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Commission Notes


Understanding Payment For Order Flow (PFOF)


Market makers generate tiny profits from each order they are routed, which the broker can elect to receive as a payment (revenue) or pass on to the customer as price improvement (a better execution price). The practice of receiving payments for order flow is called payment for order flow (PFOF), and it is very common in the brokerage industry.

To help everyday investors understand how order execution works, what PFOF is, how market makers make money, how to reduce your PFOF burden, etc. I have written a complete guide to order execution and we’ve ranked the brokers for overall order execution.

Robinhood makes $.26 for every $1,000 in orders placed


In Robinhood’s most recent quarterly 606 report the broker generated average payments of “$0.00026 per dollar of executed trade value.” This means Robinhood made $.26 for every $1,000 in orders placed.

For example, let’s say you buy 10 shares of Apple and are filled at $178.50. This means $1,780.50 was traded in total, which yielded Robinhood approximately $.44 in PFOF. In other words, your trade wasn’t free, it actually cost you $.44.

In Robinhood’s 2017 recap blog post, the brokerage noted it had “transacted over $100 billion in trading volume to date.” Applying the most recent payment metrics, this translates to $26,000,000 in total revenue for Robinhood from PFOF.

Robinhood Monthly Cost Examples


Next, let’s break down some scenarios so you can determine if Robinhood is right for you. To keep the numbers simple, we will assume this is a cash (not a margin) account, and each trade is using half of your available portfolio value. Things to remember:

  1. Buying or selling is irrelevant; Robinhood generates PFOF regardless.
  2. The most important number to focus on when assessing cost is the total combined value of all your trades (buys and sells) placed each month.
  3. If Robinhood elected to receive no PFOF, the savings would be passed onto you in the form of a better fill for your order. Accepting PFOF is an industry standard practice.
  4. All brokers monetize any excess cash sitting idle in your account, so this is not factored into the following cost scenarios.
  5. Robinhood charges for access to margin (Robinhood Gold), whereas its competitors do not. If you trade on margin, your monthly costs will be higher.

Robinhood Cost Example A


I have an average account balance of $2,000 and trade stocks once a month, on average.

  • Average account balance = $2,000
  • Monthly trades = One
  • Total transacted volume = $1,000 (1 trade x $1,000 in total stock value)
  • Total estimated monthly cost = $.26
  • Competitor comparison: Fidelity ($4.95), Merrill Edge ($6.95), TD Ameritrade ($6.95 + PFOF costs), E*TRADE ($6.95 + PFOF costs)
  • Summary: Robinhood represents great value.

Robinhood Cost Example B


I have an average account balance of $10,000 and trade stocks three times a month, on average.

  • Average account balance = $10,000
  • Monthly trades = Three
  • Total transacted volume = $15,000 (3 trades x $5,000 in total stock value)
  • Total estimated monthly cost = $3.90
  • Competitor comparison: Fidelity ($14.85), Merrill Edge ($20.85), TD Ameritrade ($20.85 + PFOF costs), E*TRADE ($20.85 + PFOF costs)
  • Summary: Robinhood represents good value.

Robinhood Cost Example C


I have an average account balance of $100,000 and trade stocks ten times a month, on average.

  • Average account balance = $100,000
  • Monthly trades = 10
  • Total transacted volume = $500,000 (10 trades x $50,000 in total stock value)
  • Total estimated monthly cost = $130
  • Competitor comparison: Fidelity ($44.95), Merrill Edge ($69.50), TD Ameritrade ($69.50 + PFOF costs), E*TRADE ($69.50 + PFOF costs)
  • Summary: Robinhood does not represent good value.

The bottom line with Robinhood is that as your total trading volume increases, so does your net cost for being a customer. See: Best Day Trading Platforms


Trade Commissions Breakdown

Feature Value
Minimum Deposit $0.00
Stock Trade Fee (per trade) $0.00
Stock Trade Fee (per share) N/A
ETF Trade Fee $0.00
Options Base Fee $0.00
Options Per Contract Fee $0.00
Options Exercise Fee $0.00
Options Assignment Fee $0.00
Mutual Fund Trade Fee N/A
Broker Assisted Trades Fee $0.00

