Re:Robinhood stock trading app confirms $110M raise at $1.3B...
by mywittyname on Wednesday April 26, 2017 @11:59AM
(#14204148)
Retail investors are essentially paying a few pennies more per share in order to trade commission free. I think that's a good deal.
Re:Robinhood stock trading app confirms $110M raise at $1.3B...
by taylorwc on Wednesday April 26, 2017 @04:20PM
(#14206601)
I completely agree with this. I'm willing to take a few pennies hit because of HFT front running my order if it means I am saving several dollars per trade in commission. Especially when you first starting out with a tiny amount to invest, the commissions of normal brokers decimate any returns.
Re:Robinhood stock trading app confirms $110M raise at $1.3B...
by jessriedel on Wednesday April 26, 2017 @12:13PM
(#14204307)
Can you quantify why you think 1-3 are more important than 4?
Re:Robinhood stock trading app confirms $110M raise at $1.3B...
by physguy1123 on Wednesday April 26, 2017 @12:40PM
(#14204608)
4 is the root cause of 1-3. By itself 4 doesn't mean much for a market maker, but the collective market behavior it results in (1-3) remove a lot of risk from market making against retail exclusively.
I'd say its more correct to say orders from retail investors are valuable because:
1) They tend to be a relatively equal number of buys and sells. This is figurative manna from heaven for market makers
2) They don't mind crossing the spread, also a gift for market makers.
3) They can't really move the spread
and probably least importantly......
4) they aren't trading based on some sort of knowledge most of the time, ie they are typically just buying because they buy a bit each month or selling because they need money or selling to re-balance,
ie they aren't trading due to market signals, but rather due to their own personal situations.