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Robinhood investors

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    16th Dec, 2020


  • The investment made by India’s Robinhood investors in April-June 2020, seems to paid off heavily.

Who are Robinhood investors?

  • The?term?“Robinhood"?comes from customers of the US brokerage Robinhood, which, offers online and free trading in stocks.
  • Robinhood provides:
    • commission-free trading for stocks
    • exchange traded fund (ETF)
    • American Depositary Receipt (ADRs)
    • cryptocurrencies
  • It generates revenue from a broad range of sources, including Gold membership fees, stock loans, and rebates from market makers and trading venues.
  • India witnessed its own version of the Robinhood surge when large numbers of retail investors opened demat accounts.

What propelled the rise of such investors in India?

  • Discount brokerages have drastically lowered the cost of stock trading
  • An industry-wide shift to online
  • Covid lockdown also provided a window to retail investors

What precautions can these investors take?

  • They should avoid any kind of leveraged products such as intraday trading or futures and options.
  • They should stake a relatively small part of savings in trading so that losses in the market do not imperil their financial future.
  • They should identify conflicts of interest among market experts
  • Rather than blindly following someone’s advice, they should do their own research also.

Verifying, please be patient.