• Robinhoods app went down at the start of the week.
  • The wild stock market crash is evidently putting too much stress on the multi-billion dollar trading startup.
  • In their own words, these outages are unacceptable.

The Robinhood app was down again on Monday, as yet another outage rocked the platform. This is entirely unacceptable, and regulators must do more to protect new and inexperienced investors from the allure of brokers offering free stuff in the most competitive, ruthless game on the planet.
The Stock Market Crashed And So Did Robinhood
Robinhood is a broker, which means they profit from people making trades. Despite some fluffy millennial marketing, this is still 100% the case. This doesnt mean they are inherently bad. It just means you need to take everything they do and say with a healthy dose of skepticism its just the prudent way to behave.
Robinhood had one job, and they failed. Again.
Once again outages were detected for Robinhood as the stock market crashed on Monday. | Source: downdetector.com
As trading volumes and price action have gone berserk, Robinhoods platform has gone under numerous times.
If this were an episode of Silicon Valley it would be funny, but its real life and real money. Even Robinhoods customer service team admitted it was unacceptable.
All a financial trading app needs to do is have fair prices and be there when you need it.
If you are getting into the warzone of financial markets, no-one is on your side, and everyone wants your money. The big funds trading against you want your money, and even people holding the same position will eventually want to get out at a better price than you.
Naturally, the broker wants your money too, and hes selling your trade data to the aforementioned guys who want to grab your shares at a lower price than you paid.
For these reasons, an app for beginners cannot go down during a period of stress because these are the most at-risk traders in the market, often leveraged and using tight stop losses.
Wall Street insiders have licenses to trade overnight as well as during the day-time. If you cant access your trades during these recent periods of volatility, you might as well wave a white flag and send your hard-earned money in an envelope.
A Broker Doesnt Make You Money, But They Shouldnt Lose You Money
Robinhoods failure to stay online during periods of stock market stress is akin to going into your doctor with a cold, and him somehow chopping off your leg. He cant technically cure you, but theres no way he should make it worse.
Source: Twitter
It wouldnt be appropriate to jump on the tech startup so aggressively if they genuinely had the pro-beginning investor attitude they claim. Offering no-commission trades is now the norm, so they arent unique in that regard.
Robinhood earns money by selling trading data to high-frequency trading firms, which is perfectly normal behavior for a broker, so long as they dont pretend youre giving up nothing in the process. You definitely are.
The best contrast is comparing Robinhood to how Facebook leverages data to aid marketers. Zuckerberg doesnt actually sell your data, even though its his most valuable commodity.
In this case, Robinhood is commoditizing your trading preferences, and directly selling your data.
Firms can use this information to form trading strategies, which may indirectly hurt your ability to make money. This information enriches their knowledge of the marketplace, and where the most vulnerable or unsophisticated positions may be.
Another way the app makes money is through interest off your deposited cash. The Federal Reserves recent emergency interest rate cut to around 0% will likely hurt Robinhoods revenue, and they will probably rely more heavily on the sale of order-flow.
Again, the broker is not your enemy unless you believe its 100% your friend. Its possible a lot of young investors felt that way about Robinhood.
Trading Is A War And Robinhood Customers Lost
Enjoying a whopping valuation, privately-held Robinhood is unlikely to be so valuable anymore. They have been criticized in the past for being misleading in their marketing, but not actually for being incompetent.
Source: Twitter
Trading is a war, and you need to know that the guy maintaining your rifle can be trusted to do his job. Robinhood has lost that trust.
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.
This article was edited by Sam Bourgi.