I think its a combination of things. One is that they were using etrade or another broker before robinhood came out. Two is that $7 on a typical trade is pretty small. Anecdotally, my trades are $1k-$5k, so $7 is maybe only a tenth of a percent, or the amount that I could lose or gain within a few minutes after the trade. Third, "if you aren't paying for it, you're the product." It is well established that your order flow is sold to larger institutions. I know it probably doesn't affect me in any meaningful way as a small fish, but I still don't like my investment decisions to be data for someone else's front running strategy.

The amount of money saved with Robinhood is often lost in the less than desirable order routing that Robinhood internally provides. This is how they can provide "free trades."

Often they are executing lousier order prices than are available on other exchanges (the actual market.)

Other brokers, that make you pay for trades, send your order out to all exchanges.

Example: save $7 to end up paying 10 cents extra per share on 1000 shares. Looks like you actually got Robbedinhood for $93...

Other brokers take a fixed $7. Robinhood takes a percentage of your orders. Even for an order as small as $300, you can expect to get Robbedinhood for $7 or more (a couple percent.)

https://startupsventurecapital.com/robinhoods-exceptionally-...