US Brokers — Your Main Options

How Zero Commission Changed the US Broker Market

For most of the history of US retail investing, placing a stock trade cost real money — commonly somewhere in the range of $5 to $10 or more per trade at mainstream brokers, with some charging considerably more for broker-assisted orders. That changed decisively in the years following the arrival of a new wave of mobile-first apps built around a genuinely zero-commission model for basic stock and ETF trades, a shift that put competitive pressure on every established broker to follow suit. By the end of the 2010s, zero-commission trading on standard stock and ETF orders had become close to the industry standard at nearly every major US broker, rather than a niche feature offered only by a handful of disruptive challengers.

This is, on balance, a genuinely good thing for ordinary investors — the cost of placing an individual trade is no longer a meaningful barrier to getting started or to investing smaller, regular amounts. But it raises an obvious question that's worth sitting with rather than brushing past: a brokerage is a real business with real operating costs, and if it is no longer charging commission on its core product, something else has to be generating the revenue that keeps it running. Understanding what that "something else" actually is — for any given broker — is now a more important part of broker comparison than commission rates ever were, precisely because commission is no longer the differentiator it used to be.

How "Free" Brokers Actually Make Money

There isn't one single answer here — different brokers lean on different combinations of the following revenue sources, in different proportions, and understanding the mix for a specific broker tells you a fair amount about its underlying incentives.

• Payment for order flow (PFOF). The broker routes client stock and options orders to a specific market maker, which pays the broker for that flow in exchange for the right to execute those trades, profiting itself from the small difference between the price it pays and the price at which it can trade the shares. For retail orders in liquid stocks and ETFs, the resulting difference in execution quality compared with "best possible price" routing is typically small on a per-trade basis — but it is a real, structural feature of the arrangement, and it is the primary reason several of the most prominent zero-commission brokers are able to offer that pricing at all.
• Interest on cash balances (cash sweep programs). Uninvested cash sitting in a brokerage account is typically swept into an interest-bearing arrangement, and the broker generally keeps a meaningful share of the interest earned, passing on a smaller portion (or sometimes very little) to the account holder — a business that becomes considerably more lucrative for brokers during periods of higher prevailing interest rates.
• Margin lending. Brokers charge interest on money clients borrow against their portfolio to trade with leverage, and margin rates can be a meaningful revenue source, particularly at brokers whose client base trades more actively or uses leverage more frequently.
• Premium subscription tiers. Several brokers offer a paid upgrade tier — extra research, higher interest on cash, access to certain advanced order types or data — as a direct subscription revenue source layered on top of the free core account.
• Securities lending. Brokers can lend out client-held shares to other market participants (commonly for short-selling purposes) in exchange for a fee, an arrangement some brokers share with clients to varying degrees and others do not disclose prominently at all.

None of these revenue sources is inherently improper, and all are disclosed, in varying levels of detail and prominence, in each broker's account agreements and regulatory filings. The practical point for choosing a broker isn't to find one with none of these revenue sources — that broker likely doesn't exist among the major zero-commission platforms — but to understand the mix for a given broker and decide whether it sits comfortably with how you intend to use the account.

Fidelity — Built Around the Long-Term Investor

Fidelity has positioned itself, consistently over a long period, as a broker oriented toward long-term, buy-and-hold investors rather than active traders — a positioning reflected in its historical choice not to participate in payment for order flow on equity orders, in contrast to several of the newer, more trading-focused apps. It offers a wide range of its own low-cost index funds alongside broad access to other providers' funds, ETFs, and individual shares, strong in-house research resources, fractional share investing, and a reputation for reliable customer service, including phone-based support — a meaningful point of difference from app-only competitors with limited human support channels.

Its interface, by comparison with some of the newer, slicker trading apps, is less obviously "designed for mobile-first engagement," which some investors experience as less modern but others experience as appropriately focused on the actual task of long-term investing rather than encouraging frequent trading activity. For a genuinely long-term, diversified, buy-and-hold investor, Fidelity's combination of low costs, broad fund range, and a historically more conservative approach to order-flow-based revenue makes it one of the more consistently recommended large US brokers for that specific use case.

Charles Schwab — The Full-Service All-in-One

Charles Schwab occupies broadly similar territory to Fidelity — a long-established, full-service broker with a huge range of its own and third-party funds, strong banking integration (including, historically, fee-free ATM withdrawal reimbursement through linked accounts, a genuinely distinctive feature among brokers), and a wide range of account types spanning brokerage, retirement, and advisory services. Its acquisition of TD Ameritrade brought additional trading tools and platforms into the Schwab ecosystem, a combination that has continued to be integrated over an extended period, meaning newer account holders may encounter some overlap or transition between legacy TD Ameritrade tools and Schwab's own native platform.

Its general positioning suits investors who want genuinely comprehensive financial services under one roof — brokerage, banking, retirement planning, and access to human financial advisory services if wanted — rather than a narrowly focused trading app. This breadth is a strength for investors consolidating multiple financial needs with one provider, though it can feel like more platform than necessary for someone whose entire plan is a simple, regular purchase of a single diversified index fund.

Interactive Brokers — Built for Active and Global Investors

Interactive Brokers (IBKR) has built its reputation specifically around serving more active and more sophisticated traders, and international investors seeking access to a very wide range of global markets beyond just US exchanges. It has historically offered some of the lowest margin lending rates among major brokers, direct access to a large number of international exchanges, and professional-grade trading tools and order types that go well beyond what a beginner-focused app typically provides.

