, but i don't know what the lure is anymore

Robinhood is basically where all the amateurs signed up to replace their entertainment outlets when the pandemic hit.

I'm on TD ameritrade. Got it back in 2015 when it was still Scottrade. The only thing they still charge Commission for is OTC stocks , which you can't even get on Robinhood. Now full disclosure, I did recently get on Robinhood, but I have nothing in it. I have that just in case I ever wanna get into Crypto, because that you can't get on Ameritrade.

The fact that these idiots are crying about Robinhood blocked them from buying, when There's tons of other platforms to buy stock on, shows how much they know.

[chicagoballer]

Considering technology, you'd think trades happened instantaneously, But there is actually a period of 2 days between the when the trade is placed and when it becomes "official" for lack of a better word. Stocks trade on a T+2 basis, it's dumb and old but this is the way of the world. So when you buy a stock you are essentially promising to pay them in 2 days and they are promising to deliver in 2 days. But, what we see is the stock in our accounts instantly and the money out instantly. We don't see that 2 day transition. This is because the clearinghouse essentially guarantees everything will get processed smoothly. The way they guarantee everything is that the brokers (RH, Schwab, Morgan Stanley, etc) place a bunch of money in what is essentially a giant escrow account. This is mandated by the SEC. Sometimes, when stocks move around a lot the clearinghouse will require extra escrow (this is because there may be a greater difference between the price of the stock when you placed the trade and when it will actually be delivered).

This is what happened last week. The clearinghouse went to RH and said we need more money for these trades. This is not negotiable - there is no bargaining.

So why only Buy orders and not Sell orders? Well, buy orders means money goes out of RH to the other party. This needs to be escrowed. Sell orders means stock out and money in, so it's the other party placing the escrow. That is why these companies were fine with sell, but not buy, orders.

Hope this helps.

I understood some of it, and your explanation reinforces some of my understanding. But I still dont understand how the volatility does not affect selling. I am sure the other party was required to have large amounts of escrow money present too. Volatility would have to go both ways.

Significant volatility has occurred in the past, short squeezes have occurred in the past. This should have been expected as I knew about the possible short squeeze early in the week. Isnt it the job of the clearinghouse and RH to anticipate this more than random internet users? This time, the decision affected the retail investor. Why would you halt 100% backed buy orders? it makes no sense especially if money is just sitting in your brokerage account. I agree with halting all margin trading.

This explanation by a brokerage's chairman makes it seem like they just want to make sure clearinghouse is paid. Which makes sense. BUT the people who were going to pay here were overwhelmingly the short selling hedge funds. So they wanted to make sure the hedge funds can pay? This seems like an excuse to protect the "market", but it saves the hedge fund in doing so. The squeeze was halted, and the billionaires cant go broke.

[url]

Watch on YouTube

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Also, to clarify, I have no money in this frenzy. Pure hope for the retail investor to win, and to have fair playing grounds. True democratization.

[Ccwatercraft]

I think there is no cost for individual trades, whereas using larger brokerages - vanguard etc - charge for each trade.

the big brokerages eliminated commissions over a year ago. that used to be an advantage for robinhood, but i don't know what the lure is anymore

Robinhood is basically where all the amateurs signed up to replace their entertainment outlets when the pandemic hit.

I'm on TD ameritrade. Got it back in 2015 when it was still Scottrade. The only thing they still charge Commission for is OTC stocks , which you can't even get on Robinhood. Now full disclosure, I did recently get on Robinhood, but I have nothing in it. I have that just in case I ever wanna get into Crypto, because that you can't get on Ameritrade.

The fact that these idiots are crying about Robinhood blocked them from buying, when There's tons of other platforms to buy stock on, shows how much they know.

Are you saying that Scottrade used to own Ameritrade or ameritrade took them over? I've been with Ameritrade long before 2015. Had scott trade way back when also and I think my brother still uses them.

I like the platform. Did not like Scottrade, wasn't user friendly for me.

