What is the scam with zero commission brokers?

The scam was prior to zero. Here is how:

Before Robinhood:
1. Customer sends order to broker
2. Broker sends order to HFT
3. Broker collects commission from customer
4. Broker collects payment fo order flow from HFT

After RH: same except #3 is zero!

For 99% of retail traders, this is the best thing that happened since the whole online trading started. Enjoy!

P.S. I am talking about your regular retail broker. If you are using direct market access broker like IB or Lightspeed, then you are presumably getting some benefit(s) from them and don’t mind the commissions.
 
Both plans provide the same routes.
qlai said:
I thought per-trade plans are not eligible for rebates but don’t incur liquidity taking fees either. Otherwise, why not just pick per-share plan? Sending a single 5000 share liquidity adding order is not a good/realistic example.
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Robert Morse said:
Funny you say that. Open an account with Lightspeed. Choose Lightspeed Trader, Sterling Trader Pro or Realtick. Choose the $4.50/Trade commissions plan. Use a route like ARCA or NSDQ and make your order visible and add liquidity. On 5000 shares, we charge you $4.50, the exchange rebate is $10.00 for a net credit of $5.50 before reg fees.
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It is not that simple. The exchange may treat the trade as removing liquidity and no rebate. At least that was the answer I received from Lightspeed when I questioned about fluctuations of option commissions.
 
qlai said:
Sending a single 5000 share liquidity adding order is not a good/realistic example.
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Because sending a single 5000 visible order to a single venue pretty much guarantees that the only way you will get filled is when the price will move significantly against you(adverse selection ). Also, if you get partial fills and decide to move the order, you will incur another ticket charge. So it’s much better, imho, to send multiple single lot orders at different levels and to different exchanges. So per-share option which you offer.
Robert Morse said:
Why is that?
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It's called Payment For Order Flow (PFOF), and it's been around forever. HFT's love "dumb" order flow and are willing to pay billions. RH gets paid 17c per 100 shares, and 58c per option contract.
 
sfwind- My example was clearing about equity orders. We do not generally pass through option maker/taker exchange debits/credits on Lightspeed Trader but we can on single leg orders on Sterling, Realtick and Silexx. I have no idea what happened to your order and where you sent it to.

sfwind said:
It is not that simple. The exchange may treat the trade as removing liquidity and no rebate. At least that was the answer I received from Lightspeed when I questioned about fluctuations of option commissions.
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IB is the "cheapest"Broker in terms of margin interest, yet takes margins on trades that is double that at other brokerages (esp. on leg in trades). I'd love to see a comparison of efficient interst rate on margin based on Initial+Main. Margin IB vs. other Brokers. Their TWS is superior to other platforms when it comes to Options imho, which is the only thing keeping me there.
 
If they sell your order flow, the banks also know where your stops are. So they can trade against you easily. More losing trades, thats how you pay. The only way around is using a broker who doesen't sell order flow. IB is the only one I know of.
 
My fills are just as good if not better and I recorded trades at the same time from the horrible free brokers and my direct access. I only make two to five hundred trades daily, you probably need someone trading more for a better sample. The stability of the direct access is worth paying commission and it almost never crashes.
 
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