3 ms·

I disagree with a lot of this comment, but the largest most glaring mistake is around the perception that robinhood is without fees. Robinhood takes their cut b

I disagree with a lot of this comment, but the largest most glaring mistake is around the perception that robinhood is without fees. Robinhood takes their cut by creating a larger than normal bid/ask spread. I promise you their cut is more than $.50 and most likely > $7 (at least in Crypto land where I have witnessed this behavior). To think that HFT firms are using this data to only front run orders also feels pretty naive to me, but I'm no expert.

ikeboy 7y ago
I don't know about crypto but on stocks they're legally not allowed to execute a transaction outside the NBBO. See https://en.wikipedia.org/wiki/National_best_bid_and_offer https://en.wikipedia.org/wiki/National_best_bid_and_offer
vasilipupkin 7y ago
It’s sctually the opposite: retail orders have no information about direction of market, so the profitable thing is not to “front run”, but to trade in the opposite direction of the retail order. If the retail order is selling the bid price, you want to buy the bid because you know on average those retail orders don’t indicate that market is going in any direction
Kranar 7y ago
What you're describing is illegal in most regulated markets around the world and certainly illegal on U.S. markets [1]. Brokers are legally required as per Reg NMS to offer the best quote to their customers. https://en.wikipedia.org/wiki/Regulation_NMS https://en.wikipedia.org/wiki/Regulation_NMS
Lazare 7y ago
> I promise you their cut is more than $.50 and most likely > $7 For stocks? Absolutely not. You get the National Best Bid or Offer (NBBO), as required by law, ie, the best spread available on the public stock markets. > at least in Crypto land Well, maybe there's your mistake. > To think that HFT firms are using this data to only front run orders They're not using it to front run orders. Not only is that illegal, but it's also in this case impossible by definition. You front run an order that might move the market by trading in advance of it, but in this case the internalisers are paying for retail order flow because it won't move the market. That's the only reason it has value to them. And because it won't move the market, you (obviously) can't get out in front of that market movement. I'd suggest doing a bit more research.

ikeboy 7y ago

I don't know about crypto but on stocks they're legally not allowed to execute a transaction outside the NBBO. See https://en.wikipedia.org/wiki/National_best_bid_and_offer https://en.wikipedia.org/wiki/National_best_bid_and_offer

vasilipupkin 7y ago

It’s sctually the opposite: retail orders have no information about direction of market, so the profitable thing is not to “front run”, but to trade in the opposite direction of the retail order. If the retail order is selling the bid price, you want to buy the bid because you know on average those retail orders don’t indicate that market is going in any direction

Kranar 7y ago

What you're describing is illegal in most regulated markets around the world and certainly illegal on U.S. markets [1]. Brokers are legally required as per Reg NMS to offer the best quote to their customers. https://en.wikipedia.org/wiki/Regulation_NMS https://en.wikipedia.org/wiki/Regulation_NMS

Lazare 7y ago

> I promise you their cut is more than $.50 and most likely > $7 For stocks? Absolutely not. You get the National Best Bid or Offer (NBBO), as required by law, ie, the best spread available on the public stock markets. > at least in Crypto land Well, maybe there's your mistake. > To think that HFT firms are using this data to only front run orders They're not using it to front run orders. Not only is that illegal, but it's also in this case impossible by definition. You front run an order that might move the market by trading in advance of it, but in this case the internalisers are paying for retail order flow because it won't move the market. That's the only reason it has value to them. And because it won't move the market, you (obviously) can't get out in front of that market movement. I'd suggest doing a bit more research.