Had a chance on amc last week, missed the boat around $3 because I had no faith in movies coming back big, and amc wasn't doing well even before covid. Have hit some big gains this year with my little investment group, a bit over 400% return, unfortunately it was with moderate amounts of play money, if I I had dropped my entire 401k (no fkn way) into the same bets I'd be up massive amounts, like no mortgage, big yacht and a flava flave watch on my neck massive.

[Dominator83]

the big brokerages eliminated commissions over a year ago. that used to be an advantage for robinhood, but i don't know what the lure is anymore

Robinhood is basically where all the amateurs signed up to replace their entertainment outlets when the pandemic hit.

I'm on TD ameritrade. Got it back in 2015 when it was still Scottrade. The only thing they still charge Commission for is OTC stocks , which you can't even get on Robinhood. Now full disclosure, I did recently get on Robinhood, but I have nothing in it. I have that just in case I ever wanna get into Crypto, because that you can't get on Ameritrade.

The fact that these idiots are crying about Robinhood blocked them from buying, when There's tons of other platforms to buy stock on, shows how much they know.

Are you saying that Scottrade used to own Ameritrade or ameritrade took them over? I've been with Ameritrade long before 2015. Had scott trade way back when also and I think my brother still uses them.

I like the platform. Did not like Scottrade, wasn't user friendly for me.

Had a chance on amc last week, missed the boat around $3 because I had no faith in movies coming back big, and amc wasn't doing well even before covid. Have hit some big gains this year with my little investment group, a bit over 400% return, unfortunately it was with moderate amounts of play money, if I I had dropped my entire 401k (no fkn way) into the same bets I'd be up massive amounts, like no mortgage, big yacht and a flava flave watch on my neck massive.

TD waterhouse bought out Scottrade, and became TD ameritrade.

And I have the same issue. I keep throwing short passes Chicago Bears style, when I need to just throw a couple of bombs downfield and go all-in on something.

[dougthonus]

I’m still learning the proper terminology. Why couldn’t they process the orders?

I don’t mind being corrected. If you know a lot, share with bulls community.

You did say RH didn’t have funds but the CEO said he did. You honestly believe there is no chance nothing suspicious happened here? And a large part of the world is in uproar for no reason?

Considering technology, you'd think trades happened instantaneously, But there is actually a period of 2 days between the when the trade is placed and when it becomes "official" for lack of a better word. Stocks trade on a T+2 basis, it's dumb and old but this is the way of the world. So when you buy a stock you are essentially promising to pay them in 2 days and they are promising to deliver in 2 days. But, what we see is the stock in our accounts instantly and the money out instantly. We don't see that 2 day transition. This is because the clearinghouse essentially guarantees everything will get processed smoothly. The way they guarantee everything is that the brokers (RH, Schwab, Morgan Stanley, etc) place a bunch of money in what is essentially a giant escrow account. This is mandated by the SEC. Sometimes, when stocks move around a lot the clearinghouse will require extra escrow (this is because there may be a greater difference between the price of the stock when you placed the trade and when it will actually be delivered).

This is what happened last week. The clearinghouse went to RH and said we need more money for these trades. This is not negotiable - there is no bargaining.

So why only Buy orders and not Sell orders? Well, buy orders means money goes out of RH to the other party. This needs to be escrowed. Sell orders means stock out and money in, so it's the other party placing the escrow. That is why these companies were fine with sell, but not buy, orders.

Hope this helps.

What doesn't make sense to me in this, is why did Robinhood not have the money? Are people trading on margin on Robinhood? If people are in retail accounts, they should all be fully funded and their money should be segregated? I worked in clearing for a logn time, but we cleared on prop traders not hedge funds or retail, so I'm a bit fuzy on the retail rules though from my series 7/24 studying I thought all customer money had to be segregated, so there shouldn't be any reason RH didn't have it, certainly not for people trading with fully funded accounts.

[Ice Man]

Here is the answer to why Robinhood (along with several other brokerages) was forced to halt trading in CME. The answer is long on regulatory/operational details, and short on villainy.

Read on Twitter

[moorhosj]

What doesn't make sense to me in this, is why did Robinhood not have the money? Are people trading on margin on Robinhood? If people are in retail accounts, they should all be fully funded and their money should be segregated?

