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They market themselves as helping and serving the little guy, because of their commission-free trades. As with most things that are free, one needs to realize
by Fomite 4y ago
They market themselves as helping and serving the little guy, because of their commission-free trades.
As with most things that are free, one needs to realize that if you're not the customer, you're the product. Robinhood makes its money on the interest in customer's accounts, margin lending, and selling trade data to high frequency traders.
Only one of those is "little guy" neutral - margin lending is extremely dangerous for inexperienced investors, and HFTs aren't the little guy.
- kasey_junk 4y agoNitpick. They aren’t selling trade data to high frequency traders, they are selling the right to trade with you to high frequency traders. Payment for order flow is the term of art if you want to learn more.