Margin Rates

Feature Value
Margin Rate Under $24,999.99 5.00%
Margin Rate $25,000.00 to $49,999.99 5.00%
Margin Rate $50,000.00 to $99,999.99 5.00%
Margin Rate $100,000.00 to $249,999.99 5.00%
Margin Rate $250,000.00 to $499,999.99 5.00%
Margin Rate $500,000.00 to $999,999.99 5.00%
Margin Rate Above $1,000,000.00 5.00%

Miscellaneous Fees

Feature Value
Bond Trade Fee N/A
Treasury Trade Fee N/A
IRA Annual Fee $0.00
IRA Closure Fee $0.00
Returned ACH Fee $9.00
Returned Wire Fee $9.00
Stock Certificate Processing Fee N/A
Stock Certificate Delivery Fee N/A
Paper Statement Fee $5.00
Paper Confirmation Fee $2.00
Domestic Wire Fee $25.00
International Wire Fee $50.00

Account Features

Offering of Investments

Feature Value Definition
Advisor Services No Offers formal investment advisory services.
Bonds (Corporate) No Offers corporate bonds.
Bonds (Municipal) No Offers municipal bonds.
Bonds (US Treasury) No Offers US treasury bonds.
CDs No Offers certificates of deposit (CDs).
Clearing Firm Self-clearing The broker's clearing firm.
Commission-Free ETFs all
Direct Market Routing - Stocks No Ability to route stock orders directly to a specific exchange designated by the client.
Direct Market Routing - Options No Ability to route option orders directly to a specific exchange designated by the client.
DRIPs No Offers dividend reinvestment plans (DRIPs).
Forex Trading No Offers forex trading.
Futures Trading No Offers futures trading.
Member FINRA Yes Member of FINRA (Financial Industry Regulatory Authority) - finra.org.
Member SIPC Yes Member of SIPC (Securities Investor Protection Corporation) - sipc.org.
Mutual Funds No Offers mutual funds trading.
Mutual Funds (No Load) 0 Total number of No Load mutual funds offered.
Mutual Funds (NTF) 0 Total number of No Transaction Fee (NTF) mutual funds offered.
Mutual Funds (Total) 0 Total number of mutual funds offered.
Mutual Funds Phone Trades No Can place mutual fund trades via phone.
Mutual Funds Web Trades No Can place mutual fund trades via the website or platform.
No Fee IRAs No Offers no fee IRAs. Requirement: no annual maintenance fee.
No Inactivity Fees Yes Charges no yearly inactivity fee for not placing a trade or not actively engaging in the account.
Options Exercising (Web) Yes Exercise an option via the website or platform.
Options Exercising (Phone) No Exercise an option via phone.
Options Trading Yes Offers options trading.
Options Trading (Weekly) Yes Offers weekly options.
OTCBB / Pink Sheets No Offers OTCBB / Pink Sheet stocks trading.
Stock Trading Yes Offers stock trading.
International Trading No Provides customers the ability to purchase shares of stock that trade on exchanges located outside of the United States. If you live overseas, please use this tool - https://www.stockbrokers.com/guides/internationaltrading.

Customer Service

Feature Value Definition
Phone Support No Offers phone support.
Email Support Yes Email support for clients.
Live Chat (Current Clients) No Live chat support for current clients.
Live Chat (Prospect Clients) No Live chat support for prospective clients.
24/7 Support No Is customer service offered 24 hours, 7 days a week?

