Comment by matwood
3 days ago
10+/trade is going back to the early 2000s for the US.
Now it's effectively 0 for most common trades. Here is Schwab for example:
https://www.schwab.com/pricing
If someone is a big options trader they can probably find a better per contract price out there.
How do they profit? There must be a cost somewhere? Another reply mentioned spreads - still a cost (you lose money when you trade).
AUM, managing high wealth clients, running their own funds with expense ratios (also some of the lowest in the industry), uninvested cash, etc... Retail trading is commoditized now.
Anyone who really cares about spreads will be using limit orders. Otherwise you're talking about pennies on highly liquid shares.
The fact that we're even discussing the possible spread differences between market makers shows just how commoditized retail trading has become.
Low cost brokerages mostly earn money from the interest rate differential, ie what they pay from your un-invested balances vs what interest they pay you.
They also earn some money from 'payment for order flow'.
the sell order flow to market makers who gobble up the other side of bad retail trades
I highly doubt market makers are in the business of betting against retail traders.
I suspect they're in the business of collecting the spread on lots of small trades that they can assume are largely random.
3 replies →
Which means that your cost is market maker's spreads instead of fees. Still a cost to you.
4 replies →
[dead]