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After I deposited all my money in robinhood to start day trading options, I was told that robinhood execution speed might not be good enough for successful day trading. My plan was to profit off the relatively big volatile swings in the current market, but I’m concerned that robinhood won’t be able to open and close large positions (50-100 options) fast enough to be able to make decent gains. I am honestly worried I’ll miss out on the current volatility and don’t want to wait to transfer my money to another broker. Do you think it’s worth the wait?

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From what I have read, the Robinhood app has a lot of glitches because it's a relatively new broker. If you're going to trade, you need a brokerage platform designed for trading that offers:

  • Continuous access to the platform

  • Easy and fast order placement

  • Smart Routing directly to the ECN with the best price

A well known Robinhood issue is that they receive payment for order flow for directing the order to specific exchanges. Per Investopedia:

In payment for order flow scenario, a broker is receiving fees from a third party, at times without a client's knowledge. This naturally invites conflicts of interest and subsequent criticism of this practice. Today, most brokers offer clear policies surrounding this practice.

This is a major benefit for smaller brokerage firms, which can't handle thousands of orders. In effect, this allows them to send off their orders to another firm to be bundled with other orders to be executed. This helps brokerage firms keep their costs low. The market maker or exchange benefits from the additional share volume it handles, so it compensates brokerage firms for directing traffic.

IMO, if you're going to be trading serious size - and 50 to 100 options is that - you might be better served on a trading platform that provides speed, quick execution and has been around long enough to have worked out the kinks.

  • Yes - PFOF will likely result in poorer execution prices for orders in the same options than if they went directly to the exchange. – xirt Apr 26 '20 at 21:48
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For your purposes, I think you'd be better off with a commissioned broker like TDA or Charles Schwab. This is all anecdotal evidence, but from my experience you may end up losing hundreds to thousands of dollars in the course of time through slippage due to Robinhood's execution speed and front-running.

You'd be better off paying the tiny commissions on your trades in this case.

This is of course if you're trading options (which your tags seem to suggest you are). If you're just concerned with stocks, then both of the brokers I listed are commission free now so it's a no-brainer (my opinion).

  • TDA and Charles Schwab are commission free. – base64 Apr 27 '20 at 7:01
  • @base64 For options I believe both charge 0.65 per contract – Amar Srivastava Apr 27 '20 at 14:10
  • Sorry I missed the last part of your answer. – base64 Apr 27 '20 at 14:25
  • Note Schwab has reached agreement to acquire TD Ameritrade to close in the 'second half of 2020', as well, so if one is interested in starting a new account, might as well pick Schwab as it will be a Schwab account some time in the near future anyway, assuming virus and whatnot doesn't delay too much. – R. Hamilton Apr 27 '20 at 14:38

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