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Robinhood doesn't make money on trades - they make money off of commisions paid to them by high frequency traders. Basically there's some time between when I pl
by jjk166 6y ago
Robinhood doesn't make money on trades - they make money off of commisions paid to them by high frequency traders. Basically there's some time between when I place an order and when a stock actually gets purchased. In that time, the price may change a bit. High frequency traders can buy at slightly lower prices than I could, and can sell at slightly higher prices than I could, so they can profit the difference without me noticing. Some of this excess gets paid to robinhood as a sort of finders fee.
Over many stocks and long periods of time, this works quite well. However the system breaks down if everyone is trying to buy the same heavily manipulated stock.