![]() Today the company makes around $330 million a quarter from payment for order flow, a figure that has tripled since before the pandemic. That’s one way Robinhood makes money, according to its a page on its own site, which a Robinhood spokesperson pointed Money to when asked for comment. Robinhood is paid by the market maker for its customers’ orders - a common practice among retail brokers. Those market makers make a profit off of how much someone is willing to sell a share for, and how much someone else is willing to buy it for - the difference is called the bid-ask spread, and the individual investor is the one who pays it. But buy and sell orders don’t always come into the market at the same moment, so companies called “market makers” essentially sell the convenience of getting your order executed immediately, says James Angel, a finance professor at Georgetown University. When you place a market order on an app like Robinhood, you’re telling a broker to get the best price you can right this second. But you may be paying something called the bid-ask spread. With no-fee investing, you - as the name entails - don’t pay fees on a trade. Here’s how Robinhood does it: The bid-ask spread You can open an account (and get a free stock), then trade without paying any fees - so yes, in a way, investing with Robinhood is “free.”īut even a company offering “free trading” needs to make money somehow. Robinhood doesn’t charge any commission fees for its customers to trade stocks, ETFs, crypto or options. Online brokers like Fidelity and Charles Schwab have historically charged commissions, but more recently have switched to a zero-fee trading as well. When you make trades through a broker, you pay them a fee for their service. Hawaii Alaska Florida South Carolina Georgia Alabama North Carolina Tennessee RI Rhode Island CT Connecticut MA Massachusetts Maine NH New Hampshire VT Vermont New York NJ New Jersey DE Delaware MD Maryland West Virginia Ohio Michigan Arizona Nevada Utah Colorado New Mexico South Dakota Iowa Indiana Illinois Minnesota Wisconsin Missouri Louisiana Virginia DC Washington DC Idaho California North Dakota Washington Oregon Montana Wyoming Nebraska Kansas Oklahoma Pennsylvania Kentucky Mississippi Arkansas Texas Get Started
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