Robinhood brought two innovations to trading: $0 trades and margin accounts for everyone. They each create a problem. To allow $0 trades, Robinhood sells their deal flow to High Frequency Traders who can front-run your purchases. The second one creates a problem because it requires no knowledge of how margin accounts work. A kid in Naperville killed himself a few months ago because he didn’t understand how his trades would settle and thought he owed $700k.

https://www.nbcchicago.com/news/local/naperville-trader-dies-by-suicide-after-seeing-730000-negative-balance-on-app/2292583/

[dougthonus]

What doesn't make sense to me in this, is why did Robinhood not have the money? Are people trading on margin on Robinhood? If people are in retail accounts, they should all be fully funded and their money should be segregated?

Robinhood brought two innovations to trading: $0 trades and margin accounts for everyone. They each create a problem. To allow $0 trades, Robinhood sells their deal flow to High Frequency Traders who can front-run your purchases. The second one creates a problem because it requires no knowledge of how margin accounts work. A kid in Naperville killed himself a few months ago because he didn’t understand how his trades would settle and thought he owed $700k.

https://www.nbcchicago.com/news/local/naperville-trader-dies-by-suicide-after-seeing-730000-negative-balance-on-app/2292583/

I didn't know Robinhood was encouraging people to do all margin trading, that definitely explains it.

Side note, if RH is selling their book and the purchaser is front running it, the purchaser is doing something completely illegal.

Also, side note, RH is self-clearing, which means their requirement for capital would have been for regulatory reasons not to a counterparty. They weren't in the cut and dry position of some other broker dealers whom were cut off by their clearing firms.

[patagonia]

Margin isn't a clearinghouse thing. That is RH lending you money to make leveraged trades. Now, it's an internal risk for RH because you can lose a lot more money and not be able to pay for it, but as long as that money is in escrow the CH doesn't care. Margin, does however, increase the amount RH has to place with the CH, because people are able to buy more stock than their cash on hand.

The clearinghouse cares about volatility. Their worry is you buy a stock for $400 and it drops to $20 during those two days and so you decide you don't want to pay for the stock anymore. The other party can't wait for RH and you to work it out so RH has already placed that money with the clearinghouse. The other side is made whole and you and RH can battle it out.

[dougthonus]

Margin isn't a clearinghouse thing. That is RH lending you money to make leveraged trades. Now, it's an internal risk for RH because you can lose a lot more money and not be able to pay for it, but as long as that money is in escrow the CH doesn't care. Margin, does however, increase the amount RH has to place with the CH, because people are able to buy more stock than their cash on hand.

The clearinghouse cares about volatility. Their worry is you buy a stock for $400 and it drops to $20 during those two days and so you decide you don't want to pay for the stock anymore. The other party can't wait for RH and you to work it out so RH has already placed that money with the clearinghouse. The other side is made whole and you and RH can battle it out.

I checked and RobinHood is self-clearing, so it is effectively about whether or not they had enough capital to meet the regulatory requirements or whether they did not wan their customers taking this risk and thought too many would back out if they lost their shirts. Either way, it would appear based on being self clearing that this was a decision they made and not one imposed upon them (unless they couldn't meet regulatory capital requirements, but they should have shifted that burden on to their clients).

[patagonia]

Margin isn't a clearinghouse thing. That is RH lending you money to make leveraged trades. Now, it's an internal risk for RH because you can lose a lot more money and not be able to pay for it, but as long as that money is in escrow the CH doesn't care. Margin, does however, increase the amount RH has to place with the CH, because people are able to buy more stock than their cash on hand.

The clearinghouse cares about volatility. Their worry is you buy a stock for $400 and it drops to $20 during those two days and so you decide you don't want to pay for the stock anymore. The other party can't wait for RH and you to work it out so RH has already placed that money with the clearinghouse. The other side is made whole and you and RH can battle it out.

