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Why ‘Free Trading’ on Robinhood Isn’t Really Free

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Re: Why ‘Free Trading’ on Robinhood Isn’t Really Free

#11

Post by seibelj »

justboxing wrote: post #4

> It’s a controversial but legal practice in the brokerage industry called payment for order flow. and then > 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 So the customer is not benefiting in this case, yet it's not illegal, just "controversial". ...Like a whole lot of other things on Wall…

> Wall Street, where crime is legalized and so none of the suits go to jail

Crime is not legal on Wall Street nor anywhere else in America. If you don't like the laws, we have a system to change them. It seems like you disagree with the finance profession, whose purpose is to efficiently move and allocate capital.

Re: Why ‘Free Trading’ on Robinhood Isn’t Really Free

#13

Post by unethical_ban »

seibelj wrote: post #11
justboxing wrote: post #4

> It’s a controversial but legal practice in the brokerage industry called payment for order flow. and then > 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 So the customer is not benefiting in this case, yet it's not illegal, just "controversial". ...Like a whole lot of other things on Wall…

> Wall Street, where crime is legalized and so none of the suits go to jail Crime is not legal on Wall Street nor anywhere else in America. If you don't like the laws, we have a system to change them. It seems like you disagree with the finance profession, whose purpose is to efficiently move and allocate capital.

>Crime is not legal on Wall Street nor anywhere else in America.

Wow, you really are using pedantry to avoid the larger point of the parent post.

Re: Why ‘Free Trading’ on Robinhood Isn’t Really Free

#14

Post by seibelj »

unethical_ban wrote: post #13
seibelj wrote: post #11

Earlier quoted context omitted.

> Wall Street, where crime is legalized and so none of the suits go to jail Crime is not legal on Wall Street nor anywhere else in America. If you don't like the laws, we have a system to change them. It seems like you disagree with the finance profession, whose purpose is to efficiently move and allocate capital.

>Crime is not legal on Wall Street nor anywhere else in America. Wow, you really are using pedantry to avoid the larger point of the parent post.

A "controversial" practice, which allows free trades at slightly more expensive prices, that is not illegal, does not mean the entire industry is corrupt.

It's arguable that pharmaceutical rebates are bribery, so is the pharma industry criminal? College football coaches make millions while professors become starving adjuncts, is academia criminal?

I think we can separate issues from describing an enormously essential component of our economy as criminal.

Re: Why ‘Free Trading’ on Robinhood Isn’t Really Free

#16

Post by justinsaccount »

palakchokshi wrote: post #7

> The difference is often less than a penny. But it adds up for larger trades. Schwab, for instance, says that for orders of 500 to 1,999 shares of S&P 500 companies, the average savings from price improvement is $10.80. Ok and Schwab charges $4.95 for trades. So an investor ends up saving $5 per trade. S&P 500 companies stock price ranges from $20 to $1200 so to buy 500 shares of a company with $20 price per share w…

> average savings from price improvement is $10.80.

I wonder if they lie about this like Fidelity does.

If the market on some product is 100.00/100.06 with a mid price of 100.03, and I route an order at the mid price that is filled at 100.02 that is then a price improvement of 1 cent.

On Fidelity I've noticed they calculate everything off the asking price, and would say my price improvement was .04, which is not really right.

Re: Why ‘Free Trading’ on Robinhood Isn’t Really Free

#17

Post by jimkri »

Lately it feels like there has been more negative news articles about Robinhood. It's been super popular with the younger investors, and I have a feeling that the larger investment platforms are starting to realize that Robinhood is not a joke, so might be trying to bring up anything that is negative.

Re: Why ‘Free Trading’ on Robinhood Isn’t Really Free

#18

Post by sharkmerry »

seibelj wrote: post #14
unethical_ban wrote: post #13

Earlier quoted context omitted.

>Crime is not legal on Wall Street nor anywhere else in America. Wow, you really are using pedantry to avoid the larger point of the parent post.

A "controversial" practice, which allows free trades at slightly more expensive prices, that is not illegal, does not mean the entire industry is corrupt. It's arguable that pharmaceutical rebates are bribery, so is the pharma industry criminal? College football coaches make millions while professors become starving adjuncts, is academia criminal? I think we can separate issues from describing an enormously essential…

arent you ignoring the externalities ?

>>which allows free trades at slightly more expensive prices

so they arent free, its priced in. Not criminal, but misleading and could be construed as corrupt.

>> t's arguable that pharmaceutical rebates are bribery, so is the pharma industry criminal?

are the rebates helping to push a drug that they know to be addictive? if its not criminal, it should be.

>> College football coaches make millions while professors become starving adjuncts, is academia criminal?

and college athletes get no pay, but a very "strings attached" education, in which many end up going to bed hungry, which basically amounts to indentured servitude if not slavery

Re: Why ‘Free Trading’ on Robinhood Isn’t Really Free

#19

Post by Sohcahtoa82 »

seibelj wrote: post #11
justboxing wrote: post #4

> It’s a controversial but legal practice in the brokerage industry called payment for order flow. and then > 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 So the customer is not benefiting in this case, yet it's not illegal, just "controversial". ...Like a whole lot of other things on Wall…

> Wall Street, where crime is legalized and so none of the suits go to jail Crime is not legal on Wall Street nor anywhere else in America. If you don't like the laws, we have a system to change them. It seems like you disagree with the finance profession, whose purpose is to efficiently move and allocate capital.

I feel like you're being deliberately naive.

When people talk about crime being legal on Wall Street, they're referring to the many cases of fraud on the scale of billions of dollars that result in no jail time for the people involved. Sometimes there will be fines, but the fines are significantly less than the amount of money the bank profits from the fraud.

For a couple quick examples that immediately come to mind, see everything that led to the 2008 crash, or Wells Fargo creating checking and credit card accounts without permission.

Re: Why ‘Free Trading’ on Robinhood Isn’t Really Free

#20

Post by seibelj »

sharkmerry wrote: post #18
seibelj wrote: post #14

Earlier quoted context omitted.

A "controversial" practice, which allows free trades at slightly more expensive prices, that is not illegal, does not mean the entire industry is corrupt. It's arguable that pharmaceutical rebates are bribery, so is the pharma industry criminal? College football coaches make millions while professors become starving adjuncts, is academia criminal? I think we can separate issues from describing an enormously essential…

arent you ignoring the externalities ? >>which allows free trades at slightly more expensive prices so they arent free, its priced in. Not criminal, but misleading and could be construed as corrupt. >> t's arguable that pharmaceutical rebates are bribery, so is the pharma industry criminal? are the rebates helping to push a drug that they know to be addictive? if its not criminal, it should be. >> College football co…

I’ve found that going down the path of being outraged at large fractions of society, such as industries / politics / belief systems, is extremely tiresome and makes you permanently angry at the world. More nuance can give you a healthier outlook, or you risk forever throwing rocks at a mountain.
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