Robinwho? A Long Term Investor’s Guide to Order-Flow Selling – ETF Trends

There’s been quite a bit of buzz in the financial press about the rise of retail investors, and in particular, Robinhood.  If you’ve been living under a rock, Robinhood is daytrading for the Tinder generation.  It’s a relatively small retail brokerage that allows you to “swipe up” to buy stocks (or cryptocurrencies).  It’s very slick, it’s got a great interface, and it genuinely encourages folks to make rash decisions easily (like I said, Tinder for the market). It’s very good at what it does.

The controversy about “Robinhood Traders” really stems from two different places. Let’s get rid of the easy one first:

1: Daytrading is Bad

This is the first big teeth-sucking, hand-wringing argument, and is the source of many headlines. The narrative is simple: people are trapped at home, there are no sports on TV, and people want the excitement of doing something.  So taking a punt on a few stocks or ETFs through an always-on-your-phone app along with a vast community of like-minded “what the heckers” is filling the gap.  And somehow, all these single share trades and $1,000 fliers are moving the market to huge swings we’ve never seen day after day.

First and foremost, I just don’t buy it.  While there may be a lot of noise about retail pajama traders, we know mathematically they just can’t be moving the volumes we’ve seen.  It almost doesn’t matter how you slice it, daily retail trading is just not a big dollar.  Depending on the study you Source…