Robinhood and How to Lose Money

Re:Robinhood and How to Lose Money by biql on Monday July 20, 2020 @07:01AM (#23896616)

Based on my limited experience, you enter during the bull market, make some easy wins, and start wanting to bet more and more because winning feels so easy. I could totally feel this process when I bought a few option calls that over a few months made 10x. That felt fantastic at first but shortly after I noticed that I started to blame myself for not taking more risk because on the hindsight, it felt so obvious that the price would go up. The market knowledge aside, psychological state is another thing that needs to be kept under control not to let yourself slip into the gambling state. I wouldn't be surprised if the online echo chambers that are set around particular stocks make people unreasonably confident and make them want to take more risk.

[ Parent | on HN ]

Re:Robinhood and How to Lose Money by WhompingWindows on Monday July 20, 2020 @10:05AM (#23897969)

I felt this. I bought a well-known controversial EV stock quite low; my plan was to make at least 33% on it. After a year, I'd made 400%, but I was struggling to click the "Sell" button. Some greed surfaced from somewhere, and it took me a couple of days to cancel the greed and sell the stock, making 12X what I hoped to the year before.

The stock has since gone up a lot more, but my dad told me: Buy low, and Sell too soon.

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Re:Robinhood and How to Lose Money by Viliam1234 on Monday July 20, 2020 @11:51AM (#23899017)

If I made 400% on something, I would probably sell half of it, and keep another half at least for a year. That way, both my safety and greed would be satisfied.

(But this is more about psychology than math. For some people this would be the worst option, because if the thing would lose value, they would blame themselves for not selling everything when they had the opportunity, and if it would gain even more value, they would blame themselves for not waiting with everything. So it would be lose/lose from their perspective.)

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Re:Robinhood and How to Lose Money by DudeInBasement on Monday July 20, 2020 @12:53PM (#23899627)

This man knows how to make money consistently.

[ Parent | on HN ]

Re:Robinhood and How to Lose Money by JumpCrisscross on Monday July 20, 2020 @09:56AM (#23897855)

> I started to blame myself for not taking more risk because on the hindsight, it felt so obvious that the price would go up

This is a gambler’s mindset. That’s fine. I enjoy playing poker with friends, and when I do so, I reinforce those neural pathways with respect to cards.

But I’m risk limited, socially and personally, in that setting. Robinhood is different. There is no social pressure to limit how much money one puts in a trading account. So when the UX pushes one to gamble with thousands of dollars, and to reinforce gambling over investing pathways when it comes to the markets, we end up with a self-destructively trained generation.

That’s troubling. Robinhood can be used responsibly. But even taking most of the comments on HN, it seems to make that difficult.

[ Parent | on HN ]