So criticism is abound today toward Robinhood for shutting off new positions in $GME (Game Stop) and others. Many of these retail traders that drove the stock up ONLY have Robinhood or other restrictive platforms, while hedge funds and others can trade shares in myriad ways without restriction. Plus, it is mostly retail traders who are LONG, and can still close their positions by selling… and the Hedge Funds are SHORT, so they want to see that selling happen.
I’m of two minds about this… on the one hand Robinhood is closing new positions to ALL traders… but the effect is that only the smaller guys are being restricted. Robinhood enticed and attracted smaller players to the market, and when these traders suddenly succeed in a huge play that damaged hedge funds, they are then cut off. But in another sense, this also protects novice traders from buying GME at $300, only to see it drop back to $20 in a few days or weeks (maybe).
What do you guys think? Should Robinhood be a fault? Will further action from Washington just drive brokers like RH out of business, limiting access to the smaller guys once again?
AOC, Rashida Tlaib Rip Robinhood Over GameStop Trading Restrictions
