5 ms·
What people don’t realize is that these 0$ trading commissions just make it up in their routing of the transactions. You’re not going to get the best price. U
by justonepost 9y ago
What people don’t realize is that these 0$ trading commissions just make it up in their routing of the transactions. You’re not going to get the best price.
Use interactive brokers if you want a good price. Flat fee is higher but the trade routes are great.
- bcherny 9y agoI mean, average portfolio size for Robinhood users is probably in the $1k-10k range. How much does your 22 year old cousin care whether she pays $325.60 or $325.62 for a share of TSLA? For individuals it’s negligible, but for the HFT firms whose kickbacks make up most of Robinhood’s revenue, this adds up.
- austenallred 9y agoYeah, worst case scenario use a limit
- prklmn 9y agoI can assure you that most robinhood users don’t have the slightest idea of what trade routing means. Also, I doubt there are many accounts placing big enough trades routinely for routing to have a material impact.
- anilshanbhag 9y agoThis is really speculation. There is no reliable source to confirm this. I have used Robinhood for over 6 months now and never observed the trade price deviate from what is listed on Schwab and IB. Also, for most people who trade 100-1000 shares it doesn't really matter.
- justonepost 9y ago50K * 0.001 is $50 dollars. Better to just pay a flat fee and get better routing.
- kasey_junk 9y agohttps://www.interactivebrokers.com/download/4Q_2017_IB_ORDER_ROUTING_REPORT.pdf https://www.interactivebrokers.com/download/4Q_2017_IB_ORDER... IB doesn’t sell their order flow but they do take payment from dark pool operators & liquidity providers.
- SEJeff 9y agoAnd this is what limit orders are for. Disclaimer: I'm a robinhood user, who also works for a large high frequency trading firm. You're spot on (well that and robinhood gold is how they really make their money).
- jnordwick 9y agoI used to work with the founders, Vlad and Bijou. The are smart and very entrepreneurial guys. I actually assumed they were selling order flow. They have a ton of dumb money that many firms would die to interact with.
- SEJeff 9y agoI'm sure you're right, like with most things in this industry!
- justonepost 9y agoLimits don't work. Market might not cross your price.
- Mizza 9y agoI believe that RH is actually making their money off of the interest on spare cash in accounts. You can do limit orders in the app if you are particular about price. I don't have a source for this, other than I like the app.
- tanderson92 9y agoIs this really true if you're submitting passive limit orders? If I'm not even asking for the best price, how can I be taken advantage of.
- Blackthorn 9y ago> You’re not going to get the best price. That's FUD (and I'm an Interactive Brokers user). That sort of routing flashes your trade to groups before it hits the exchange, and they have the option to take it. By regulation they can only take it at or better than top of book price. If they don't take it, it will hit the exchange. Look, Interactive Brokers is a great brokerage. Very usable software and API, best in class commissions and margin rates, and you get direct routing and their smart router works pretty good too from what I understand. But don't oversell it by bashing RH.
- tehlike 9y agoThis. interactive brokers provide the best user experience for most portfolios. Very useful app.
- austenallred 9y agoEh, use a limit and you’re fine