I checked and RobinHood is self-clearing, so it is effectively about whether or not they had enough capital to meet the regulatory requirements or whether they did not wan their customers taking this risk and thought too many would back out if they lost their shirts. Either way, it would appear based on being self clearing that this was a decision they made and not one imposed upon them (unless they couldn't meet regulatory capital requirements, but they should have shifted that burden on to their clients).

https://blog.robinhood.com/news/2021/1/29/what-happened-this-week

[dougthonus]

Margin isn't a clearinghouse thing. That is RH lending you money to make leveraged trades. Now, it's an internal risk for RH because you can lose a lot more money and not be able to pay for it, but as long as that money is in escrow the CH doesn't care. Margin, does however, increase the amount RH has to place with the CH, because people are able to buy more stock than their cash on hand.

The clearinghouse cares about volatility. Their worry is you buy a stock for $400 and it drops to $20 during those two days and so you decide you don't want to pay for the stock anymore. The other party can't wait for RH and you to work it out so RH has already placed that money with the clearinghouse. The other side is made whole and you and RH can battle it out.

I checked and RobinHood is self-clearing, so it is effectively about whether or not they had enough capital to meet the regulatory requirements or whether they did not wan their customers taking this risk and thought too many would back out if they lost their shirts. Either way, it would appear based on being self clearing that this was a decision they made and not one imposed upon them (unless they couldn't meet regulatory capital requirements, but they should have shifted that burden on to their clients).

https://blog.robinhood.com/news/2021/1/29/what-happened-this-week

Not sure what you are saying with this link, but look at this:

https://www.cnbc.com/2018/10/10/robinhood-launches-its-own-trade-clearing-system-as-customer-growth-surges.html

The fintech start-up, famous for its zero-fee trading platform, spent the past two years building an independent clearing system that will allow it to settle and clear transactions and provide custody for assets, the company announced Wednesday.

[patagonia]

Here's another CNBC article for you:https://www.cnbc.com/2021/01/30/robinhood-says-restrictions-on-gamestop-due-to-tenfold-increase-in-deposit-requirements.html

“It was not because we wanted to stop people from buying these stocks,” Robinhood said in a blog post published late Friday.

“We did this because the required amount we had to deposit with the clearinghouse was so large — with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements — that we had to take steps to limit buying in those volatile securities to ensure we could comfortably meet our requirements,” it continued.

And self-clearing isn't the same thing as I'm discussing.

[Susan]

https://www.tweaktown.com/news/77560/this-redditor-turned-755k-into-48-million-thanks-to-gamestop-stock/index.html

So around 2005 or so, I was a big poster on a HS Running message board called Dyestat. My best "friend" on that site was a guy from MA called "wizard".

wizard and I drifted after he deleted his fb sometime around 2010 and AIM became obsolete but earlier today I saw his brother post an article. wizard is deepf*ckingvalue on reddit.

https://www.tweaktown.com/news/77560/this-redditor-turned-755k-into-48-million-thanks-to-gamestop-stock/index.html

But what is absolutely mind blowing about this all is that normal people are getting stinking rich from this entire thing, with Reddit poster u/**** putting in $754,991 and making -- at least according to the last post -- a no-one-in-your-lineage-has-to-work-again $48 million.

From getting banned for saying "penis" on a running message board to transforming how Wall Street works.

Isn't he the one who started all this? He's been posting updates about this on reddit for sometime now.

As someone who's still learning and is intending to try the stock market, this is extra interesting for me. It's like a battle of David and Goliath but through the internet. This will probably made into a movie a la The Big Short.

Yeah! The WSJ interviewed the old moderator who had to put up with our stupid asses back in the day. Thankfully the boards got shut down in 2011 and all of our old (and probably very problematic) posts got deleted.

[KL78192020]

Reddit users are trying to convince people to go in on Doge Coin. Thoughts?

I would wager that a lot of people trying to do these things are getting in early, then trying to convince others to get in, then dumping their shares at a profit. It will be interesting to see if reddit is able to consistently manipulate the markets enough to make this work, but I kind of doubt it.

Yup this is the modern day pump and dump, this little guy versus the big hedge funds is a nice storyline. At the end of the day the hedge fund guys aren't risking much of their own money, its investments from pension funds. These guys have already made tonnes of money from management fees, is it a blow to their egos? of course, but its not the end for them.