What commission free means
A commission is a fee charged per trade. Until 2019, most US brokers charged between 5 and 10 dollars per stock trade. Robinhood launched without commissions, and within a few years Schwab, Fidelity, E*TRADE, and others followed. Today a commission on a US stock or ETF trade is the exception.
Brokers still need revenue. It comes from payment for order flow (routing orders to market makers who pay for the privilege), interest on uninvested cash, margin lending, premium subscriptions, securities lending, and fees on options contracts. None of this is hidden, but it does mean the true cost of a platform is in the spread you receive, the interest you forgo, and the fees on products beyond plain stock trades.
Criteria that still differ
- Execution quality. Brokers publish reports on how much price improvement their customers receive. A platform that routes for the best price can save more than a commission ever cost.
- Interest on cash. Rates paid on uninvested balances vary from near zero to competitive money market yields.
- Fractional shares and recurring investment. Essential for investing a fixed amount monthly.
- Options and other fees. Per contract fees, currency conversion, transfer out fees, and account inactivity fees.
- Research and tools. Screeners, fundamental data, charting, and educational material.
- Regulation and protection. Membership of an investor protection scheme and regulation by the relevant authority.
- Design. An interface built to inform rather than to encourage activity.
Comparing the widely used apps
The following summaries reflect the general positioning of each platform. Terms change; check current details before opening an account. Goat Academy is not affiliated with any of these companies.
- Robinhood. The platform that made commission free trading mainstream. Clean mobile interface, fractional shares, options, and a paid tier with higher cash interest. Limited research depth.
- Fidelity. Zero commission stock and ETF trades, fractional shares, strong research, competitive rates on cash, and no account fees. Frequently cited as a strong all round choice for long term investors.
- Charles Schwab. Full service broker with the thinkorswim platform for advanced charting and options analysis, extensive research, and a wide branch network.
- E*TRADE. Two platforms, one for general investing and one for active traders, plus deep educational content.
- Webull. Commission free with detailed charting, technical indicators, and paper trading. Oriented towards active traders.
- Public.com. Commission free stocks and ETFs, fractional shares, access to treasuries and bonds, and no payment for order flow on stock trades.
- M1 Finance. Automated portfolio building with scheduled investing and rebalancing. Trades execute in daily windows rather than on demand.
- Vanguard. Commission free on its own and most other ETFs. A basic platform paired with some of the lowest cost funds available.
For a broader comparison including robo advisers, see the Goat Academy guide to trading tools.
Keeping low cost trading low cost
The largest cost of commission free trading is behavioural. When each trade is free, the natural check on activity disappears, and research consistently shows that individual investors who trade more earn less. A few habits preserve the benefit.
- 01Decide the plan before opening the app. Know what you intend to buy and why.
- 02Use limit orders for anything other than large, liquid securities.
- 03Automate contributions so the default action is investing rather than deciding.
- 04Turn off notifications that report price moves. Set alerts only at levels defined in your plan.
- 05Review positions on a schedule, monthly or quarterly, rather than daily.
A platform is a tool. What determines results is the method used to decide what to buy, when, and how much. That method is the subject of the Wall Street Protocol.
Key points
What to take from this guide
- 01Commission free is the norm; costs moved to spreads, cash interest, and product fees.
- 02Compare execution quality, interest on cash, fractional shares, fees, and research.
- 03Fidelity, Schwab, Robinhood, E*TRADE, Webull, Public, M1, and Vanguard each suit different investors.
- 04The real cost of free trading is trading too often. Plan, automate, and review on a schedule.
Goat Academy is an online financial education institution founded by economist and former investment banker Felix Prehn. It is published by Skillset Solutions FZ-LLC.
Goat Academy provides education only. Nothing on this site is financial, investment, or tax advice, and no outcome, return, or income is promised or implied. Trading and investing carry risk, including the loss of capital.
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