Platforms & Tools

Feature Value Definition
Desktop Platform (Windows) No A downloadable, windows based desktop trading platform.
Desktop Platform (Mac) No A downloadable, Mac based desktop trading platform.
Web Platform Yes Offers a web (browser) based trading platform.
Active Trading Platform N/A The flagship trading platform.
Two-Factor Authentication Login Yes Offers two-factor authentication (e.g. mobile code, security fob token generator, email code, or similar) Applies to WEBSITE client area login. Mobile apps (eg Touch ID) do NOT count.
Charting - Corporate Events No Can show or hide multiple corporate events on a stock chart. Examples: dividends, earnings, splits, news.
Charting - Historical Trades No The ability to see past buy and sells, typically marked with a buy or sell symbol, on the stock chart.
Charting - Indicators / Studies 0 The total number of indicators / studies available to be included on a stock chart. Examples: SMA, MACD, RSI.
Charting - Drawing Tools 0 The number of drawing tools available for analyzing a stock chart. Examples include: pointer, trendline, arrow, note.
Charting - Automated Analysis No Can show or hide automated technical analysis (patterns) on a chart. Service provider example: Recognia.
Charting - Trade Off Chart No The ability to pre-populate or execute a trade from the chart. Most commonly this is done by right clicking on the chart and selecting an order. Linking the user from the chart to an empty (non pre-populated) order form does NOT count.
Charting - Notes No Add notes to any stock chart.
Heat Mapping No Colored heat map view of a watch list, portfolio, or market index. Heat maps are a visual tool used to view gainers and losers.
Ladder Trading No A ladder tool provides active trading clients the ability to one click buy and sell equities off a real-time streaming window of fanned bids and asks.
Level 2 Quotes - Stocks No Level II stock quotes available.
Level 2 Quotes - Options No Level II options quotes available.
Option Chains - Streaming No Option chains with streaming real-time data.
Option Chains - Total Columns 5 Option chains total available columns for display. Duplicates do not count.
Option Chains - Greeks 0 When viewing an option chain, the total number of greeks that are available to be viewed as optional columns. Greeks = delta, gamma, theta, vega, rho.
Option Chains - Quick Analysis No The ability to jump straight from the option chain to a P&L chart or probability chart for deeper analysis. Viewing a summary P&L within the chain itself also qualifies.
Option Analysis - P&L Charts No When analyzing a theoretical option trade, a P&L chart is available.
Option Probability Analysis No A basic probability calculator.
Option Probability Analysis Adv No A tool to analyze a hypothetical option position. Displays a probability histogram / chart with optional customizations.
Option Positions - Greeks No View at least two different greeks for a currently open option position.
Option Positions - Greeks Streaming No View at least two different greeks for a currently open option position and have their values stream with real-time data.
Option Positions - Adv Analysis No Ability to analyze an active option position and change at least two of the three following conditions - date, stock price, volatility - and assess what happens to the value of the position.
Option Positions - Rolling No Ability to pre-populate a trade ticket and seamlessly roll an option position to the next relative expiration.
Option Positions - Grouping No Ability to group current option positions by the underlying strategy: covered call, vertical, etc. Can be done manually by user or automatically by the platform.
Short Locator No Tool that allows customers to view the current real-time availability of shares available to short by security.
Stock Alerts Delivery - Email No Stock alert optional delivery method: email.
Stock Alerts Delivery - Sound No Stock alert optional delivery method: sound.
Streaming Time & Sales No Streaming time & sales for any equity viewable.
Streaming TV No Offers live TV. Examples - CNBC, Bloomberg.
Trade Hot Keys No Ability to designate keyboard hotkeys for on the fly trading.
Trade Journal No Provides a trade journal for writing notes. All entries are dated, titled, and may be tagged with a specific stock ticker. Adding text notes to individual stock charts does NOT count.
Paper Trading No Offers the ability to use a paper (practice) portfolio to place trades.
Watch Lists - Streaming Yes Site or platform (only one needed) watch lists stream real-time quote data.
Watch Lists - Total Fields 7 Total available fields when viewing a watch list. Examples: price, symbol, bid, ask, volume.

