US Brokers — Your Main Options

Fidelity, Schwab, Interactive Brokers, Tastytrade, Webull, Robinhood compared

9 min read Beginner

"The US broker landscape has been transformed by zero-commission trading. The question is no longer what it costs to trade — it is what the broker makes from your order flow, your cash, and your data instead."

For educational purposes only. Nothing in this chapter is financial advice. All figures are illustrative examples. Tax rules, account types, contribution limits, and regulations differ by country and change over time. Always verify current rules with official government sources or a qualified financial adviser before making any investment decisions.

The US Broker Landscape

The US broker market was transformed by zero-commission trading, pioneered by Robinhood in 2013 and adopted by all major platforms by 2019. Commissions are now zero for stocks and ETFs at almost all major US brokers. The question is how they make money instead — and the answer matters.

How zero-commission brokers make money

Payment for order flow (PFOF): selling your orders to market makers who execute them — you may get slightly worse prices.
Cash sweep interest: your uninvested cash earns interest, which the broker keeps most of.
Margin lending: charging interest on borrowed money.
Premium subscriptions: Gold tiers, research, advanced tools.

Major US Brokers Compared

Broker	Best for	Key strength	Watch out for
Fidelity	Long-term investors	No PFOF, strong research, fractional shares, excellent customer service	Interface less modern than competitors
Charles Schwab	All-in-one investors	Huge fund selection, banking integration, strong advisory options	Recent TD Ameritrade merger still integrating
Interactive Brokers	Active traders, international investors	Lowest margin rates, global market access, sophisticated tools	Complex interface, inactivity fees on some accounts
Tastytrade	Options traders	Best-in-class options tools, flat-fee options commissions	Focused on derivatives — less suited to passive investors
Robinhood	First-time investors	Simplest UX, fractional shares, crypto access	PFOF model, limited research, past reliability issues
Webull	Technical traders	Free advanced charting, paper trading, options	PFOF model, limited educational resources

All listed brokers are SIPC-insured up to $500,000 ($250,000 cash). This does not protect against investment losses.

FAQs

Can UK residents use US brokers?

Some US brokers (Interactive Brokers, Saxo) operate internationally. Pure US-only brokers like Fidelity US and Schwab are not available to non-US residents. UK residents should use UK-regulated alternatives.

What is SIPC protection?

The Securities Investor Protection Corporation covers up to $500,000 ($250,000 cash) per customer per broker if the firm fails. Equivalent to the UK's FSCS.

Is Robinhood safe?

It is SIPC-insured and SEC-regulated. The concern is its business model (heavy PFOF reliance) and past outages during volatile markets. For passive investing in index ETFs, it functions adequately.

What about tax reporting?

US brokers provide Form 1099 for tax reporting. Non-US residents using international versions of US brokers receive equivalent documentation. Keep records of all trades for capital gains reporting.

Key takeaways

Zero-commission trading is the US standard — brokers make money through PFOF, cash interest, and margin.
Fidelity: best overall for long-term investors (no PFOF, strong research).
Interactive Brokers: best for active traders and international access.
Robinhood: simplest UX but PFOF model and past reliability concerns.
All major US brokers are SIPC-insured up to $500,000.