This “disadvantage” is overrated. If I sell some stock today because I need the money, that means I’m a “noise trader.” Whether my timing is good or bad based on short-term considerations is essentially random.

Random is not actually all that bad! I got what I wanted. Professional traders will prefer to trade against random traders because trading against someone who actually knows what’s going to happen is bad for them. This means trades by random traders get sufficiently subsidized that trades are free for us.

When buying or selling we often pay for convenience, and when the cost is very low, it’s not worth worrying about. In just about every other business, the prices we pay for convenience are a lot higher.

> The thing retail is supposed to get out of the deal is NBBO, but Robinhood was fined millions for not even providing that

Is this true? My understanding is that Robinhood was fined millions for taking more PFOF (vs price improvement) than they disclosed. At no time were they below NBBO for the vast majority of their trades—the difference was just that they were only giving consumers 20% of the better then NBBO prices they were getting, which was lower then many other broker-dealers, and taking the other 80% of the spread for themselves. From the SEC order:

    For most orders of more than 100 shares, the analysis concluded that Robinhood
    customers would be better off trading at another broker-dealer because the additional price
    improvement that such orders would receive at other broker-dealers would likely exceed the
    approximately $5 per-order commission costs that those broker-dealers were then charging. The
    analysis further determined that the larger the order, the more significant the price improvement
    losses for Robinhood customers—for orders over 500 shares, the average Robinhood customer
    order lost over $15 in price improvement compared to Robinhood’s competitors, with that
    comparative loss rising to more than $23 per order for orders over 2,000 shares.

However, the broker-dealers that analysis was comparing Robinhood to charged around $5 for per-order commissions. Whether $15 of price improvement for trades of tens of thousands of dollars is worth $5 of commission fees for small trades is not, to me, an obvious call for Robinhood to make. In total, the SEC determined that Robinhood traders lost $34MM over 2.67 years (or $13 million per year) vs using another brokerage firm, but that that loss was almost certainly concentrated in those doing big trades, and customers trading under 100 shares of stock per transaction were benefitted by Robinhood's policy.

If you're paying $40-$50 dollars per trade, how is that "solving the problem of expensive transfers"?

>Robinhood Crypto does not guarantee you the NBBO because the NBBO doesn't exist.

Yeah sorry, I was pattern matching on "robinhood frontrunning" and didn't take the fact we're talking about crypto trading into account. With that in mind, they're not front running you, they're just providing worse rates and making money off the spread. It's basically how the "no commission" currency exchange places you see at airports works. They sell EUR to you at 1.15 EUR/USD, but they buy EUR from you at 1.10 EUR/USD.