If I were to use Robinhood for zero commission stock trading, does that mean that if I were to buy $100 dollars in a stock and immediately sell it I wouldn't lose any money? I'm trying to make sure I understand this right.
Take note, Robinhood also uses a fuzzy pricing model. The quote you see and purchase the stock at is not necessarily what the market has on its books at that exact moment. Robinhood can opt to buy/sell you the shares at a slight premium to actual market value. They also can freely fail to complete your transaction at the quoted price specifically if the market price has moved against them too quickly, and they're unable to fulfill the quoted price.
These differences are not necessarily utilized actively in their current practice, but their operating agreement and platform gives them the wiggle room to utilize it in this way, which gives them the space to make profits from transactions while marketing their platform as a no-fee service.
EDIT: Additional details
The Content and the Service are provided on an “as is” and “as available” basis. To the fullest extent permitted under applicable law, Robinhood and the Third Party Providers expressly disclaim all warranties of any kind with respect to the Content and the Service, whether express or implied, including, but not limited to, the implied warranties of merchantability, fitness for a particular purpose and non-infringement. Neither Robinhood nor Third Party Providers guarantee the accuracy, timeliness, completeness or usefulness of any Content. You agree to use the Content and the Service only at your own risk.
ROBINHOOD AND THE THIRD PARTY PROVIDERS WILL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR LOSS OF PROFITS, REVENUE, INCOME, GOODWILL, USE, DATA OR OTHER INTANGIBLE LOSSES (EVEN IF ROBINHOOD OR ANY THIRD PARTY PROVIDER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), RESULTING FROM: (1) THE USE OF OR THE INABILITY TO USE THE CONTENT OR THE SERVICE; (2) THE COST OF PROCUREMENT OF SUBSTITUTE GOODS AND SERVICES RESULTING FROM ANY GOODS, DATA, INFORMATION OR SERVICES PURCHASED OR OBTAINED OR MESSAGES RECEIVED OR TRANSACTIONS ENTERED INTO, THROUGH OR FROM THE SERVICE; (3) ACCESS TO OR ALTERATION OF YOUR ACCOUNT, TRANSMISSIONS OR DATA DUE TO YOUR CONDUCT, INACTION OR NEGLIGENCE; OR (4) ANY OTHER MATTER RELATING TO THE CONTENT OR THE SERVICE.
8a. Order Routing and Executions. Unless I specify the market for execution, you decide where to route my orders for execution. You consider a wide variety of facors in determining where to direct my orders,m such as execution price, opportunities for price improvement (which is when an order is executed at a price that is more favorable than the displayed national best bid or offer), market depth, order size and trading characteristics of the security, efficient and reliable order handling systems and market center service levels, speed, efficiency, accuracy of executions, and the cost of executing orders at a market. If I instruct you to route my order to a particular market for execution ("Direct Routing"), and you accept my order and instruction, you are not required to make a best execution determination beyond executing the order promptly and in accordance with the terms of my order[...]
8c. Trade Execution and Price. You route orders to markets for prompt execution in view of prevailing market conditions but there can be delays in the processing of orders, I understand and agree with the following [...]
Again, i would like to plainly state my own position. I am not a lawyer, and definitely not a lawyer specializing in Securities. None of this is indicative that Robinhood does operate in this way.
However, the way that their terms are structured, specifically the lack of operational clarity of how orders are routed and handled, and a general excuse from liability to anyone that uses their platform or content, I think produces a questionable gap in the structure of their terms (All in my opinion. Your opinion might be that these terms are sufficiently tight enough to protect you, the customer).
If they so desired, they could operate in a way that is potentially misleading, but not directly illegal (Like a mutual fund that builds in additional charges in to its expense ratio and front/back load fees. Not illegal, and "clearly" laid out. It just takes a knowledgeable review of the terms to be explained in layman terms to the client to be understood.)
Despite the fact that Robinhood charges no fees, there are still SEC and FINRA fees. When you sell, you pay a minimum of $0.02.
Also be aware of frictional costs. Securities generally have a spread between the bid and the ask. You will need to cross that spread when you buy and sell. On a highly liquid ETF such as SPY the spread is likely to be only $0.01. On less liquid securities you will encounter larger spreads.
The price quoted in Robinhood is simply the last price, not the current price. You can check the spread by tapping on "market price" in the buy or sell window, but be aware that in Robinhood these prices are delayed 15 minutes (however they will give you an idea of the size of the spread).
Tip: Use "limit orders" on Robinhood to ensure you don't pay more or get paid less than you want. Set the order type by tapping on "order types" in the buy/sell window.
You are right to question the meaning of "zero commission".
Read the fine print very closely, call them, or do a test trade to make sure there are no fees. Even if the broker claims not to charge a commission, that doesn't mean that they're not going to pass the SEC fee (currently 0.0000231 * trade value) or even the clearinghouse fees through to you.