[PublicEnemy111]

I was coming here to say exactly that.

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.

[this_user]

They are likely also making money by selling the customer's order flow to large institutions/HFT firms who will happily pay significant sums for this. This is something most other retail brokers are also doing and have been doing for a while. The result is that you as the customer are paying indirectly by getting screwed on your fills.

http://en.wikipedia.org/wiki/Payment_for_order_flow http://blogs.wsj.com/moneybeat/2014/06/13/payments-to-big-br...

[nlh]

I wonder what the actual implications of "getting screwed on fills" really are.

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.)

[kasey_junk]

> The result is that you as the customer are paying indirectly by getting screwed on your fills.

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.

[bt3]

Not only this, but I get the feeling that Robinhood is bypassing some corporate social responsibility (and possibly fiduciary duties) if they begin suggesting/ allowing first time investors to start using margin accounts.

This is just fuel on the fire of uneducated first-time investors being lured by "$0 commissions".

[poopsintub]

They take a pretty good fee to withdraw money. I'm not sure that would be a decent part of their revenue, though.

[vtlynch]

Do you have a source for this?

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...

[what_ever]

Withdraw to your bank account?

[poopsintub]

Sorry about that. I must have looked at ACAT - Outgoing for some reason, believing it was ACH.