If there was anything missing from the average American’s economic wellbeing, it was the ability to create bespoke financial products to scalably make bets against informed professional traders while they sleep.
Quite ironic. The original Robin Hood took from the rich and gave to the poor. Robinhood, the app, seems to do the exact opposite: it helps the rich get richer at the expense of regular folk.
This should be limited to giving advice (education, warning, explicit consent), unless there's harm to third parties.
Because, you know, certain actions and even thoughts can lead to eternal damnation in Hell, according to what a society may think. Would you prefer the society to hold you off from that?
I disagree, AI agents could help level the playing field. Citadel doesn't have any AI models that are better than what you or I have. Market data is more accessible than ever. As LLMs get better at trading, the difference in capability between you and a professional trader gets smaller.
Also, Claude knows about a lot of the traps that consumers can fall into: spread, execution, risk concentration, etc. -- high chance that if I tell Claude I'm thinking of going all in on AMC because some Reddit post told me to, it'll say "slow down cowboy"
Will it be is a different thing though. And if it’s not, who exactly is accountable?
With funds and portfolio managers that run them, there’s a clear accountability model (if the fund sucks, the manager loses their job and the company loses credibility)
With AI agents doing the management, who is accountable when the fund sucks? If it’s the customer, we’ve moved accountability from someone who at least in theory, knows what they’re doing to someone who has little to no clue.
Even better for America's well being will be if thousands of individual investors have identical or near identical bots for sophisticated financial institutions to exploit while they sleep.
And not just informed professional traders -- also insiders with privileged information about world events that let them trade before the news hits. Now AI agents are going to be chasing phantom signals that look like they might be evidence of an insider's move.
LOL. This is the outcome when a Product Manager sits there and says "You know, people just aren't losing enough money on sports betting. How can we fix this?"
Cryptoscammers everywhere rubbing their hands together. There's so many ways this could go wrong. Everything from prompt injection, to being tricked in running a specific scammers setup, to which they can pump and dump specific stocks, and all sorts of other manmade horrors.
I don’t understand this constant fascination with having language models trade stocks. Language models are very useful tools but not aligned at all with generating alpha.
An LLM may be bad at trading stocks, but an LLM may be good at analyzing the wider context, like the news feed, to inform automated trading driven by a more sophisticated model, called by the LLM as a tool.
I don't think that this contraption should necessarily perform tolerably, but the use of an LLM is not necessarily a wrong move.
I use the Interactive Brokers MCP pretty heavily. I don't do any cool automatic fun "trading", but instead I use it to have "pseudo-QQQ".
I didn't like the relatively high fees for QQQ, and I realized that Invesco releases the weights for QQQ for free. I also think Tesla is too overvalued, and I want to avoid the SpaceX IPO. With the Interactive Brokers MCP, I just feed it the CSV of QQQ's weights, tell it to remove and redistribute Tesla, and then I tell it to buy "$1000 of pseudo-QQQ", in the form of raw stocks.
Doing this, I still basically get the same exposure as QQQ, without any fees.
I have thought about this but snag on rebalancing, because it would create a taxable event, or be drawn out over months/years.
Although maybe a bit spicier, VGT is half the cost of QQQ, so that is what my "NASDAQ" has been. I also blend in VTI to cut the volatility a bit, which is 1/3 the cost of VGT.
I feel like you could probably have the AI write a script that uses the API to do the same thing, except this time you have code you can test rather than relying on the probabilistic machine every time you do a trade.
I don't let it buy anything without confirming, and I will load the CSV into Google Sheets to make sure that the numbers more or less correspond to what I think they will. It's just easier to directly use the MCP and set up some custom skills for what I want to do.
QQQ gets the leverage from, among other things, swap agreements and futures. I don’t think what you have could be reasonably considered “pseudo-QQQ”. It’s like copying a cake recipe, but leaving out the flour and eggs because they are too expensive.
I am in the "false confidence" stage of Dunning Kruger Syndrome for finance stuff, so I personally would do swap agreements, but I'm not an average case.
I mean, even still, my point stays the same; if you have access to their strategies, I don't see why you can't just get the MCP to directly mimic that.
Alpha is ultimately the result of analysis, of better analysis than others.
LLM's can actually be exceptionally good at research and pattern recognition, i.e. analysis. And while they aren't great at running numbers themselves, they can do exceptional work passing off Python scripts to an interpreter to generate the numerical results they need.
I'm quite sure the Robinhood AI is going to be trash, i.e. just a gimmick.
But, it's not crazy to think that with the right harness, there are big opportunities for identifying profitable strategies. Especially relying on unparalleled and essentially unlimited research capacity based on public information. More analysis than any single firm could ever hire.
And even for Robinhood users, it's entirely plausible that AI-traded stocks will perform much better than the trades a majority of users would make, since most investors are really unsophisticated.
They’re possibly great at generating alpha in highly complex systems that compose LLMs with tabular machine learning and other analytical techniques at a large scale. So yea, certainly not for these users.
As much as I hate the idea of enabling the desperate masses to gamble like this, LLMs are very aligned tools for sentiment analysis, which can be the foundation of a trading strategy. I think it's extremely irresponsible to use them for execution, though.
