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Are you implying robinhood is front-running trades? That's an extraordinary claim indeed. And even if they were, it would not impact you in this particular case

Are you implying robinhood is front-running trades? That's an extraordinary claim indeed. And even if they were, it would not impact you in this particular case.

spullara 7y ago
Not sure if this is frontrunning exactly but I think the point is that they make money by marketing your trades. https://seekingalpha.com/article/4205379-robinhood-making-millions-selling-millennial-customers-high-frequency-traders https://seekingalpha.com/article/4205379-robinhood-making-mi...
- benj111 7y ago
  That's not front running at all. In fact it's the perceived lack of front running risk by the buyers and sellers that make Robin Hood more valuable to Market Makers. A big institutional shareholder may very well know more than the Market Maker at the other end of the trade, that's a risk for them if the market moves against them. Robin Hood investors are far less likely to have that kind of information so there isn't the same risk that market makers will get shafted.
  - semi-extrinsic 7y ago
    > In fact it's the perceived lack of front running risk by the buyers and sellers that make Robin Hood more valuable to Market Makers. Basically, you get a discount trading on Robin Hood, because the people taking the other side of the bet know that you're probably not making a smart move.
    - benj111 7y ago
      Last time i explained the concept I was even less polite and got downvoted :) but yes
- sweeneyrod 7y ago
  That's the opposite of front-running. If the brokerage or HFT was front-running, you would pay more to buy or sell than e.g. Goldman Sachs would. But payment for order flow means you pay less, because the brokerage is confident that as a retail investor you don't have an edge -- there is no risk of you buying just before the price shoots up and leaving them at a loss.
dna_polymerase 7y ago
They were/(are) selling order flow to market makers. Calling that front-running is a bit of a stretch though.
zelly 7y ago
Literally every retail broker sells order flow to HFTs for them to execute. What HFTs do with that afterward is up to the HFTs. Yes, they front run. Yes, they trade against you. Why else would they pay for the order flow?
- usmannk 7y ago
  That's not at all what front running is. But to let patio11 answer your question: payment for order flow is useful in many ways. See: https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...

Are you implying robinhood is front-running trades? That's an extraordinary claim indeed. And even if they were, it would not impact you in this particular case.

spullara 7y ago

Not sure if this is frontrunning exactly but I think the point is that they make money by marketing your trades. https://seekingalpha.com/article/4205379-robinhood-making-millions-selling-millennial-customers-high-frequency-traders https://seekingalpha.com/article/4205379-robinhood-making-mi...

benj111 7y ago
That's not front running at all. In fact it's the perceived lack of front running risk by the buyers and sellers that make Robin Hood more valuable to Market Makers. A big institutional shareholder may very well know more than the Market Maker at the other end of the trade, that's a risk for them if the market moves against them. Robin Hood investors are far less likely to have that kind of information so there isn't the same risk that market makers will get shafted.
- semi-extrinsic 7y ago
  > In fact it's the perceived lack of front running risk by the buyers and sellers that make Robin Hood more valuable to Market Makers. Basically, you get a discount trading on Robin Hood, because the people taking the other side of the bet know that you're probably not making a smart move.
  - benj111 7y ago
    Last time i explained the concept I was even less polite and got downvoted :) but yes
sweeneyrod 7y ago
That's the opposite of front-running. If the brokerage or HFT was front-running, you would pay more to buy or sell than e.g. Goldman Sachs would. But payment for order flow means you pay less, because the brokerage is confident that as a retail investor you don't have an edge -- there is no risk of you buying just before the price shoots up and leaving them at a loss.

dna_polymerase 7y ago

They were/(are) selling order flow to market makers. Calling that front-running is a bit of a stretch though.

zelly 7y ago

Literally every retail broker sells order flow to HFTs for them to execute. What HFTs do with that afterward is up to the HFTs. Yes, they front run. Yes, they trade against you. Why else would they pay for the order flow?

usmannk 7y ago
That's not at all what front running is. But to let patio11 answer your question: payment for order flow is useful in many ways. See: https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...