Margin accounts have capital requirements. If you’re over leveraged, they will liquidate your positions to ensure you have capital. This is standard. If people didn’t know about this, they have no business with a margin account.
1. Robinhood accounts are all margin by default. Most novice investors don't know the difference. They should, but I would wager Robinhood doesn't spend a lot of time educating people about this.
2. Long positions (buying and holding stock) aren't leveraged. There is no capital risk to holding a stock. If the sales of GME are entirely based on other positions being underwater, then sure, but it seems at least some of the examples provided aren't in that situation.
A broker can change margin maintenance requirements at any time, including for shares bought with margin. When using margin, a broker has wide latitude to liquidate positions of the account using margin.
Robinhood let’s you borrow money to buy stocks. If you borrow $10k to buy GME at $300 and it dropped to $100. There’s a risk to RH that you won’t be able to payback the loan. RH most likely will liquidate the position before it even hits $100 to mitigate the risk on the loan depending how leveraged you are.
I thought RH only allowed margin if you paid the monthly fee? Or, are you talking about margin for purposes of settling so you can trade again before a sale is fully settled?
