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No, they are stop hunting.
by afrojack123 6y ago
No, they are stop hunting.
- gruez 6y agoCare to elaborate?
- afrojack123 6y agoSure. The trading is done in lower volume assets like non S&P 500 and Options market. This is actually the orders where Robinhood gets most of its money. Say you put up trades and stop loss and trailing stop loss. These orders are sent to and purchased by Robinhoods customers (Citadel and Virtu). Citadel and Virtu act like dealers. They take the opposite side of your trade and also know where your stop losses are. Because these are lower volume stocks, they can push prices around, force you to sell at a loss and then prices go back to where they were a few moments ago. https://www.jstor.org/stable/2962317?seq=1 https://www.jstor.org/stable/2962317?seq=1 This link describes what is going on. This happens all the time in forex markets. During lower volume periods, they go after the stop losses. Only market where this doesn't really happen is futures because all trades occur on a centralized exchange. My recommendation switch to a broker like Tradestation and route your trades through the IEX exchange to avoid getting duped.
- tcbawo 6y agoCustomer orders are tagged in the market (thus available to all participants) due to laws governing market participant behavior. These orders are essentially static, while all other institutional orders with direct market access are fluid. Customer orders are profitable in aggregate in the same way playing professional poker is profitable: a constant stream of less equipped/informed money.