Robinhood may be in trouble as SEC steps up efforts against trading gamification

Karthik Subramanian

The Securities and Exchange Commission (SEC) in the US has said that it would be looking more deeply into efforts at ‘gamification’ of stock and another trading by certain trade platforms as a means of attracting new users and making existing users trade more.

This could have a direct impact on the way Robinhood does business as its critics have been accusing it of trying to gamify trading on its platform without educating the traders about the risks that are involved with trading. One of the important tools that the trading platforms give is projections on how much a trader can make based on certain conditions. But these are based on best-case scenarios which are likely to mislead gullible traders into truly believing that they would be able to get a lot of success through their methods.

“While these new technologies can bring us greater access and product choice, they also raise questions as to whether we as investors are appropriately protected when we trade and get financial advice,” SEC Chair Gary Gensler said in a statement. “… In many cases, these features may encourage investors to trade more often, invest in different products, or change their investment strategy.”

Truth be told, it is not only Robinhood that has adopted such practices but we have seen many trading platforms, stock, and FX, trying out gamification as they believe that this would make trading more attractive for users. It is probably time to realize that the ‘real’ traders do not need trading to be gamified to make it interesting or challenging as trading by itself, with patience and determination, has enough problems to solve for the traders. It is only new users and those who are interested to make a quick buck, more out of a gambling tendency than a trading mindset, who need gamification and other ways to make trading more interesting. But with the trading market getting crowded, unfortunately, many trading platforms have resorted to this gamification model to draw in such gullible users.

Despite such challenges to its business model which is focussed on retail traders, Robinhood has been doing well and its stock price continues to hold strong. Though it continues to make losses due to spending on marketing and sales, it is expected that the coming quarters will see it posting some strong numbers as it adds to its userbase and expands its product range.


Read this next

Retail FX

eToro supports Immutable X (IMX), Livepeer (LPT) and Cartesi (CTSI)

Israeli social trading network eToro has added support for trading three new tokens. Immutable X (IMX), Livepeer (LPT) and Cartesi (CTSI) are the next coins to join eToro’s list of featured digital assets.

Executive Moves

LiquidityBook hires Fintech veteran Jonathan Cross to lead EMEA business

LiquidityBook, a provider of FIX and OMS trading solutions for both the buy and sell-side, has added Jonathan Cross to its business team for the EMEA region.

Retail FX

Interactive Brokers’ traders now have direct access to TradingView

Professional charting and trading platform, TradingView has integrated the US-listed brokerage firm Interactive Brokers as the latest online trading partner.

Digital Assets

This Web3 infrastructure provider is on the verge of a radical upgrade

The crypto industry fueled the anticipation of the arrival of web3 with the introduction of Decentralized Finance, Metaverse, and more. And today, that web3 is finding support from various developers looking to build and develop the space to extract the most benefits out of it.

Digital Assets

Crypto bots: trading assistant 

The cryptocurrency market is a volatile one, with huge gains and dramatic dips. However, the most informed traders can use automated tools to maximize profits while minimizing risks. 

Retail FX

Cryptos Seed Review – What Makes This Broker Stand Out (2022)

Read our Cryptos Seed review today to learn all you need to know about Cryptos Seed before signing up with the broker( – by Finance Feeds.

Institutional FX

Citadel goes live with FX NDFs trades on LCH ForexClear

“This builds on the strong growth at the service, which has historically been driven by a focus on margin efficiencies that will only increase with Phase 6 of the uncleared margin rules in September 2022.”

Digital Assets

Crypto platform Bitfrost registers as VASP in Gibraltar ahead of DLT License

“We’re now looking at the next steps necessary to obtain authorisation to operate as a fully regulated DLT or Virtual Asset Service Provider.”

Industry News

Poland’s GPW to acquire Armenia’s stock exchange

GPW will become the majority shareholder of AMX with a block of 967 shares, representing a 65.03% stake in the company’s share capital. CBoA will hold 372 shares representing a 25.02% stake in the company’s share capital. The remaining 9.95% i.e. 148 shares are AMX’s treasury shares.