Re:Robinhood Is Set to Raise at Least $200 Million in New Fu...
by human20190310 on Friday May 24, 2019 @08:05PM
(#20006306)
The good news is that the broker isn't screwing them.
The bad news is that the reason for that is because the broker doesn't have to screw them; they're uninformed noise traders buying and selling in basically equal measure. The traders buy at $1.001 and sell at $0.999 as much as they want until they're blinded out by the spread, which the broker keeps.
The "savings" being passed along is just a reduction in the portion of the spread that the broker would normally use to protect itself against informed traders.
The bad news is that the reason for that is because the broker doesn't have to screw them; they're uninformed noise traders buying and selling in basically equal measure. The traders buy at $1.001 and sell at $0.999 as much as they want until they're blinded out by the spread, which the broker keeps.
The "savings" being passed along is just a reduction in the portion of the spread that the broker would normally use to protect itself against informed traders.