This is news you need to know #RepostPlus @cnbc
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One trader says he took a $1,000,000 position in stock – using only a $4,000 deposit. 😯
Some Robinhood users have been manipulating the stock-trading app to trade with what they call “infinite leverage.”
The glitch allowed Robinhood Gold users to borrow money from the company to make trades. Though margin trading is common, this particular glitch allowed users to overstate the amount of money they had in their accounts — and borrow against it. Hence the nickname “infinite leverage.”
That backdoor essentially created free money for certain users. Now, it’s put Robinhood in a bit of a bind.
Will the company be punished by regulators for the glitch? Details at the link in bio.