Market margin is below 1% so I'm not sure where you're getting your information.

If they are charging that far above market margin this get even worse if that is even possible.

Can confirm. I figured that was standard. I signed up with Scottrade and bought some stock on margin. Then I was going through my transaction history awhile later and saw they were charging me 7.75%!

My margin (different brokerage) is closer to Mubsy's than 1% for sure. Perhaps 5% margin is enough to turn a profit for RH.

The margin a retail brokerage charges, is just that, retail margin. It costs very little for a broker to offer margin. They can essentially finance your margin for whatever the current fed funds rate is. In the US this number remains at 0.00%-0.25%. According to http://www.newyorkfed.org/markets/om...dfundsdata.cfm this number is currently at 0.13%. Anything charged in excess of that is essentially their cut (though there are some tiny risk related costs).

This is absolutely their play.

Selling the order flow is where the real money is for these companies [look at etrade] and they view the free trades as a loss leader. Surprising that they were the first to think of this.

Orders are not handled that way. They could only send their customers orders, to registered BDs. Whatever price the receiving firm transacts the order at, it gets passed straight through to the end customer. Best-execution is highly scrutinized and regulated

Maybe they will short the **** out of all the other brokerages who charge for trades and make money that way.

They just raised money at a $1.3 Billion valuation.

https://techcrunch.com/2017/03/31/now-whos-the-rich/

I'm a heavy user and satisfied. My only complaint really is that it takes a good 30 seconds to execute an order and at least a minute if you count searching for the ticker. Both of those tasks load for way too long.

Oh ya I would prefer cheaper margin. Though I don't use Gold because of the high cost so whatever.

been using this for over a year now. love it

"Free" trading almost always mean you're paying the cost in the spread and/or routing. Not actually free.

Please provide evidence that Robinhood is engaged in the illegal activity you just accused them of.

https://en.wikipedia.org/wiki/Nation..._bid_and_offer

eth,

It's not that simple. If you do a lot of trading it's probably worth your time to research what differentiates Interactive Brokers from the retail brokers (including Robinhood) and potentially switch. Despite their great name, Robinhood is not a charity. They're making plenty of money off you.

scrolls,

before making a bunch of vague accusations based on flimsy conjecture, you might wish to learn how to actually make a point or argument of some kind. i cannot explain how you are wrong if you don't even make an attempt to show that you are right.

RH presently makes their money primarily from interest on deposits and margin. there are many benefits to using IB instead of Robinhood, but getting a better price on your trades is not one of them, as both are required to offer NBBO.

Dude you really have no idea what you're talking about. You should probably go do some research. Your mind will be absolutely BLOWN unfortunately. I know mine was.

I have some idea what I'm talking about. I run a huge Robinhood community. I read about, discuss it and answer questions about it everyday. There is 100% chance I know more than all of you combined about Robinhood and it's business model.

Yet each of you condescendingly tell me to go learn about the topic. When you'd be more correct to ask me to teach you about it.

Everything I've said stands and is correct. Until somebody actually makes some kind of point, argument, or claim, I can't do anything other than repeat whatever I've already said.

I think people are implying robinhood sells their flow to HFT firms and therefore even thought they are offering NBBO best execution, you've been front run

They do sell their order flow, so does every other discount brokerage. But that fact is irrelevant to the price you get because they are required to offer NBBO.

This is the comment that began this chain and it's either false or an accusation Robinhood is breaking the law.

http://www.stockbrokers.com/feature/...for-order-flow

Brokers that Receive Payment for Order Flow

Charles Schwab
E*TRADE
OptionsHouse
Scottrade
TD Ameritrade

Others do as well in other forms. IB for example:

https://gdcdyn.interactivebrokers.co...isclosure.html


While they say they "Interactive Brokers does not sell its order flow to another broker to handle in route" the document describes multiple other ways they profit from order flow.

Etc.

This stuff is standard in the industry. Yet everyone who discovers Robinhood does it thinks they've discovered some kind of scam or way that customers are getting screwed over. That simply isn't the case.

So I have no idea what I'm doing in the stock market but I created a Robinhood account about a year ago to buy stock in a company that i like. (I picked Robinhood because i like to buy a new share every pay period as a sort of savings plan and obviously paying $7 per trade to buy one share would be incredibly dumb). I've been doing this for about a year now and have about $4k in equity. Am I right in understanding that if Robinhood were to go belly up my equity is insured and I would be made whole?

Yes, cash and shares, though the SIPC, which is basically an FDIC for brokerages:

https://en.wikipedia.org/wiki/Securi...on_Corporation

Now valued at $5.6 billion.

https://www.wsj.com/articles/robinho...ion-1521141033

When will the haters finally be proven right?

In the late 90s, I signed up for a brokerage account. I chose it based on fee structure and benefits. It was great for a little while.

Over the years, my brokerage account was bought our 3 times by ever bigger firms, finally ending up at Scottrade IIRC. Each time, fees on everything increased. Similar story for the internet bank accounts I used to have.

What is the path for Robinhood? Just like most startups, it's not necessarily the business model that has to work. If they can amass clients and a decent amount of assets to manage, they ARE valuable. We've seen this so many times that I'm surprised people are still hung up on thinking that the business model is going to stay the same forever. It won't.

Targeting millennials makes some sense also, and it's not just because people make more/save more as they age. This is new(er) blood that hasn't been recruited by 100 companies before. We're also on the cusp of the greatest generational wealth transfer in world history as Gen X start to die out and leave their assets to the poor millennials.