> Some hedge funds are rich, because they buy the order-flow data of poor people playing with their money
Hedge funds do not pay retail brokerages for order flow. The vast majority of trading activity from retail investors is motivated by public information, so it offers basically no insight worth paying for.
This is the exact reason why market makers do pay for order flow. They can safely execute a huge number of these trades with very little risk and collectively make a hefty profit from the small spread.
Hedge funds do not pay retail brokerages for order flow. The vast majority of trading activity from retail investors is motivated by public information, so it offers basically no insight worth paying for.
This is the exact reason why market makers do pay for order flow. They can safely execute a huge number of these trades with very little risk and collectively make a hefty profit from the small spread.