Summary of "How Do Commission-Free Platforms Make Money?"
Commission-free trading platforms generate revenue through several methods despite not charging fees. They often earn from payment for order flow, where they receive compensation for directing trades to specific market makers. Additionally, they offer premium services and margin lending, charge interest on idle cash balances, and sell trading data to third parties. These strategies allow them to operate without direct commissions, making money indirectly from user activities and preferences.
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1. Revenue Sources for Investment Platforms
- Overview of how investment platforms generate revenue.
2. Trading Commission
- Explanation of fees charged per trade, though some platforms offer commission-free trades.
3. Platform Fees
- Subscription or maintenance fees for using the platform.
4. Platform-Managed Portfolios
- Fees for managing portfolios on behalf of users.
5. Interest on Uninvested Cash
- Earnings from interest on users' idle cash balances.
6. Currency Conversion Fees
- Charges for converting currencies during trading.
7. Stock Lending
- Income from lending users' stocks to other traders.
8. Contracts for Difference
- Earnings from CFDs, allowing speculation on price movements.
9. Payment for Order Flow
- Compensation received for routing trades to specific market makers.
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