Supporters of the practice say that routing orders to speedy traders benefits individual investors, because they can get better prices than they would at the New York Stock Exchange or Nasdaq. But that’s only if the broker passes that benefit, which brokers call “price improvement,” down to the customer. It’s unclear whether Robinhood gives customers that benefit. Unlike E*Trade, Charles Schwab Corp. and TD Ameritrade Holding Corp. —which also take payment for order flow—Robinhood doesn’t publish data on how much price improvement it gives customers. The upshot: When you buy or sell shares on Robinhood, the app is likely executing your trade at a slightly worse price than another broker would, market veterans say. https://www.wsj.com/articles/why-fr...snt-really-free-1541772001?mod=hp_featst_pos2
Of course not. Nobody can stay in business "giving everything away for free". They gotta make money somewhere.... spreads, mostly. The "true cost" of a financial transaction = commission + spread + slippage. I once looked into the "cost" difference between the SPY and the ES futures. Turns out, the ES trades about 10x the $$ value of the SPY each day. The primary difference is "slippage".
my guess is that Robin Hood appeals primarily to millinneals. the magic word in their vocabulary is a four letter word free and the remaining details in disclosure documents are not worth looking at.
Look if your investing and holding....why bother with small slippage.. it's what makes a market different perspectives, time horizons etc...
There's no statistical proof as they don't release the numbers. But the fact that RH gets paid way more for order flow compared to competition tells you that they screw the customers the most.