In the world of investing, size matters. Large institutional investors like hedge fundspension fundsand endowments have long enjoyed preferential treatment in the markets due to their substantial trading volumes. This imbalance has left individual investors at a disadvantage, struggling to achieve the same favorable terms. Enter Bettermenta platform designed to democratize trading by harnessing the collective power of its customers.
Betterment’s custom-built trading platform is engineered to provide individual investors with institutional-style execution. By pooling customer orders, Betterment unlocks bulk-order pricing typically reserved for big trading desks. This innovative approach ensures that Betterment customers, whether they self-direct or automate their investing, receive a fairer shake in the market.
Protecting Investors from Market Volatility
One of the standout features of Betterment’s trading execution methodology is its use of marketable limit orders. These orders set a price ceiling or floor for every trade, ensuring that executions occur quickly but not at a price worse than the limit. This serves as a guardrailprotecting investors from the market’s momentary chaos. Limit orders are a key tool in pursuing best executiona regulatory standard that requires seeking the most favorable terms reasonably available for a trade.
Strength in Numbers: The Power of Aggregated Orders
Betterment’s strategy of aggregating customer orders is akin to the bulk-buying power of a Costco shopper. When sellers know you’re ordering in volume, they are more inclined to offer better prices. Similarly, Betterment combines similar buys or sells of the same security before sending them to market as a single, larger order. The critical threshold is generally 100 shares or more of any given stock or fund, known as round lots.
Orders smaller than 100 shares are considered odd lotsand individual investors often struggle to achieve round-lot status on their own. A 2026 analysis of over 3 billion U.S. equity trades revealed that odd lot orders experienced roughly 10% less price improvement than round lots. For a popular, heavily-traded fund like VTIthis can translate to thousands of dollars in lost gains over decades.
By banding orders together, Betterment crosses the round-lot threshold more often, leading to better pricing. However, Betterment does not delay trades to chase a round lot; orders are aggregated when they naturally align and executed when they do not.
Outsmarting High-Frequency Traders
High-frequency traders have made a business out of being first, often racing ahead of individual investors to capitalize on market signals. Betterment’s custom-built trading technology is designed to minimize this systemic disadvantage. Instead of sending orders to market the instant they’re placed, Betterment batches orders into scheduled trade windows throughout the day. These windows vary across most trading activity, eliminating predictable patterns and making it harder for high-frequency traders to target individual orders.
This strategy also complements Betterment’s bundling approach, as the windows provide time to aggregate orders before sending them to market. There are exceptions, such as day-end orders, which are executed promptly to avoid price movements that occur while the market is closed.
In the vast ocean of the market, individual investors often feel like small fish. Betterment’s trading platform is designed to change that, providing institutional-style execution and a fairer playing field. Whether you self-direct your investing or use Betterment’s automated technology, you benefit from a platform that pools trades, sets price guardrails, and chooses execution moments deliberately. This ensures your trades get a fairer shake, giving you more freedom to invest as you see fit.
