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Comment by kasey_junk | Hacker News Reader

Robinhood definitely does profit from each trade. They are paid by third parties to route the trades through them.

[edit] link to comment below as requested https://news.ycombinator.com/item?id=8358217

Do you have a link for that? From their FAQ, here's their (admittedly not super clear) answer to "How does Robin Hood Make Money?":

Robinhood will offer margin trading as well as API access, which will allow partnered developers to build applications in conjunction with Robinhood. Robinhood will also receive remuneration for providing trade volume in certain markets. In the future, we plan to offer premium services for active investors.

"Robinhood will offer margin trading as well as API access, which will allow partnered developers to build applications in conjunction with Robinhood. Robinhood will also receive remuneration for providing trade volume in certain markets. In the future, we plan to offer premium services for active investors.

Robinhood is venture-funded by Google, Andreessen Horowitz and many others, which affords us the freedom to focus on building a wonderful brokerage experience rather than short-term profits.

See the comment by chollida1 in another part of the thread: https://news.ycombinator.com/item?id=8358217

"They get paid to sell your orders to Knight Capital, Lava and Credit Suisse.."

How do those third parties profit then?

I've never worked on an order flow based trade but the ways that seem most obvious to me are: 1) decreased fees with the exchanges due to higher rebate levels. 2) updated knowledge of the depth and nature of price levels making pricing algorithms more intelligent. 3) capturing the spreads on market orders.

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