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Comment by hehehaha | Hacker News Reader

To be honest, people will eventually return. RH is the cost leader by a wide margin and its very unique to its business model via data arrangement with Citadel. In aggregate, total savings they pass down to retail traders is in the billions. With options trading at all time high, savings for 2020 was likely in tens of billions.

Edit: upon looking at some aggregate data via OCC, appears I overestimated savings.

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Almost every single broker offers commission-free trading now.

And some of them (Fidelity, Vanguard etc.) didn’t pull trading when it got volatile. They also have far more stable platforms.

I think it’s also important to mention that Robinhood also has the most brain dead simple UI out of all the trading platforms I’ve seen.

The brokers you’ve listed have more complicated user interfaces than the casual trader would care to learn about. Fidelity and Vanguard also probably care way more about their reputations than to gamify their platform like RH does.

What costs are they leading in? Stock, ETF, and mutual fund trades cost nothing on all the major platforms. (Maybe not options, but most people shouldn't be trading options, as they all just learned.)

Don’t Fidelity, E*TRADE, Ameritrade, and just about it everyone else have zero commission trades now?

Not on options

While technically true, I wonder if people care much about a $1 fee on an entire contract (100 shares).

I guess if you’re buying lottery tickets at $.01-$.02 per contract it’s be a 50-100% change in costs.

Most of the time you'd be trading more than one contract, though. Say you want bet on cheap out of the money options, you could easily see a commission of $10 - $50 on a single trade if you buy up a bunch of them.

The fee can still be very significant, especially once you engage into complex options strategy (e.g. call spread / put spread / iron condor). That tends to trade in significantly larger quantity (e.g. you can have a 50x call spread), in which the fee is now $100 ($50 for buying a call and $50 for selling another call).

I don’t use Robinhood so forgive my ignorance, but what savings are you referring to?

That trading stocks on it and all of its features are free, no fees and no commission.

You are still getting a hidden fee on most transactions due to the sold order flow. Rh itself earns 17 cents per 100 shares and 58 cents for options. The loss for the user is certainly much higher though and as the cost is hidden they likely make more trades.

https://www.google.com/amp/s/www.cnbc.com/amp/2020/08/13/how...

RH is the cost leader by a wide margin and its very unique to its business model via data arrangement with Citadel

It’s free right up until the point they decide to charge you 100% of your money.

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