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by vijucat 2224 days ago
FYI: "With no commission" is a bug, not a feature. Typically, when you pay commission, you get better prices. Let's say you buy 100 shares of SPY at Interactive Brokers. You pay $1 commission and get it for 268.28. At a free-of-commissions broker, you might get your 100 shares for 268.30. That's $1 more than the trade at IB. TNSTAAFL.

It's exactly like how duck typing took over programming in the last decade or so with, "Whee, see, less typing!!", and we lost the value of having static types ("strong typing"). Why are we tempted so easily? Now we have the horror of Javascript everywhere. Even the Node.js founders recoil from their own creation and are going a step in the right direction with Deno.
2 comments
admax88q 2224 days ago
Are you saying that alpaca charges a commission on trades by inflating the price and taking a cut?

Or through what mechanism do commissioned trades get lower prices?

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selectodude 2224 days ago
Free brokerages generally don’t execute orders as quickly in order to sell order flow which allows HFT firms to front-run your trade. If you’re a buy and hold investor, the fractions of a cent you’re losing don’t matter much over the long run but the issue is still there. Generally when you pay for something, it means that somebody is beholden to you if there’s issues. Robinhood et. al. are free because they suck.

https://www.cnbc.com/2020/03/09/robinhood-app-down-again-dur...

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mrep 2224 days ago
No, they sell order flow because market makers know discount brokerage users are uninformed and thus less risky to buy and sell from. However, they actually give you better prices than the public market offers and they have to or else the SEC would fine them [0]. Your link is just about robinhoods shitty infra that couldn't handle their user load and has nothing to do with order flow.

[0]: https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...

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idohft 2224 days ago
I'm going to have to jump in here and say, no, HFT can and does not front-run your trade. There are reasons why your execution on RH is not as good as professionals, but it's not because of front-running.
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tdhoot 2224 days ago
Do you have any sources that retail trades are being front run? When I looked into it a while back it seemed they would sell your order flow but you had to be guaranteed best execution prices.
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