If you’ve not had a chance to check out Robinhood’s app yet, the team at 11:FS are doing a review of the live, at the moment -
Does anyone use these at the moment with UK brokers or is this just for traders?
I’m a huge fan of trailing stop loss orders. Sadly my current broker doesn’t provide it and my old broker changed systems!
My personal view is this should be a hygiene factor for any investor. That might be my more adventurous trader side coming out but I’ll explain my view.
With my investments I try and place stop loss order which never expire, this is my attempt to protect myself against having my gains wiped out by a market movement that I wasn’t prepared for or I might not be actively looking at the price. It’s also to keep in line with the principle of letting winners run and cutting losers early.
Let’s say I buy Company X for £100 a share. I set my stop loss to be £90-95 (depending on volatility) what I am trying to achieve is setting what level of risk I’m willing to take on an investment, in this case I’m saying between 5-10% is how much I am willing to lose (take into account your commission charges with these calculations.)
Now this works fine to protect me from making a serious loss unexpectedly e.g. think Beyond Meat when they announced the next stock sale at a discount. However, it doesn’t protect your profits.
What I end up doing is checking in on the investment every few days or weeks to cancel stop loss orders and set them back up, with a higher stop loss price. Ideally locking in profits should I see an unexpected movement. However this requires a lot more management on my side and it isn’t always top of my priority list.
This is where a trailing stop loss comes into play. This is absolutely the protection I am looking for. It means I can keep a consistent level of risk while actively protecting my gains. This is far more common in the CFD/FX world and I don’t see why it shouldn’t be common place for regular trading.
Worst case an investment I love triggers my trailing stop loss. I lock in some profit. If I still like the investment even after the dip, I can buy back in at a cheaper price.
The downside is the price dips to trigger your stop loss and then the price rises again, meaning you exited earlier than you needed to. I see this as risk management, are you making a logical risk based decision, or an emotional one.
If you want to get really fancy you can mix and match trailing stops with trailing buys, to try and capture momentum, however you are blurring the lines around over trading and just setting up a momentum based trading system.
Bottom line for me is risk management, just because I like an investment at it’s currently valuation, will I feel the same way when it’s -20% down versus book cost? Will I then make an emotional or logical decision on what to do next? Will I end up holding onto loss making investments because I refuse to sell in a negative position?
Futures and Options trading books spend a lot of time thinking about risk management, I believe even my long term investments need that level of risk management in place to. When I make an investment I should have a strategy in place, and a trailing stop loss or even just a regular stop loss should be part of it.
Big move by Robinhood, amazing time for them too with the other brokers removing their trading commissions as well. Very lucky timing!
Quite impressed by how fast Robinhood’s rolling out new features!
Not the most exciting demo they could have used tbh but I’m sure the design’s good!
Maybe it’s just me, but I don’t see what the whole hype about dark mode is about. Every company seems to join the bandwagon, even tiny startups with limited resources who surely can spend valuable dev time on other things. Yes, I get that in theory it’s just amending a CSS file, but there seems to be a lot of noise about something negligible.
Strange that this hasn’t been stopped yet.
Slightly ironic that their users are now able to take from the rich (VCs funding the company) & give to themselves
The traders using what they called infinite leverage to supercharge their wagers could be held liable for the money and guilty of securities fraud, according to Donald Langevoort, a law professor at Georgetown University.
Here’s one example from yesterday
It turns out this is nothing new
Looks like they are targeting a early 2020 release according to their UK waitlist.
Nice! Their referral links seem to be broken so I had to just use uk.robinhood.com instead.
I spotted this elsewhere, they have TechCrunch coverage
Very exiting to see what these guys will bring to the UK.
There will be some business model challenges and they are being extremely tight lipped about how they have overcome these. They also have US agreements which will be carrying over (additional investor protection) which hopefully we never has to see in action but I’ll be interested to know how this works in practice.
Sadly there isn’t a lot of information about what terms and agreements this platform will have, so I don’t have any extra insight there.
I’ve keen to understand how they are handling the regulation differences, especially around responsibility and compliance, where the two countries do have more meaningful differences.
As always, I love to see more competition in this space, more pricing pressure on brokers, more innovation both in terms of pricing and what to offer customers. I don’t think we’ll end up in a world of commission free being standard, but I do see a situation where you go to a broker who charges commission for additional perks or benefits. In short more choice for customers.
I’ve heard lots of mutterings about people who have interviewed with Robinhood UK and it all sounded very standard, which makes me even more curious about the business strategy. Is it really get the customers and then figure it out? They have to money to take that kind of risk to just get market share, but the other major brokers have deep war chests too.
A great time to be a DIY investors in terms of broker choice!
“Early 2020” is apparently Q1 2020.
Robinhood’s just added an impressive looking collection of analysis / insights features to their app. I’m not sure they’ll make it into the UK app when it launches but looking forward to trying it at some point.
Much to like their although I am always sceptical around crowdsourcing financial advice, in particular when it comes to stock.
Confirmation (it is the first day of Q2 after all), that the Robinhood launch has been delayed. Although apparently not because of Coronavirus or Brexit
A bit of a “no sh!t, Sherlock” news article.
- “We are going to launch in Q1”
- Hey, RobinHood, its now 1st April
- “We are delayed”
Gutted though, it’s the one broker I am waiting for that seems to meet all my criteria, although allegedly they wouldn’t have an ISA at launch so I’d have to wait till they had sorted that out.
Any idea on a new ETA, article didn’t mention.
Can’t find any updated ETAs, looks this article is the only one, they must have contacted them a few days ago to check.
I’m guessing as a firm they are extremely busy, probably just a question of priorities, or maybe delayed by third parties. Hopefully they are using the extra time well!