RobinHood.com - offering commission free trades

[SmallCap]

have any of you taken a good look at this website? they plan to offer commission free trades forever. What are your thoughts, would you do this?

 

here is the link to the FAQ section of the website

https://robinhoodapp.zendesk.com/hc/en-us

 

I have received an invitation code that can be used to start an account, only problem is I don't have an IOS device.

[berkshire101]

I don't trade frequently so it wouldn't be enough of an incentive to switch.  I like the motif investing idea of buying multiple stocks at once for one flat rate.  Hoping traditional brokerages will start lowering their commission fees.

[rukawa]

Commissions are already so low among discount brokers that they are no longer a deciding factor. As far as I am concerned, less than 10 dollar commission per trade which is the norm among discount brokers is essentially the same as free. My more important concerns are FX fees and breath of markets that I can access. Interactive Brokers is great in both these areas. Focusing on trade commissions in deciding brokers is penny wise but pound foolish.

[oddballstocks]

Commissions are already so low among discount brokers that they are no longer a deciding factor. As far as I am concerned, less than 10 dollar commission per trade which is the norm among discount brokers is essentially the same as free. My more important concerns are FX fees and breath of markets that I can access. Interactive Brokers is great in both these areas. Focusing on trade commissions in deciding brokers is penny wise but pound foolish.

 

Agreed, it's a strange thing.  Retail investors are paying almost nothing to trade, yet I believe institutional rates are still high.  Prime brokers don't come cheap.  In a way this makes sense, brokers realize who is really footing the bill, not the millions of retail investors but rather the larger funds/institutions.

[Guest Schwab711]

Commissions are already so low among discount brokers that they are no longer a deciding factor. As far as I am concerned, less than 10 dollar commission per trade which is the norm among discount brokers is essentially the same as free. My more important concerns are FX fees and breath of markets that I can access. Interactive Brokers is great in both these areas. Focusing on trade commissions in deciding brokers is penny wise but pound foolish.

 

Agreed, it's a strange thing.  Retail investors are paying almost nothing to trade, yet I believe institutional rates are still high.  Prime brokers don't come cheap.  In a way this makes sense, brokers realize who is really footing the bill, not the millions of retail investors but rather the larger funds/institutions.

 

PBs actually provide a ton of value that is not necessary for retail brokers. Being able to find 'hard-to-find' securities on request, million-share block trades, dark pool access (not generally touted), and anonymity. If you need one, it's worth getting a good one. First million-share trade that doesn't move the market will make it worth it.

[meiroy]

 

Isn't it free just for trades in US common stocks? Everything else is expensive, some very expensive. Also free trades have to be done via a mobile APP, to my understanding.

 

 

[peter1234]

Good execution is usually more relevant than low trading commissions.

[rukawa]

Good execution is usually more relevant than low trading commissions.

 

I have heard this many times but I don't know what exactly this statement means for small investors. IB claims that their execution is better than other brokers. For a large trader this is probably important. But how does a small investor benefit. Is it in small stocks?

[Vish_ram]

Good execution is usually more relevant than low trading commissions.

 

I have heard this many times but I don't know what exactly this statement means for small investors. IB claims that their execution is better than other brokers. For a large trader this is probably important. But how does a small investor benefit. Is it in small stocks?

 

In IB, if I use a limit buy, many times I get the trade executed below the limit price. I've never seen this happen in other brokers. These small savings add up.

[ItsAValueTrap]

Good execution is usually more relevant than low trading commissions.

 

I have heard this many times but I don't know what exactly this statement means for small investors. IB claims that their execution is better than other brokers. For a large trader this is probably important. But how does a small investor benefit. Is it in small stocks?

 

You lose more money to poor execution on stocks with big spreads.  Smallcap stocks tend to have wider spreads between the bid and the ask.

 

If you are trading a liquid stock (e.g. top 10 in volume) with a 1 cent spread on the bid/ask, then with IB you might be better off by around 20-30 cents per 100 shares.  They give you the rebates on limit orders.  So you might get 24-28 cents per 100 shares if your order is routed to ARCA or NASDAQ (I don't know the exact numbers).  They also don't play order execution games in the same manner than the retail brokerages do.

 

You need to trade a lot for IB to be worth it, e.g. over a few hundred dollars in commissions.  You need a minimum of $10k in assets.

 

(*IB is my favourite broker.)

 

2- If you highly illiquid nanocaps, then your order execution might be ok with the retail brokerages because many market makers leave those stocks alone.  They may not want to take the other side of your trade and try to fleece you.