5 ms·
Is there a catch to Alpaca? How do they make money?
by syntaxing 8y ago
Is there a catch to Alpaca? How do they make money?
- conistonwater 8y agoCompanies like that usually sell the order flow to market makers.
- mrfredward 8y agoWhich is a nice way of saying you're in a pool of bait for high frequency traders. ...but that's really not so bad. Having an algorithm skim 2 cents/share off of you is a lot better than paying $5+ per trade (assuming you're not trading 1000s of shares, and you're not in penny stocks or options where spreads are big).
- conistonwater 8y agoIt's not a nice way of saying that, the "pool of bait" logic is totally wrong. There's a lot of nonsense written about high frequency trading on the internet, but for example Matt Levine's explanations are completely readable, correct, and on point (see the other comment).
- SirLJ 8y agoThere is no free lunch... To paraphrase a friend from high school: "...when you start to play and don't know who the patsy is, usually it's you..." ;-)
- mrfredward 8y agoIf someone will pay to trade with you instead of someone else, you're definitely not getting the best price.
- solarkraft 8y agoI know Robinhood makes hundreds of millions with this, do you know how large the full market actually is?
- jcfrei 8y agoGood explanation of Robinhood's business model by Matt Levine: https://www.bloomberg.com/opinion/articles/2018-10-16/carl-icahn-wants-to-fight-dell-again https://www.bloomberg.com/opinion/articles/2018-10-16/carl-i...
- umitanuki 8y agoAnd by Evan https://medium.com/automation-generation/commission-free-trading-is-it-helping-or-hurting-you-dc5fdc22ca6a https://medium.com/automation-generation/commission-free-tra...