81% of Robinhood revenue comes from payment for order flow
wsj.com
wsj.com
I don’t see a problem with what Robinhood is doing. I don’t trade stocks all day. I’m not worried about 10 cents price improvement. By the time I enter my limit price and click buy or sell the price has already ticked up or down.
I buy the stocks that I think will go up over time.
There’s a psychological impact of commissions. When you click the button you have immediately lost money. Now you have to make it up!
I don’t want to be reminding myself “ah, but I paid the $2.34 commission and got my 10 cents price improvement so I came ahead by $1 on a $1000 trade”. Or whatever the actual numbers add up to be.
If the price was $58.10 and I put $58.50 limit (so it doesn’t tick away from me before I click) and the order gets executed at my limit or less and I pay no commission, it seems like I would’ve gotten what I wanted.
There is no need to pretend to make it more controversial because individuals are placing bets at a brokerage firm.
It is the same concept with the same solution. User data should be considered user property, as opposed to a mere byproduct of user existence.