What to know about zero-commission trading

Is zero-brokerage trading the key to unlocking your investment potential? Here is what you should know about commission-free transactions.

The rise of zero-commission trading has had a dramatic impact on investing in recent years, lowering barriers to entry and making it easier for retail investors to participate in the stock market.

But does zero brokerage really mean “no-fees attached”? How do trading platforms make money without charging for their services?

While zero brokerage has made investing more accessible, particularly for smaller traders, Webull Australia CEO Rob Talevski says it’s important investors understand what commission-free trades truly offer.

Zero-commission does not mean no cost trading

“Zero brokerage means your broker is not going to charge you a commission for managing your order,” Talevski says. “But it doesn’t mean there might not still be some fees associated with your transaction.”

Some investments, particularly within foreign markets such as the US, have regulatory and settlement fees attached.

A good platform should clearly indicate any additional fees that might apply to your transaction.

How does zero-commission trading stack up?

Traditional brokers generally charge higher commissions and platform fees to their clients, but how does this measure up against a platform offering zero-commission trading?

“Let’s take for example, your broker is charging you $11 per trade, and you’re an active trader making upwards of 20 daily transactions. This could easily run into hundreds of dollars per day in commissions which will eat into your returns,” Talevski says.

“When you compare this with a zero-commission platform such as Webull, depending on which market you’re trading in, you could be paying as little as zero to just a few dollars for the same number of trades.”

What should investors look for when considering a zero-commission broker?

Talevski says every investor should carefully look at the fee schedule of any platform they decide to use.

“There are some out there that offer zero commission but have conditions in the fine print,” he says.

“For some it might be zero commission on your first transaction only, or for a certain dollar value, or once a day, or only if you X number of trades a month.”

He also encourages investors to consider the level of service they need from their platform.

“There are some platforms that offer zero commissions, but is the platform right for you? Is it giving you all the bells and whistles that good platforms can deliver, or is their offering very basic – only one market, limited research functionality and charting opportunities?”

How Webull makes zero-commission brokerage work

Webull offers zero-brokerage ETF trading on both domestic and US trades, but not on equities.

“We’re serious about helping people grow their wealth, so we put our money where our mouth is and offer zero brokerage on all ETF transactions,” Talevski says.

“Clients can use it as much as they like and not pay brokerage for ETFs, but they should be aware there may be some regulatory fees that come with some transactions.”

Talevski explains the company is confident that investors will, after exploring the platform’s features, transition to using other services that come with associated fees.

“We offer a very competitive rate card, but we offer a lot with that as well, so you really are getting a lot for a little.”

This article was developed in collaboration with Webull, an advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.