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Robinhood Says Your Account Is Restricted From Purchasing – If you are an active stock or crypto trader; Waking up to a restricted brokerage account can be inconvenient, if not frustrating. This can lock you out of a profitable opportunity. But it happens all the time to Robinhood users. Why is your Robinhood account limited? What can you do about it?
Robinhood offers its commission-free trading; Stocks with margin access and same account; ETFs; It is popular among retail investors for its options and ability to trade cryptocurrencies. Its fractional share buying service and pre-IPO pre-orders are Robinhood’s other big draws. More than 13 million investors use the service. You need to know about account limit risks and how to avoid them.
Robinhood Says Your Account Is Restricted From Purchasing
No investor likes to have their brokerage account restricted or blocked. So it helps to know why your Robinhood account has been limited and what to do if it happens.
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A broker may place your account on hold for a variety of reasons. Limits may apply only to a particular stock or they may affect all transactions in an account. Most Robinhood account restrictions prevent you from making purchases, but not sales. Here are the reasons that can lead to Robinhood account limitation.
If you declare yourself to be a controlling person in a company; The broker will prohibit you from trading that company’s stock. Made to meet regulatory requirements. Such restrictions apply only to specific stocks. When you are not a controller in the company, you can return to trading the stock.
Robinhood margin accounts; For investors using Instant and Gold; You can limit them if you exceed the broker’s day trading limits or lower margin requirements.
Robinhood may limit your account after reversing too many transactions. You need to fund your account in order to trade with it. You pay the brokerage account by transferring money to it from your bank account. If there are insufficient funds in your bank account, the transfer may not be successful. In that case, The broker will recover your advanced funds while waiting for the transfer deposit to settle. If you have too many failed transactions, your account may become limited.
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Robinhood sometimes prevents customers from buying stocks that are undergoing a split or merger. This is usually a temporary restriction that affects all brokers and investors in specific stocks. A broker may also prohibit you from trading in listed stocks or those whose trading has been suspended by the exchange for any reason.
A broker may restrict trading on an account with incorrect or outdated information. In addition, Accounts may be restricted for fraudulent inquiries. Note that the broker does not allow investors to operate duplicate accounts. Therefore, you may be subject to restrictions if you break the rules.
Robinhood also restricts accounts across the platform from trading certain volatile stocks. A good example is during the GameStop short squeeze that was fueled by retail investors on Reddit’s WallStreetBets community. The broker is GameStop itself; AMC Theatres; Some stocks, including BlackBerry and Nokia, are restricted from buying. The restriction caused widespread outrage among Robinhood investors.
Depending on the cause of the restriction, it can take a few days to several months to heal. for example, An account may be restricted for 90 days if the day trading limit is exceeded.
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If Robinhood restricts your account due to stock issues; You may lose access to the crypto trading service. If the limit is linked to an account balance value below a required threshold, such as day trading limits or margin requirements. This can be corrected by adding money to the account. You need to contact the broker after adding money to the account to resolve the issue. Robinhood only allows users to trade 500 shares at GameStop. Photo: WireStock/Alamy
All trading restrictions were lifted on Friday to allow users to buy shares in Reddit-promoted companies, weeks after the financial crisis. Then there’s Robinhood, the financial trading platform that blocked the unprecedented rise in Gamestop shares.
Users criticized the company after it limited the number of Gamestop and AMC shares an individual could buy following a Reddit-led rise in some of the companies’ share prices. “There are currently no temporary restrictions on increasing your positions,” Robinhood said in a statement on its website.
After Robinhood initially rose in mid-January, Robinhood was allowed to trade only 500 shares in GameStop, a video game store chain, and 5,500 AMC shares, according to Reuters. The lifting of the restrictions comes as the US Treasury Department begins to explore how to prevent a similar incident from happening again.
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When Robinhood introduced restrictions on purchases, it was accused of protecting hedge funds paid by the company to process certain users’ trades.
Gamestop after WallStreetBets sub-Reddit sparks massive trading event AMC Thousands of young traders use Robinhood, which stands as an easy-to-use platform for inexperienced investors to buy BlackBerry and other companies.
Politicians as diverse as Alexandria Ocasio-Cortez and Ted Cruz have criticized Robinhood, and Ocasio-Cortez recommended the company be subject to congressional hearings. But Robinhood says limits are needed to cover potential losses.
“With hundreds of millions of dollars in volatile securities in deposit requirements … we have taken steps to limit purchases in these volatile securities to ensure we can comfortably meet our needs,” Robinhood’s website said in a statement.
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Axios reported Friday that Treasury Secretary Janet Yellen called in regulators after Gamestop went up to protect against the boom and bust of the past two weeks. Robinhood trading limits for GME and other stocks are bad for users; the company, Admitted. However, CEO Vlad Tenev denied that hedge fund and business partner Citadel pressured it, saying the company had no choice.
Robinhood has placed bid limits after last week’s increase in clearing deposit requirements for shares, the company said in a blog post on Friday. “It’s not because people don’t want to buy these stocks,” Robinhood said. Robinhood said the company was under pressure from Citadel or other market makers to limit trading on GameStop and other “meme stocks.” Tesla Inc. Tenev said in a meeting with CEO Elon Musk on social audio app Clubhouse. Instead, National Securities Clearing Corp. He said that because he sought $3 billion in deposits and the company negotiated up to $700 million. “We know this is a bad outcome for customers,” Tenev said, “but we have no choice but to accommodate our needs.”
The company initially barred buyers from WallStreetBets’ scooped-up stocks before allowing “limited” purchases. At one point, There are limits on 50 different stocks.
This means that users can only buy one GME share and no more than five options, although there is now a limit of eight stocks.
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The table below shows the maximum number of shares and options contracts that can increase your positions. The aggregate limit for each security, not the limit for each security. Please note that this includes the shares and options contracts you already have […] If you already have more shares or contracts than the above limits. Your positions will not be sold or; Closed. However, You may not open positions in each of these securities unless you sell enough of your holdings below the applicable limit.
App users have asked Apple to remove Robinhood from the App Store. He threatened regulatory investigations and lawsuits that followed even bigger problems for the company.
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Ben Lovejoy is a British technology writer and EU editor. He is known for his op-eds and diary pieces for more comprehensive reviews that delve into the experiences of Apple products over time. He is the author of two technical thriller novels; I write fiction along with SF shorts and a couple of rom-coms.
