What is the catch with Robinhood?
- Thread starter RGLD
- Start date
The catch is they make profits by selling all the order flow to Hedge Funds and Wall Street - which means that Robinhood customers get really lousy fills. And it adds up if you trade with any frequency. Nothing is free.
Same for all deep discount or free stock brokers.
And that's why Primer Brokerage is growing at an 8 percent annual rate and drives revenues of $30B per year ++ at Investment Banks. Institutional investors and hedge fund clients know that shitty fills add up.
Same for all deep discount or free stock brokers.
And that's why Primer Brokerage is growing at an 8 percent annual rate and drives revenues of $30B per year ++ at Investment Banks. Institutional investors and hedge fund clients know that shitty fills add up.
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why lousy fills if you set a limit price? or are sold limit orders never displayed to wider market
yea, you got a brave new world of newbie traders whom follow momo with glee and due diligence is foreign. Very very similar to the dot com bubble.
So, the entire angle here is to take the other side of the trade. With Robinhood, buy the order flow and front run them. Same goes generally. Take the other side of the crowded trade, look with extreme caution at the big momo runners. Take profits often when the robinhood crowd jumps into a hyped name.
So, the entire angle here is to take the other side of the trade. With Robinhood, buy the order flow and front run them. Same goes generally. Take the other side of the crowded trade, look with extreme caution at the big momo runners. Take profits often when the robinhood crowd jumps into a hyped name.
The risk would be some times you might not get filled, whereas with a direct access broker you would. So you miss out on profits.
I dont know if that is really the reality, and if it is how often it happens.
Robinhood has taken in $271M in fees from payment for order flow in Q1-20 and Q2-20. This was not an altruistic endeavor.
Orders are not being routed for the sake of the investor's best interest. Orders are being routed for the gain and financial benefit of the Market Makers who are paying for the order flow.
Orders are not being routed for the sake of the investor's best interest. Orders are being routed for the gain and financial benefit of the Market Makers who are paying for the order flow.
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Can yo give me an example of a bad fill? Let's say I have a limit of $1 credit. You're saying it could be filled at something else?
Again, Robinhood has taken in $271M in fees from payment for order flow in Q1-20 and Q2-20.
Orders are not being routed for the sake of the investor's best interest. Orders are being routed for the gain and financial benefit of the Market Makers who are paying for the order flow.
If the investor trades infrequently it may not be an issue.
Orders are not being routed for the sake of the investor's best interest. Orders are being routed for the gain and financial benefit of the Market Makers who are paying for the order flow.
If the investor trades infrequently it may not be an issue.
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Yes, it’s totally feee including $0 commissions on options. But features are limited, like no shorting stocks and no portfolio margin, so they’ll close your options automatically when you’re at risk of being assigned. Also no options on indexes. But they support trading crypto that some people are into as well.
My wife uses Robinhood and sometimes I tell her what options/spreads/combos to buy so we enter the same orders. Quite often she actually gets better fills than I can get at Interactive Brokers. Sometimes I yell “how did you get that order through when I’m still waiting?!”
“Better” means faster or she gets filled at all, while I don’t. Other times she doesn’t get fills while I do, but not that often.
All the negative hype is form people who never used Robinhood and make assumptions.
Yes, Robinhood does sell order flow to market makers, but so do most brokers nowadays. Market makers cannot give you totally invalid price, especially on limit orders. They may delay your fills till the underlying moves in unfavorable direction, but I haven’t noticed much of that. I’m not sure if some orders are filled internally at Robinhood against other users, but MM’s could do that just as well on their end. Robinhood’s order flow may also help MMs achieve better efficiency, which can go back to customers.
Generally it’s difficult to experience problems with Robinhood in terms of getting orders filled, but they do have other, technical issues, and no customer service to get in touch with.
My wife uses Robinhood and sometimes I tell her what options/spreads/combos to buy so we enter the same orders. Quite often she actually gets better fills than I can get at Interactive Brokers. Sometimes I yell “how did you get that order through when I’m still waiting?!”
“Better” means faster or she gets filled at all, while I don’t. Other times she doesn’t get fills while I do, but not that often.
All the negative hype is form people who never used Robinhood and make assumptions.
Yes, Robinhood does sell order flow to market makers, but so do most brokers nowadays. Market makers cannot give you totally invalid price, especially on limit orders. They may delay your fills till the underlying moves in unfavorable direction, but I haven’t noticed much of that. I’m not sure if some orders are filled internally at Robinhood against other users, but MM’s could do that just as well on their end. Robinhood’s order flow may also help MMs achieve better efficiency, which can go back to customers.
Generally it’s difficult to experience problems with Robinhood in terms of getting orders filled, but they do have other, technical issues, and no customer service to get in touch with.
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Is there a big market of people who choose between a prime broker and a discount broker?