4 ms·
how does Alpaca make money?
by giorgioz 6y ago
how does Alpaca make money?
- throwaway888abc 6y agoGuesing, they are selling order flow. Same like Robin Hood https://www.cnbc.com/2019/04/18/a-controversial-part-of-robinhoods-business-tripled-in-sales-thanks-to-high-frequency-trading-firms.html https://www.cnbc.com/2019/04/18/a-controversial-part-of-robi...
- TeMPOraL 6y agoSo Robin Hood is taking from the rich, giving to the poor, and then turning around and selling the poor out?
- psanford 6y agoSelling order flow isn't "selling the poor out". Reg NMS literally requires brokerages to route your orders to where they will get the best execution price. In general you as a retail investor get better execution prices because of how this works (why? because retail investors generally don't have new information that will move the price so they are "safe" trades for liquidity providers). Now robin hood _did_ get fined for "not perform[ing] systematic best execution reviews of several order types". If that's what you were referring to then fine. But if your complaint is just about selling order flow you should better understand what that means. Maybe start with patio11's How Brokerages Make Money[0]. [0]: https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...
- TeMPOraL 6y agoYeah, I misunderstood what "selling order flow" means; I was under impression this is something closer to front-running. Thanks for the link!
- tom_mellior 6y agoThey have a well-hidden FAQ section: https://support.alpaca.markets/hc/en-us/articles/360011047171-Business-Model https://support.alpaca.markets/hc/en-us/articles/36001104717... They list several ways in which they "will" make money. My (possibly unkind) reading is that currently they're burning investor money.