That is sidestepping the point: 70-90% of retail traders lose money. The question should be: is AI trading enough of an improvement to justify its non-subsidized costs?
Just like any useful tools, there would be an expert super tool user who could probably generate enough profit based on the tools. The majority would not profit from it in the long run (the monopolistic tool makers would reap any profit from the value chain.)
AI agents for trading, as well as 24/7 trading are no different than offering sports gambling and prediction markets to the masses; it is a vacuum for the fiat of the unsophisticated. The goal is more trading volume to generate more fees, similar story with private equity wanting access to 401ks to unload PE at peak valuations to bag holders.
There needs to be a ton of regulation of this eventually. this will not be a problem from a safety perspective today, but a smarter-than-human agent trained on long-horizon tasks should not be given access to influence the market unless this is done very carefully.
I was definitely wondering this. As I understand it they make money on order flow and don't charge for transactions (is that right?). But allowing LLMs to trade dilutes the true information in the order flow.
On the other hand maybe it's just chasing trends, like their previous forays into blockchains. It pays because it keeps their name in the news.
They were adopted by professionals long ago, and those highly tuned and validated proprietary models are going to kick the butt of the models that you have access to every day of the week.
I was a fan of Robinhood's mission of democratizing finance and prioritizing UX for casual traders. They seem to jump on every hype train though, crypto, prediction markets, now agentic trading, whether it is ethical or not or good for their customers or not, and it seems like the distance between "democratizing finance" and "finding new suckers" is closing. Disappointing but not surprising.
Robinhood's crypto offering is extremely deceptive. They offer "commission-free cryptocurrency trading" but don't make it clear that you pay a 0.95% fee[1] on every trade (technically a 'spread' and not a 'commission' but there is hardly a difference). They also take 25% of staking rewards. These are absurdly high fees.
If you’d like to make dubious trades that’s your prerogative and who am I to stop you.
Because, you know, certain actions and even thoughts can lead to eternal damnation in Hell, according to what a society may think. Would you prefer the society to hold you off from that?
Also, Claude knows about a lot of the traps that consumers can fall into: spread, execution, risk concentration, etc. -- high chance that if I tell Claude I'm thinking of going all in on AMC because some Reddit post told me to, it'll say "slow down cowboy"
Will it be is a different thing though. And if it’s not, who exactly is accountable?
With funds and portfolio managers that run them, there’s a clear accountability model (if the fund sucks, the manager loses their job and the company loses credibility)
With AI agents doing the management, who is accountable when the fund sucks? If it’s the customer, we’ve moved accountability from someone who at least in theory, knows what they’re doing to someone who has little to no clue.
Maybe if you prompt it to be highly critical of you, the user.
Otherwise it will absolutely right you out of money.
I am sure there are some very happy people in the larger firms due to this news.
I don't think that this contraption should necessarily perform tolerably, but the use of an LLM is not necessarily a wrong move.
I didn't like the relatively high fees for QQQ, and I realized that Invesco releases the weights for QQQ for free. I also think Tesla is too overvalued, and I want to avoid the SpaceX IPO. With the Interactive Brokers MCP, I just feed it the CSV of QQQ's weights, tell it to remove and redistribute Tesla, and then I tell it to buy "$1000 of pseudo-QQQ", in the form of raw stocks.
Doing this, I still basically get the same exposure as QQQ, without any fees.
Although maybe a bit spicier, VGT is half the cost of QQQ, so that is what my "NASDAQ" has been. I also blend in VTI to cut the volatility a bit, which is 1/3 the cost of VGT.
I don't let it buy anything without confirming, and I will load the CSV into Google Sheets to make sure that the numbers more or less correspond to what I think they will. It's just easier to directly use the MCP and set up some custom skills for what I want to do.
Dunno, it seems to work fine.
I am in the "false confidence" stage of Dunning Kruger Syndrome for finance stuff, so I personally would do swap agreements, but I'm not an average case.
LLM's can actually be exceptionally good at research and pattern recognition, i.e. analysis. And while they aren't great at running numbers themselves, they can do exceptional work passing off Python scripts to an interpreter to generate the numerical results they need.
I'm quite sure the Robinhood AI is going to be trash, i.e. just a gimmick.
But, it's not crazy to think that with the right harness, there are big opportunities for identifying profitable strategies. Especially relying on unparalleled and essentially unlimited research capacity based on public information. More analysis than any single firm could ever hire.
And even for Robinhood users, it's entirely plausible that AI-traded stocks will perform much better than the trades a majority of users would make, since most investors are really unsophisticated.
https://en.wikipedia.org/wiki/Parable_of_the_broken_window
https://www.bogleheads.org/wiki/Getting_started
This feels like when everything became webified for no reason, or everyone added features like 3D TVs that were clearly not necessary.
This is only about removing friction for the non-professionals to rapidly burn their money...
Obviously how much the average user will profit / compile debt from this change is a lot more variable.
On the other hand maybe it's just chasing trends, like their previous forays into blockchains. It pays because it keeps their name in the news.
1. https://cdn.robinhood.com/assets/robinhood/legal/rhc-fee-sch...
Will be waiting for the notice to say that 70% of users lose money to now 90% of users lose money.