Re:Robinhood Is Set to Raise at Least $200 Million in New Fu...
by human20190310 on Friday May 24, 2019 @07:55PM
(#20006259)
A market maker sets a bid (the price at which they buy) and an offer (the price at which they sell).
The offer will always be higher than the bid, and they make the spread between the bid and offer price.
If buy and sell orders are roughly balanced, they will not lose money. The idea behind purchasing flow such as Robinhood's is that the traders are random noise traders, with a balance of buys and sells as such.
Re:Robinhood Is Set to Raise at Least $200 Million in New Fu...
by wglb on Friday May 24, 2019 @10:53PM
(#20006833)
There is another kind of market maker whose job is to provide liquidity by always staying in the market. The exchange pays them some fraction of a penny per share bought and sold.
The offer will always be higher than the bid, and they make the spread between the bid and offer price.
If buy and sell orders are roughly balanced, they will not lose money. The idea behind purchasing flow such as Robinhood's is that the traders are random noise traders, with a balance of buys and sells as such.