Ok maybe in the us. Anyway are you sure it is really free in regards that they don't give you a worse price or won't execute if things move in the wrong direction like Robinhood did...? My point is, its just inconvenient for me to rely on a third party without able to enter the "true" market on myself.
The question is, worse price than what? In the US you’re supposed to get at least the best price quoted at any stock exchange, the “nationally best bid and offer” (NBBO). Surprisingly, you can often do better, but this is still a good price. I don’t think you can easily do that with cryptocurrency where you normally only trade at one exchange?
Maybe relying on a third party is useful if they can get you better prices without needing accounts with all the exchanges? And brokerages normally give you a better price than any exchange. This is called price improvement. [1]
Robinhood got in trouble for falsely claiming that they get better prices than their competitors and not disclosing that they get payment for order flow, but their customers still got the NBBO I think? Although see [2].
People make a big deal about payment for order flow because they don’t like the idea of someone else making money off them, but that doesn’t mean you got a bad price.
Actually you can do it for cryptocurrencies as well. There are a lot of aggregators that execute or split your order across different exchanges.
As you said yourself, brokers may offer somehow better prices. My point is just, it is not possible to interact directly with the exchange, even if it maybe for some people more convenient to use a broker. There is no free lunch, more third parties means in my opinion worse price or higher fees.
You'd think that, but apparently retail customers get better prices because market makers are more likely to lose money trading against a professional who knows something is coming, and the smaller spread from lower risk for them is enough to pay for the business model. They still make money on the spread but it's lower.
It's a bit weird that it works that way, but there is a logic to it. Price discrimination can work in your favor.
(And having gotten many literally free lunches from an employer, there is no harm to it if you know why they do it.)
Got it. Sounds interesting.
Just one remark about it, europe seems to be banning practices related selling the order flow. As you said it sounds a bit weird. Lets say non transparent.
So maybe you don't always get a good deal.
PS:
Crypto isn't always better in this regard since, there are some frontrunners and so on. The difference is that it is completely transparent.
