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Platforms have a duty to ensure users get the best possible execution for each trade. This means if Apple stock is trading for $120.13 Ask vs 120.11 Bid. My purchase at the time should be at the Mark, or middle, 120.12 or at most the ask 120.13. Robinhood should be searching across various exchanges to get me the best price.
Robinhood like other retail broker-dealers gets paid to bring orders to companies for execution and that creates a conflict of interest because they may choose to go to the dealer in its own financial interest rather than finding you the best deal.
Robinhood paid the 65 million fine without a fight and said that it reflects past practices and now what they do now
If you’ve ever tried to use Robinhood on a particularly high volume day, the app is often laggy and order execution is very delayed compared to data being shown. Nothing about this benefits the user, and that’s the big issue.
I use Robinhood
However, I always preview my trades on TD Ameritrade before opening Robinhood to see the prices I want and set limit orders.
Setting limit orders, or telling the brokerage the most you’re willing to pay, helps protect against poor execution. By setting my limit to what I see on TD, I don’t feel the need to rush into a trade with a Market order on Robinhood because I know the price I want.
“Acting on no discipline and no cost, it’s a recipe for disaster,” one adviser told MarketWatch at the time.
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