That sophistication comes with a genuinely steeper learning curve — its platform and fee schedule (which, for more basic use, can be simple, but becomes more complex across its various account and pricing tiers) are considerably less immediately approachable than a simplified consumer trading app. It has also historically applied inactivity fees on some account tiers for very low-activity, low-balance accounts, a detail worth checking specifically if your plan is a genuinely passive, infrequent, buy-and-hold approach rather than active trading. For investors who do want international market access or lower borrowing costs for leveraged strategies, however, it remains one of the strongest options in the US broker market.

Tastytrade — Specialised for Options Trading

Tastytrade (built by a team with roots in options-focused trading education and technology) is positioned specifically around options trading — a derivatives strategy that is a meaningfully different activity from buying and holding diversified index funds, and one that carries its own distinct risk profile, worth understanding on its own terms rather than assuming it's simply a more advanced version of ordinary investing. Its platform and tools are built specifically to support options strategies, with flat-fee or otherwise simplified options commission structures that have historically been competitive for frequent options traders specifically.

For an investor whose actual plan is long-term, diversified, buy-and-hold index investing — the core approach emphasised throughout this course — Tastytrade's specific strengths are largely not relevant; its tools and fee structure are optimised for a different activity entirely, with options trading representing a distinct skill set, time commitment, and risk exposure from passive index investing.

Robinhood — The Original Zero-Commission Disruptor

Robinhood is widely credited with triggering the broader industry shift toward zero-commission trading, building its initial growth specifically around a simple, mobile-first app targeting first-time, often younger, investors, with fractional share investing and, for a period, access to cryptoasset trading within the same app. Its revenue model relies substantially on payment for order flow and interest on cash balances — a structural feature that drew particular regulatory attention and scrutiny in the years following its rapid growth, given the scale at which it operated this model compared with more established brokers.

Robinhood has also faced well-documented periods of platform outages and trading restrictions during episodes of extreme market volatility, which drew criticism and scrutiny at the time regarding its infrastructure and risk-management practices under stress. For straightforward, long-term, buy-and-hold investing in diversified funds, these episodes are less directly relevant than they would be for an active trader needing reliable access during fast-moving markets — but they're a fair part of the broader picture when weighing its overall track record against more established competitors.

Webull — Charting-Focused, Technically-Oriented

Webull positions itself toward a more technically-engaged retail trader, offering free access to more advanced charting tools, a paper (simulated) trading feature, and options trading, within a zero-commission structure that, similarly to Robinhood, relies in part on payment for order flow as a revenue source. Its educational resources have historically been comparatively lighter than those of the larger, more established full-service brokers, which may matter more to a genuine beginner than to someone already comfortable navigating markets independently.

Its charting and technical-analysis tools are a genuine point of differentiation for traders who want that functionality without paying for a separate, dedicated charting subscription — relevant specifically to a more active, technically-oriented trading style rather than the passive, diversified, long-term approach this course generally emphasises.

Side-by-Side Comparison

Every broker listed here is a member of the Securities Investor Protection Corporation (SIPC), which covers up to $500,000 per customer per firm in the event of broker failure, of which up to $250,000 can be cash — equivalent in principle, though not in exact figures, to the UK's FSCS. As with FSCS, SIPC protects against the firm's failure, not against ordinary investment losses from the market moving against you.

Can UK Residents Actually Use These Brokers?

This is a genuinely common point of confusion, so it's worth being direct about it. Several purely US-domestic brokers — Fidelity's core US retail brokerage and Charles Schwab's core US brokerage among them — are generally not available to non-US residents opening new accounts, reflecting US-specific regulatory and tax-reporting requirements that don't straightforwardly extend to overseas account holders. A UK resident generally cannot simply open a standard US Fidelity or US Schwab brokerage account from the UK in the way a US resident can.

Some brokers with a genuinely international presence — Interactive Brokers notably among them, and Saxo (covered in the UK brokers chapter of this course) — do operate structures that allow non-US residents, including UK residents, to open accounts offering access to US markets, typically through a locally regulated entity rather than the pure US-domestic one. For most UK investors, though, the simpler and more tax-efficient route to the same underlying global market exposure is a UK-regulated broker offering a Stocks and Shares ISA that itself provides access to US-listed shares and ETFs (or equivalent UK/European-domiciled funds tracking the same underlying global indices) — covered in detail in the UK brokers chapter of this course — rather than attempting to open a genuinely US-based brokerage account directly.

Tax Reporting and Record-Keeping

US brokers issue standardised tax reporting forms (commonly a Form 1099 series) to US taxpayers, summarising dividends, interest, and realised gains for the year, used directly in US tax filing. Non-US residents using an internationally accessible version of a US-headquartered broker typically receive different, equivalent documentation appropriate to their own country's tax reporting requirements, rather than the US-specific forms. Regardless of which broker or country, it is good practice to keep your own ongoing record of trades, dividends received, and any foreign tax withheld, rather than relying solely on the broker's own statements being available indefinitely — platforms are sometimes acquired, restructured, or wind down specific services over time, and historical statements are not always easy to retrieve years later.

How to Actually Decide Between Them

Stepping back from the individual profiles above, the decision generally comes down to three questions. First, what is your actual intended activity — long-term, diversified, buy-and-hold investing points toward Fidelity or Schwab; active trading or international market access points toward Interactive Brokers; options trading specifically points toward Tastytrade; and a simple, low-friction first account points toward one of the more beginner-focused apps, provided you're comfortable with their revenue models. Second, how much do you value having no payment-for-order-flow in the broker's revenue mix specifically — a genuine point of differentiation for Fidelity among the brokers covered here, though one that matters more in principle than in typical day-to-day execution outcomes for most retail-sized orders. Third, and specifically for UK-based readers of this course, whether the broker is realistically accessible to you at all as a non-US resident, and whether a UK-regulated, ISA-eligible broker might achieve the same underlying investment goals more tax-efficiently than attempting to access a US-domestic broker directly.