Introduction

Robin Hood made it too easy for unsophisticated investors to trade on margin or borrow money to buy stocks or options. If you own a bunch of stocks on margin and the price of those stocks drops, you can get hit with a margin call and need to put up more cash sell the stock. Margin calls can be a killer, forcing traders to unwind at exactly the wrong time and lose a ton of money. The delicious irony of last week is that, by encouraging so many of its customers to make risky trades on margin, robin hood took on too much risk itself. It was forced to reveal whose side it was really on, its own. This was bound to happen