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This isn't a good comparison. Casinos are incentivized to have you fail/lose (but enjoy the process). Pay-per-trade brokers are incentivized to have you trade

This isn't a good comparison. Casinos are incentivized to have you fail/lose (but enjoy the process). Pay-per-trade brokers are incentivized to have you trade frequently and/or buy certain securities. RobinHood doesn't actually profit from each trade, so it could be argued that they have are likelier to care about the retail investor's long-term success (providing automated tools for monthly investments in low-fee funds, etc). Regardless, let's give some love to the fact that people are accountable for their actions and the vast amount non-bad information on the internet. A beginning retail investor is one search away from a strategy that is a metric ton better than not investing at all (which is what most of them do): https://www.google.com/webhp?sourceid=chrome-instant&rlz=1C5CHFA_enUS507US507&ion=1&espv=2&ie=UTF-8#safe=off&q=what%20should%20a%2020%20year%20old%20invest%20in https://www.google.com/webhp?sourceid=chrome-instant&rlz=1C5... If RobinHood causes some people to piss away their savings on crazy-risky investments, it's not because those people didn't have access to decent investment advice.

kasey_junk 12y ago
Robinhood definitely does profit from each trade. They are paid by third parties to route the trades through them. [edit] link to comment below as requested https://news.ycombinator.com/item?id=8358217 https://news.ycombinator.com/item?id=8358217
- avmich 12y ago
  How do those third parties profit then?
  - kasey_junk 12y ago
    I've never worked on an order flow based trade but the ways that seem most obvious to me are: 1) decreased fees with the exchanges due to higher rebate levels. 2) updated knowledge of the depth and nature of price levels making pricing algorithms more intelligent. 3) capturing the spreads on market orders.
- webwright 12y ago
  Do you have a link for that? From their FAQ, here's their (admittedly not super clear) answer to "How does Robin Hood Make Money?": Robinhood will offer margin trading as well as API access, which will allow partnered developers to build applications in conjunction with Robinhood. Robinhood will also receive remuneration for providing trade volume in certain markets. In the future, we plan to offer premium services for active investors. "Robinhood will offer margin trading as well as API access, which will allow partnered developers to build applications in conjunction with Robinhood. Robinhood will also receive remuneration for providing trade volume in certain markets. In the future, we plan to offer premium services for active investors. Robinhood is venture-funded by Google, Andreessen Horowitz and many others, which affords us the freedom to focus on building a wonderful brokerage experience rather than short-term profits.
  - slykat 12y ago
    See the comment by chollida1 in another part of the thread: https://news.ycombinator.com/item?id=8358217 https://news.ycombinator.com/item?id=8358217 "They get paid to sell your orders to Knight Capital, Lava and Credit Suisse.."

kasey_junk 12y ago

Robinhood definitely does profit from each trade. They are paid by third parties to route the trades through them. [edit] link to comment below as requested https://news.ycombinator.com/item?id=8358217 https://news.ycombinator.com/item?id=8358217

avmich 12y ago
How do those third parties profit then?
- kasey_junk 12y ago
  I've never worked on an order flow based trade but the ways that seem most obvious to me are: 1) decreased fees with the exchanges due to higher rebate levels. 2) updated knowledge of the depth and nature of price levels making pricing algorithms more intelligent. 3) capturing the spreads on market orders.
webwright 12y ago
Do you have a link for that? From their FAQ, here's their (admittedly not super clear) answer to "How does Robin Hood Make Money?": Robinhood will offer margin trading as well as API access, which will allow partnered developers to build applications in conjunction with Robinhood. Robinhood will also receive remuneration for providing trade volume in certain markets. In the future, we plan to offer premium services for active investors. "Robinhood will offer margin trading as well as API access, which will allow partnered developers to build applications in conjunction with Robinhood. Robinhood will also receive remuneration for providing trade volume in certain markets. In the future, we plan to offer premium services for active investors. Robinhood is venture-funded by Google, Andreessen Horowitz and many others, which affords us the freedom to focus on building a wonderful brokerage experience rather than short-term profits.
- slykat 12y ago
  See the comment by chollida1 in another part of the thread: https://news.ycombinator.com/item?id=8358217 https://news.ycombinator.com/item?id=8358217 "They get paid to sell your orders to Knight Capital, Lava and Credit Suisse.."