Robinhood's Gold tier, which is a different name for buying on margin, has potentially dire implications for the health of the economy....
The great depression was largely the result of massive numbers of everyman speculators entering the markets with reckless amounts of leverage. Robinhood vastly lowers the barrier for gambling with money you don't own. There's a reason you can't buy lottery tickets with credit cards.
They offer 2x margin with the normal rules against pattern day trading with <25k balances, which is pretty mediocre.
There are much better options for high-risk (reckless) trading, like 500x Forex accounts, "binary options", and lots of other nonsense enabled by offshore jurisdictions.
For an easy example of how reckless/risky these alternatives are, look at FXCM/Alpari/etc after the 2015 EURCHF action.
They don't, or shouldn't have to. Brokers that offer generous margins do something typical brokers do not - they auto-liquidate when you fall below minimum maintenance margin. Most retail brokers would give you a friendly phone call and let you liquidate the next day or so.
Next, forex markets are so heavily traded they have a virtual guaranteed stop. That is, if you set the order you will get it filled no worse than that price.
The only way a broker gets hit is a sudden currency drop, like the Swiss franc did a few years back.
I think most of these x500 Forex shops are bucket shops. They are not even derivatives. More known as CDF which means you are buying/selling against them.
> The great depression was largely the result of massive numbers of everyman speculators entering the markets with reckless amounts of leverage.
The Great Depression is a lot more complicated than Black Thursday... (inflationary monetary policy during most of the roaring 20's, contractionary policy during the market crash causing bank runs).
Since it is gambling is regulated at the state levels this varies by state. 14 states allow for purchasing lottery tickets with credit cards, the others don't.
The great depression was largely the result of massive numbers of everyman speculators entering the markets with reckless amounts of leverage. Robinhood vastly lowers the barrier for gambling with money you don't own. There's a reason you can't buy lottery tickets with credit cards.