Research

Feature Value Definition
Research - Stocks Yes Offers stock research. Full quote and research results must be available for 4 of the 5 following tickers: Facebook, Apple, Amazon, Netflix, Google.
Research - ETFs Yes Offers ETFs research. Full quote and research results must be available for 4 of the 5 following tickers: SPY, GLD, OIH, QID, FAZ.
Research - Mutual Funds No Offers mutual funds research. Full quote and research results must be available for 2 of the 3 following tickers: VTSAX, FCNTX, CAIBX.
Research - Pink Sheets / OTCBB No Offers pink sheet / OTCBB research. Full quote and research results must be available for 2 of the 3 following tickers: FNMA, IMBBY, NENE.
Research - Fixed Income No Offers fixed income research. Full quote and research results must be available for fixed income securities such as individual US Treasuries.
Misc - Global Markets Overview No A featured quote summary of worldwide indices. Interactive chart optional. Must be via website or platform, mobile excluded as separate category.
Misc - Portfolio Allocation Yes Displays a pie graph or bullet list breakdown of the client's current portfolio including % allocations. Examples: domestic equities, foreign equities, bonds, cash, fixed income.
Misc - Portfolio Builder No A tool that asks hypothetical risk tolerance questions then assists clients with building a diversified portfolio of ETFs based on their answers.
Stock Research - Earnings Yes View analysis of past earnings. At least one chart / graph required. Examples: Consensus vs actual data, EPS growth, sales growth.
Stock Research - Insiders No View a list of recent insider transactions.
Stock Research - Metric Comp No View a multi-column table comparing fundamental and/or technical data of at least two stocks side by side. Note - Stocks included must be customizable, ie AAPL, BABA, DIS.
Stock Research - SEC Filings No View a list of recent SEC filings.
Stock Research - Social No View social sentiment analysis, eg twitter analysis (NOT just a stream of recent tweets), for individual equities.
Stock Research - ESG No Provides Environmental, Social, Governance (ESG) criteria scores.
Stock Research - Reports 0 Total number of downloadable PDF research report providers available for equities research (using symbol AAPL). Examples: S&P Capital IQ, Thomson Reuters, Ned Davis Research.
ETFs - Performance Analysis Yes The ability to view historical performance.
ETFs - Top 10 Holdings No A list of the ETF's top 10 holdings.
ETFs - Morningstar StyleMap No The infamous Morningstar Equity StyleMap which visually marks the ETF's investment strategy in one of nine boxes.
ETFs - Ratings No Are third party ratings available for the ETF SPY? Examples: Morningstar, Lippers.
ETFs - Reports No Are downloadable research reports available for the ETF SPY? Examples: Morningstar, S&P Capital IQ.
Mutual Funds - Fees Breakdown No A clear breakdown of the fund's fees beyond just the expense ratio. 12b-1, minimum investment, total fees estimate, all examples of a detailed breakdown.
Mutual Funds - Top 10 Holdings No A list of the fund's top 10 holdings.
Mutual Funds - Performance Analysis No The ability to view multi-year historical performance.
Mutual Funds - Prospectus No Access to the fund's prospectus in PDF format.
Mutual Funds - 3rd Party Ratings No Are 3rd party ratings available for the fund VTSMX? Examples: Morningstar, Lippers.
Mutual Funds - Reports No Are downloadable research reports available for the fund VTSMX? Examples: Morningstar, S&P Capital IQ.
Screener - Stocks No Offers a equities screener.
Screener - ETFs No Offers a ETF screener.
Screener - Mutual Funds No Offers a mutual fund screener.
Screener - Options No Offers a options screener. Commonly referred to as a spread creation tool or similar.
Screener - Bonds No Offers a bond screener. **Note - ETF bond screeners do NOT count.

Education

Feature Value Definition
Has Education - Stocks Yes Provides a minimum of 10 educational pieces (articles, videos, archived webinars, or similar) with the primary subject being stocks. All content must be easily found within the website's Learning Center. Platform tutorials, FAQs, etc do NOT count.
Has Education - ETFs No Provides a minimum of 10 educational pieces (articles, videos, archived webinars, or similar) with the primary subject being ETFs. All content must be easily found within the website's Learning Center. Platform tutorials, FAQs, etc do NOT count.
Has Education - Options Yes Provides a minimum of 10 educational pieces (articles, videos, archived webinars, or similar) with the primary subject being options. All content must be easily found within the website's Learning Center. Platform tutorials, FAQs, etc do NOT count.
Has Education - Mutual Funds No Provides a minimum of 10 educational pieces (articles, videos, archived webinars, or similar) with the primary subject being mutual funds. All content must be easily found within the website's Learning Center. Platform tutorials, FAQs, etc do NOT count.
Has Education - Fixed Income No Provides a minimum of 10 educational pieces (articles, videos, archived webinars, or similar) with the primary subject being fixed income. All content must be easily found within the website's Learning Center. Platform tutorials, FAQs, etc do NOT count.
Has Education - Retirement No Provides a minimum of 10 educational pieces (articles, videos, archived webinars, or similar) with the primary subject being retirement. Platform tutorials, FAQs, etc do NOT count.
Investor Dictionary Yes An online dictionary of at least 50 investing terms.
Webinars (Monthly Avg) 0 Total educational client webinars hosted, on average, each month.
Webinars (Archived) No Provides an archived area to search and watch previously recorded client webinars.
Live Seminars No Provides at least 10 live, face-to-face educational seminars for clients each year. Must be delivered by a broker staff member.
Videos No Are educational videos available? At least 10. A video is a short clip, typically several minutes in duration, that explains a trading concept, term, or strategy. Archived webinars and platform demos do NOT count.
Retirement Calculator No Offers a retirement calculator.
Progress Tracking No Clients can track their progress and see which articles and/or videos they've completed to date.
Interactive Learning - Quizzes No Quizzes offered within the education center. Must include multiple questions and score results. Example service provider - Morningstar, InvestingTeacher.com

