Why Free Trading Apps Cost You More Than You Think

avatar

Hey Jessinvestors

As people continue to sit at home and looking for ways to earn an income, the stock market has become a popular destination for retail investors. I've noticed a lot of people I've spoken to recently as well as on traditional social media talking about how they are entering the stock market on their own time and money.

Investing is a tricky occupation, and with the market as frothy as it is, even someone like me with a little bit of knowledge on how to evaluate public markets have stayed away from it only because I

  • A don't know when it will correct and
  • B, I don't believe in making money from overvalued companies, it's just too close to the breaking point for me

When I see unsophisticated investors jumping in, buying into stocks, stock splits and even share slices, you have to wonder wtf is going on; this isn't normal. Why would average Joe and Jane be taking their hard-earned money and pumping it into companies, why wouldn't they use a broker, why don't they have savings?

The truth is, its systemic depression avoidance, desperation or greed at this point, a combination of both coming from different corners of the market.

The stock put

What most of these new investors don't understand is the systematic risk of the stock market. Governments cannot allow for it to correct as it results in massive job losses and even more significant pension losses.

The centralisation of capital flow over the years through the misuses of inflation has caused this situation, and with a floor on your losses, people are going to pile in, you can't lose, the governments got your back.

stockmarket.png

Currency debasement

As currency debasement continues, people are starting to see the price of goods and services shoot up in price. Their wages are flat, and they need a hedge, so they look to the stock market and pile in the additional inflation into the stock market bidding up asset prices in a sort of Ponzi style economy.

All new money created floods in paying the previous stockholders and so the cycle continues.

Retail focussed trading apps

Then we have to come to the final reason we see stock markets hitting all-time highs. Institutional investors are chasing yield, and they can only do so much with the billions they have, boo hoo, poor them managing Billions of other peoples money and can't figure out how to make a profit with it, sadly it means you're shit at your job, but that's beside the point.

So free trading apps are now suckering in millions of people who can now load up an account and get AI to advise them or trade stocks based on whatever trends they realise or see in mainstream media.

This is why you see most of the funds going to FAANG stocks; these are popular brands like Facebook, Amazon, Google, Netflix, etc., we know the big companies, so they are a "safe bet."

Bait and switch

While the removal of the trading fees is huge for retail investors to allow them to get in and make micro trades what they don't know is the cost of the fees. When revenue is removed from one end, it's passed to another and what these free trading apps do is kind of sneaky.

Unlike blockchain, where the transaction is the settlement layer, what these apps do is package all orders and submit it to a brokerage.

The broker buys these order books and then places the orders on the exchange not before setting their positions first, so they get to front-run free app traders if they are buying or selling and make money on the spread.

If you don't quite get it to let me try to explain in an easier way, let's say I manage orders for apple stock. I get 100 people who want to buy, but before I place their order.

I place one of my own, so I am in just before this avalanche of orders come in to bid up the price, I could even sell to my own orders in that case and make the spread.

Be careful with your broker

So while some of the free trader Davey day traders are making money due to government intervention, and economic manipulation, these apps are making money on both sides of any trade. Investing has always been an information trading game; the money is a secondary part of it, those who have the info first make the best trades.

If you are going to trade on free apps, please be aware of this and if you are okay with it, by all means, wishing you many happy gains.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

Let's connect

If you liked this post, sprinkle it with an upvote or esteem and if you don't already, consider following me @chekohler and subscribe to my fanbase

Browse & Earn CryptoStack Sats For FreeEarn Interest On Crypto
brave.jpgEarnSats.jpgcryptocom.jpg

celciusnetwork.jpg



0
0
0.000
6 comments
avatar

/ minimining was here

0
0
0.000
avatar

Lol making my comment section look active in times of need, that's the job of a swede

0
0
0.000
avatar

Yes. You pay me good so I do it. I send the invoice soon

0
0
0.000
avatar

Congratulations @chekohler! You have completed the following achievement on the Hive blockchain and have been rewarded with new badge(s) :

You got more than 21500 replies. Your next target is to reach 22000 replies.

You can view your badges on your board and compare yourself to others in the Ranking
If you no longer want to receive notifications, reply to this comment with the word STOP

Do not miss the last post from @hivebuzz:

HiveBuzz supports meetups of the Hive UK Community
0
0
0.000
avatar

Earning from the manipulation of fund from investors. That is really a method that I would not have thought of. It is like how the Whales manipulate the market but this is done without using their own fund. The fund goes in is to simply gain profit from before or after putting in the investors' fund. Looks like regardless of market pricing, these free trading app still earn.

!tip

0
0
0.000