from: http://techcrunch.com/2015/05/07/free-stock-trades/ > Tenev says Robinhood is charging a 3.5% fee to trade on margin in a private beta of the feature
It looks like they're planning to monetize via margin. That would work great if the economy was perpetually in an upswing... but I don't think they would have survived in the great recession.
Not to mention the irony of Robinhood making margin calls.
http://en.wikipedia.org/wiki/Payment_for_order_flow http://blogs.wsj.com/moneybeat/2014/06/13/payments-to-big-br...
If I'm buying AAPL as a casual retail consumer, and the market price at the absolute moment is $121.05, and I get "screwed" with a fill of $121.06, is that really a big deal? Especially considering that a few seconds later the true market price could jump in either direction?
As a professional trader who's head is in the moment, sure, that seems bad. But does it REALLY matter for a casual long-term investor? My hunch is no. (I know I couldn't care less if I pay a few pennies more or less - I'm not using Robinhood for day trading, and that's not the point or their pitch.)
Citation needed. Its entirely possible that order flow traders are actually providing better/equivalent fills than can be obtained without them.
I've seen no long term studies one way or the other, though I admit on first blush order flow payment seems dodgy.
This is just fuel on the fire of uneducated first-time investors being lured by "$0 commissions".
For US listed stocks there is no fee throughout the entire transaction (deposit, buy, sell, withdraw): https://brokerage-static.s3.amazonaws.com/assets/robinhood/l...
Robinhood has stated for a while that they have a margin feature they plan to charge for: https://robinhoodapp.zendesk.com/hc/en-us/articles/202853769...