User Information On Trading Platforms
Case Study and Solution Proposal
About
This case study comes off the back of the tragic news of a 20 yr old’s passing as reported by Forbes on June, 17 2020. ( 20-Year-Old Robinhood Customer Dies By Suicide After Seeing A $730,000 Negative Balance )
The article summarizes the likely cause to trading option strategies he was unfamiliar with, Robinhood perhaps granting him an extraordinarily large margin limit, and the representation of the financial information on the app.
With a background in finance, technology and regulation, this affected me especially hard, which why this case study and proposal.
In Robinhood’s subsequent statement;
The extracts below stick out for me;
The company is also expanding its educational content related to options trading, with more information being added on early options assignments in its help center. Robinhood will hire a new “Options Education Specialist” to further enhance its new offerings. In the near-term, the company is “rolling out improvements to in-app messages and emails” that it sends to customers about their multi-leg options spreads, while also adding more details to its platform about the mechanics of early options assignments.
Robinhood will increase eligibility requirements, and “consider additional criteria” for customers for level three options authorization “to help ensure customers understand more sophisticated options trading.”
This case study and proposed product solution will focus on improvements to the in-app messages
Eligibility requirements and additional criteria will be outlined in a separate case study.
Initial Research
Because I am working on this on my own, there was very limited opportunity to gain direct feedback from users and internal stakeholders. However, I was able to gain insight into the user’s interaction and opinions via social media and investing forums.
Applying a rational lens to filter out some of the more emotionally charged opinions, I was able to arrive at my starting questions.
Do users know the specific consequence of entering a trade
Are users able to obtain this information natively from the platform
Do users know how the trade might affect their overall portfolio
Improvements Features
The features I would introduce to improve the information represented in app would be considered a low difficulty and medium risk solution.
Implementation will not need any data or capability that is not already in place. In reviewing the vast amounts of instructional social media, it stuck out to me that users must move off the platform to perform simple calculations to understand the incremental impact of a trade.
Brainstorming Ideas
1.
Having an overlay or pop up to show scenarios upon each trade.
3.
Simple messages on screen to summarize trade impact.
2.
User attestation and confirmation on the understanding to be done every trade
4.
Graphical representation of the profit and losses as a pop up or embedded into existing layout
Selecting a Persona
To arrive at a solution, I had to narrow down the user persona.
Using my own experience in developing products for various customer profiles, and with integrating platforms, I came up with a list of assumptions to focus in on the type user.
Customer Profile
Bryan is familiar with tech and has some exposure to financial markets
Bryan has theoretical knowledge of securities and product types, and continuously receives information from various sources such as podcasts, online forums and instructional videos.
First time opening a trading account and has never traded in securities before.
Bryan is in his early earning years or about to enter the job market and has some free cash to invest.
The Look and Feel
With this understanding of a typical user, I wanted the feature to have the following characteristics.
A clean simple interface,
Minimal steps or action required to place a trade
Easily observable and understandable information
Does not deviate from the style of the rest of the platform
The current features of the platform meets almost off of these requirements.
Wireframes
I wanted to keep it to 1 consolidated view that should be constantly updated as the user selects different trade parameters. The biggest challenge was to find the right balance of information vs creating visual “white noise”. These were the 2 I found had the optimal balance.
In a perfect world, I would be able to run user A/B testing to see which one provided the best amount of information in a quick glance.
Option 1
Option 2
Wireframe - Refined
Extending out the initial concepts
Option 1
Option 2
Wireframe - Final
Ultimately I decided that a block of text added would keep with the theme of the interface and provide the quickest way to communicate the critical point of maximum gain or loss
Here I used a option spread strategy to show the type of information required
Metrics For Success
Despite the limited availability of resources to gather data to support the conclusion, based on my experience with other platforms I believe this proposal is a low complexity but high value feature that provides important information to the user. With the correct user profiling, the feature enhancement remains commercially friendly.
The solution affects the user’s interaction the most and plays a factor in the user’s decision making, i.e. Trade or No Trade. There are 3 key metrics to track;
Execution time
Time spent when the user starts his first parameter selection till trade execution.
An inverse correlation between time spent and higher trade volume per user should remain steady.
Decision Making Time
Time spent between selecting the last trade parameter to trade execution.
A longer time between selection of the last trade parameter till trade execution indicates the user has consumed the new information represented.
Traded Volume
Assuming initial user profiling is sufficient to categorize into the 3 levels, trading volume before feature launch vs after feature launch per product should remain steady
Mobile Devices
In the screenshot shared by the Alex’s relative, we see that Cash and Buying Power amounts are the same.
From this we infer the intent is to show the cash in the account that is available to purchase additional securities. This cash is made up of actual cash and the margin granted.
Cash = Actual Cash + Margin Granted
If the user had traded a 2 legged option trade (and assuming no untended design flaw), the app shows 2 things that stick out to me;
Leg 1 settlement amount without the offsetting leg 2
Cash is represented as a final settlement amount when the overall strategy has not fully settled.
This is a very unusual representation given both options are exchange traded and subject to the same market convention.
We can deduce this is an edge case that happens under 2 conditions;
The option seller sold an American option.
The seller had an early assignment on the short leg of his option.
A corresponding trade to cover a purchase is often not executed until the following trading day, meaning the negative balance is temporary, not a balance of debt, and not final. Robinhood tells its users via email and notifications, it also elaborates on its reading material.
Rather that the user needing another separate point of reference, all 3 points can be cleanly reflected in the layout making this a simple UX fix.
Guiding principles are;
Cash should only ever show the final settled amount of all trades and strategies. While technically the Leg 1 option has settled, the overall strategy has not.
All other future dated cash flows should clearly be marked as distinct from the settled actual Cash
Any sub lines can show the total incoming unsettled vs total outgoing unsettled virtual cash amounts
Improved Wireframe
With this, the look and feel of the platform has been maintained while providing added clear and concise information.
Part 2 of this case study will outline my ideas for improvements to the client onboarding and qualifying criteria