Mobile Trading

Feature Value Definition
iPhone App Yes Offers a downloadable iPhone app through the iOS app store.
Apple Watch App Yes Offers a downloadable Apple Watch app through the iOS app store.
Android App Yes An Android smartphone app available in the Google Play store.
Touch / Face ID Yes Offers optional Touch ID security (fingerprint verification) for iOS mobile app. Account login most common integration.
Account Transfers Yes Ability to perform ACH deposits and withdrawals from the mobile App.
Quotes (Real-time) Yes Mobile app offers real-time quote data.
Quotes (Streaming) No Mobile app offers streaming (or auto refreshing) real-time stock quote results. More specifically, the quote screen must auto-refresh at least once every three seconds.
Watch List (Real-time) Yes Watch list in mobile app uses real-time quotes.
Watch List (Streaming) No Watch list in mobile app uses streaming real-time quotes. More specifically, the watch-list must auto-refresh at least once every three seconds.
Watch List Syncing Yes Watch list in mobile app syncs with client's online account. Updates made in the mobile app migrate to the online account and vice versa.
Market Movers (Top Gainers) Yes Stocks top gainers list viewable in the mobile app.
Custom Screening / Scanning No Mobile app supports custom screening for stocks, ETFs, mutual funds, and/or options. Must be customizable filters, not just predefined searches.
Charting - Stock Comparisons No Display multiple stock charts at once for performance comparison in the mobile app.
Charting - Drawing No Can markup stock charts using the mobile app. Examples include: trendlines, arrows, notes.
Charting - Technical Studies 0 How many technical studies / indicators are available to add to a stock chart in the mobile app.
Charting - After Hours Yes Stock charts in mobile app display after hours trade activity.
Stock Alerts - Basic Fields Yes Set basic stocks alerts in the mobile app. Examples: price alerts, volume alerts.
Stock Alerts Delivery - Push Notifications Yes Optional smartphone push notifications for stock alerts in the mobile app.
Customizable Homescreen No Client dashboard customizable in the mobile app. Examples: Portfolio, watch lists, quotes, quick links.
Stream Live TV No Stream live TV in the mobile app. Examples - CNBC, Bloomberg.
Trading - Stocks Yes Stocks trades supported in the mobile app.
Trading - After-Hours Yes After-hours trading supported in the mobile app.
Trading - Conditional Orders No Conditional orders (Contingent, OTO, OCO, OTOCO, etc) supported in the mobile app.
Trading - Mutual Funds No Mutual fund trades supported in the mobile app.
Trading - Simple Options Yes Single-leg option trades supported in the mobile app.
Trading - Complex Options Yes Multi-legged option trades supported in the mobile app.
Trading - Option Rolling No Ability to pre-populate a trade ticket and seamlessly roll an option position to the next relative expiration in the mobile app.

Banking

Feature Value Definition
Member FDIC No Member of the FDIC (Federal Deposit Insurance Corporation) - fdic.gov.
Checking Accounts No Offers formal checking accounts and checking services. To qualify, checking services must be marketed on the website as a client service. Basic checking through the clearing firm does not count.
Savings Accounts No Offers savings accounts.
Debit Cards No Offers debit cards as part of a formal banking service.
Credit Cards No Offers credit cards.
Mortgage Loans No Offers mortgage loans.
Mobile Check Deposit No Check deposits can be made through the mobile app.
Online Bill Pay No Ability for clients to add and pay bills using the website.
Mobile Bill Pay No Ability for clients to add and pay bills using the mobile app.
ATM Fee Reimbursement No Are debit card ATM fees reimbursed?
No Fee Banking No Offers no fee banking. Requirements: no minimum balance required, no monthly maintenance fees, no debit card fees, no annual fees.
Retail Locations 0 Total retail locations. Company HQ or similar corporate offices do not count. Must be a formally branded, publicly accessible branch office marketed on the public website.

Robinhood Competitors

Select one or more of these brokers to compare against Robinhood.

All pricing data was obtained from a published web site as of 02/18/2019 and is believed to be accurate, but is not guaranteed. For stock trade rates, advertised pricing is for a standard order size of 500 shares of stock priced at $30 per share. For options orders, an options regulatory fee per contract may apply.

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