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I don't understand how stocks work but I'm hoping someone can explain it to me given my short example here.

So on Monday, I purchased 2 stocks priced at $2.50 each, using an app on iOS called Robinhood. It advertises itself as the first free stock exchange, so I took it at its word. On Tuesday, I sold those stocks for $2.48 each. So you would think that I would only lose 4 cents correct? No. I lost 6 cents. Why? I thought stocks were just simple math. Buy low, sell high (obviously not in this case), but why does 2x2=6 in the stock market?

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    What were your fees to buy and your fees to sell?
    – Grade 'Eh' Bacon
    Oct 5, 2017 at 14:06
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    Was it a market order or limit order? Did you actually sell for $2.48? If it was a market order, the best bid may have been at $2.47 even if the last trade was at $2.48
    – PGnome
    Oct 5, 2017 at 14:09
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    There's not enough information here to answer the question. If you actually bought two stocks at 2.50 each and sold them at 2.48 each and there were no trading fees, you lost 0.04. So clearly one of those statements is inaccurate.
    – ChrisInEdmonton
    Oct 5, 2017 at 14:10
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    Be aware that there are types of leveraged options, where you can loose more money than you invested, so be careful in buying things you know nothing about. Better do some reading
    – Christian
    Oct 5, 2017 at 17:15
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    Did anyone else see "Lost 1.5X" and immediately think, "what did you do, short Tesla or something?" :P
    – Mason Wheeler
    Oct 6, 2017 at 0:18

2 Answers 2

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Free, huh?

From their Commission and Fee Schedule:

SEC FEES

So if you literally bought two shares, then the SEC added one penny in fees and FINRA added one penny as a "Trading Activity Fee"

Note that there are several other fees on their schedule that may not apply to you.

If you had bought 100 shares instead, your total fees would have still been only 2 cents, but you would have lost $4 on the trade. So the fees are minuscule when you start doing larger orders.

However, That should not discourage you from experimenting and learning. I'd rather pay 2 cents in fees on a 4 cent loss than 2 cents in fees on a $400 loss. Just chalk it up to the cost of experience.

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    Thanks, I had no idea this was a thing. I guess it's "near" to free, but still not free. I just wanted to try stocks out and see how they worked, I wasn't out to make money. Good to know there are fees involved.
    – hack3rfx
    Oct 5, 2017 at 14:16
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    @hack3rfx Most brokers probably just lump it into their normal non-zero fees and it goes unnoticed.
    – D Stanley
    Oct 5, 2017 at 14:44
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    @DStanley that is exactly what they do. Most brokers have a target audience and know what kinds of stocks they buy and sell, and make a commission structure that covers all the fees 99% of the time.
    – CQM
    Oct 5, 2017 at 15:09
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    @hack3rfx No one is going to give away for free what is essentially a cost to them. One piece of advice more for you - refrain from shorting stocks and selling options. Stick to a long position on stocks and buying of options. If you want to profit from a falling share, don't sell calls, rather, buy puts :)
    – cst1992
    Oct 5, 2017 at 18:15
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    @Mindwin Well the app does provide commission free trades under certain conditions.
    – D Stanley
    Oct 6, 2017 at 13:56
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There is a misunderstanding somewhere that your question didn't illuminate. You should have lost $0.04 as you say. Assuming the prices are correct the missing $0.02 aren't covered by a reasonable interpretations of the Robinhood fees schedule.

For US-listed stocks: $0 plus SEC fees: 0.00221% of principal ($22.10 per $1,000,000 of principal) plus Trading Activity Fee: $0.000119/share rounded to nearest penny plus short/long term capital gains taxes

The total fee rate is 0.002329% or 0.00002329*the price of the trade. With you trades totaling around $11, the fee would be ~0.000256 or ~1/40 of a penny.

The answer is probably that they charge $0.01 for any fraction of a penny. It's difficult to explain as anything other than avarice, so I won't try.

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    This is already covered (without conjecture) in the answer already posted.
    – Grade 'Eh' Bacon
    Oct 6, 2017 at 18:42

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