Stock Trading and Other Things

How do stock brokers or online stock brokers make money?

I am sure it is an obvious answer but I just can't think of it. I know it can't be the fee that we pay for buying and seeling. Commission?

Public Comments

1. They get a % of the commissions. As simple as that. Sometime they are paid a % of the asset management fee if it is that type of relationship. tb

2. Typically money is made on a per trade basis with online brokers. With traditional brokers it can be a %, as mentioned earlier, or a per trade basis as well, called commission. For example when talking with a broker about commissions round trip cost is often used, meaning how much does it take for me to exectute and clear this trade so it gets into my account.

3. They make fees in multiple ways:

- customer service fees (ie: from giving advice)
- everytime you make a trade you pay a commission.
- management fees (ie: if they manage your funds completely they take a 1-2% yearly management fee).

4. Yes they do make much of their money from commissions. They do so in small amounts per share but in very large volume.

If they are a market maker in a particular security then they may also make money on the bid/ask spread for that security.

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6. pretty well all through commission:
- commission on trades
- commission from mutual fund companies ("trailer fees")
- commission on selling other services (my broker is from my bank and can negotiate my mortgage rate, and sell me car, house, and life insurance)

7. a broker is a firm/individual who buys or sells shares on behalf of the customers, u cant directly buy the shares from the exchange, but u can do so thru a authorised broker.
since they are offering such a service, they charge you a % of the transaction as their fee. this is called brokerage. sometimes online firms offer share tips and charge consultation fees for such services. mutual fund managers charge professional fees for their portfolio management services. so depending on their activity and level of invesment, brokers charge accordingly