Supporters of the practice say that routing orders to speedy traders benefits individual investors, because they can get better prices than they would at the New York Stock Exchange or Nasdaq.
But that’s only if the broker passes that benefit, which brokers call “price improvement,” down to the customer.
It’s unclear whether Robinhood gives customers that benefit. Unlike E*Trade, Charles Schwab Corp. and TD Ameritrade Holding Corp. —which also take payment for order flow—Robinhood doesn’t publish data on how much price improvement it gives customers.
The upshot: When you buy or sell shares on Robinhood, the app is likely executing your trade at a slightly worse price than another broker would, market veterans say.
https://www.wsj.com/articles/why-fr...snt-really-free-1541772001?mod=hp_featst_pos2
But that’s only if the broker passes that benefit, which brokers call “price improvement,” down to the customer.
It’s unclear whether Robinhood gives customers that benefit. Unlike E*Trade, Charles Schwab Corp. and TD Ameritrade Holding Corp. —which also take payment for order flow—Robinhood doesn’t publish data on how much price improvement it gives customers.
The upshot: When you buy or sell shares on Robinhood, the app is likely executing your trade at a slightly worse price than another broker would, market veterans say.
https://www.wsj.com/articles/why-fr...snt-really-free-1541772001?mod=hp_featst_pos2
