It was my understanding that most of the value that comes from buying the orderflow of a place like RobinHood comes from being able to do high frequency trading. Even if you are a smart trader the people that buy your RobinHood orderflow can profit from you by frontrunning trades.
Commission-free brokers have historically hidden behind PFOF as a way to keep the cost out of the front end of the trade, instead making traders pay for higher market values.
To me that sounds like leogao description of the PFOF being due to misinformed traders seems wrong.
It was my understanding that most of the value that comes from buying the orderflow of a place like RobinHood comes from being able to do high frequency trading. Even if you are a smart trader the people that buy your RobinHood orderflow can profit from you by frontrunning trades.
I’m afraid you’re confused about how PFOF works. It’s absolutely not about “frontrunning trades”
https://public.com/learn/payment-for-order-flow-pfof-explained-and-why-it-matters writes:
To me that sounds like leogao description of the PFOF being due to misinformed traders seems wrong.
I don’t think you’ve found the most unbiased description of PFOF out there