Do you pay commission when selling stocks?

Do you pay commission when selling stocks? This article explains how explicit commissions have largely disappeared at major U.S. brokers but other fees and implicit costs remain. Read practical exa...

2026-01-19 00:25:00

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Do you pay commission when selling stocks?

Do you pay commission when selling stocks? In short: historically each buy and sell carried an explicit broker commission, but as of mid‑2024 most U.S. online brokers advertise $0 commissions for standard stock and ETF trades. That does not mean selling is always truly free — regulatory fees, exchange pass‑throughs, spreads, order routing practices, and account service charges can still create costs. This guide explains what “commission” means, the fees you may still see when you sell, why brokers advertise commission‑free trading, practical examples from major firms, and simple ways to reduce costs.

As of June 30, 2024, according to Investopedia and major broker fee schedules, commission‑free online trading for U.S. stocks and ETFs is common. Readers will learn how to spot explicit charges, where implicit costs hide, what disclosures to check (Form CRS and trade confirmations), and a short checklist to run before executing a sale.

Definition — what “commission” means in stock trading

A commission is a fee charged by a broker to execute a securities transaction on behalf of a customer. It is an explicit charge presented as a line item on your trade confirmation or monthly statement. Commissions historically came in three common forms:

Per‑trade flat fee (for example, $4.95 per trade).
Per‑share fee (for example, $0.005 per share).
Percentage of trade value (more common with full‑service brokers or advisors).

Commissions are distinct from other costs such as the bid‑ask spread, regulatory assessments, exchange fees, or account management/advisory fees. A broker can advertise $0 commissions but customers may still face other explicit fees or implicit costs when selling.

Common fees and costs when you sell stocks

When you place a sell order, the following fee and cost categories can apply. Not every sale will incur every item — the exact mix depends on the broker, product, and order type.

Broker commissions (per‑trade or per‑share): explicit fees for order execution.
Regulatory fees: small charges passed through from regulators (for example, certain SEC transaction fees on sales).
Exchange and clearing fees: fees charged by an exchange or clearing venue that may be passed to customers.
Bid‑ask spread and market impact: the implicit cost of executing at a less favorable price.
Broker service and broker‑assisted trade charges: higher fees if a broker executes the order for you.
Account fees: outgoing transfer fees, paper statement fees, or inactivity fees in some accounts.

Broker commissions (per‑trade vs per‑share)

Brokers historically charged commissions either as a flat amount per trade or per share executed. Flat commissions simplify billing — a $4.95 commission applies whether you sell 10 shares or 1,000 shares. Per‑share models charge by the share and can add up on larger orders.

Each buy and each sell was typically billed separately. That meant a round‑trip trade (buy then sell) generated two commissions unless a broker waived one. Today, many brokers list $0 commissions for online equities and ETFs, which removes that explicit per‑trade line item for standard electronic trades.

Regulatory and exchange fees

Even on platforms advertising $0 commissions, regulators and exchanges can impose small fees that the broker passes to customers. Examples include:

SEC transaction fees (assessed on sell transactions to fund the SEC's activities).
Exchange or clearing fees for certain venues or trade types.

These pass‑through fees are usually modest but can appear on trade confirmations as a separate line.

Spreads, markups and execution quality

A $0 commission headline does not guarantee the best execution price. Two important implicit costs are:

Bid‑ask spread: The difference between the highest buy price (bid) and lowest sell price (ask). When selling, you may receive the bid price, which is lower than the ask.
Execution quality and price improvement: Brokers route orders to various market makers or venues. Payment for order flow and routing choices can affect whether your order gets price improvement (a better execution price than the visible NBBO) or not.

Wider spreads and adverse routing can make a so‑called free trade effectively more expensive than a commissioned trade with strong execution quality.

Other transactional and account fees

Common additional charges that may accompany a sale include:

Broker‑assisted trade fees: higher charges when a human helps place the order.
Mutual‑fund redemption fees: fees for selling mutual fund shares within a short holding window.
Paper statement or confirmation fees: small monthly or per‑statement charges if you opt for mailed documents.
Outgoing transfer (ACATS) fees: a fee to transfer an account to another broker.

Special cases — ETFs, mutual funds, ADRs, options and bonds

Different products often have unique fee rules:

ETFs: Most U.S. ETFs trade commission‑free at many brokers for online orders, but some brokers may levy transaction fees for non‑core or foreign ETFs.
Mutual funds: Many brokers offer no‑transaction‑fee (NTF) fund lists, but funds outside that list can carry transaction fees. Some mutual funds charge short‑term redemption fees.
ADRs: American Depositary Receipts sometimes carry custody or pass‑through charges.
Options: Options typically involve per‑contract fees even at brokers with $0 stock commissions.
Bonds: Fixed‑income trades may involve markups or markdowns rather than explicit commissions; some brokers have flat bond trading fees.

Why many brokers offer “commission‑free” selling

Brokers can market $0 commissions because they earn revenue from other sources. Removing visible commissions lowers a cost barrier for retail investors and increases platform usage.

Common revenue sources that replace explicit commission income include:

Payment for order flow (PFOF): brokers route retail orders to market makers that pay for the order flow.
Interest income: brokers earn interest on uninvested customer cash.
Margin interest: lending to customers who trade on margin.
Premium subscriptions and services: paid tiers, research, or advanced tools.
Securities lending: lending customers’ shares to short sellers on margin accounts.

Payment for order flow (PFOF) and its implications

Payment for order flow is an arrangement in which market makers pay brokers to receive their retail orders. The market maker executes the order and may offer small price improvement; in return the broker receives a payment.

Implications for sellers:

PFOF can be a source of revenue that allows $0 commissions, but critics note it introduces a potential conflict of interest in order routing.
The effective execution price can be slightly worse or better depending on routing and market conditions; retail investors should review execution quality reports and disclosures.

Other revenue sources (interest, margin, premium services)

Brokers also monetize customer relationships via:

Earning interest on idle cash balances, sometimes by sweeping into partner programs.
Charging margin interest to leveraged traders.
Offering paid research, advanced order types, or custody services.

These revenue streams help sustain commission‑free models but may bring tradeoffs such as less personalized service or the need to accept certain order routing arrangements.

Practical application — how commissions and fees appear when you sell

In practice you will often see the following if you sell stock at a modern U.S. discount broker:

A $0 commission line for the trade if it was an online, self‑directed U.S. stock or ETF sale.
One or more small regulatory or exchange pass‑through fees on the confirmation (commonly under a dollar for typical retail trades).
A display of execution price and whether any price improvement occurred.
Separate records for the buy and the sell; historically each leg would have its own commission line.

If you used a broker‑assisted method, sold a mutual fund outside an NTF list, or traded options/bonds, expect additional explicit fees shown on the confirmation or monthly statement.

Examples from major brokers and regulators

As of June 30, 2024, primary fee disclosures indicated that many large retail brokers offer $0 online commissions for U.S. stocks and ETFs while still disclosing regulatory and exchange fees on confirmations. Representative points:

Fidelity: Public fee schedule lists $0 commissions for online U.S. stock and ETF trades, with regulatory/transaction fees passed through where applicable.
Vanguard: Many Vanguard ETFs and U.S. stocks trade commission‑free on its platform; funds outside certain lists may have transaction fees.
Robinhood: Advertises commission‑free trades for stocks and ETFs but posts regulatory and exchange fees as pass‑throughs on trade confirmations.
FINRA and SEC (Investor.gov): Provide guidance on fees, order routing disclosures, and the definition of commissions. Regulators urge investors to read fee schedules and execution quality reports.

Sources: fee schedules and regulatory pages published by brokers and agencies as of mid‑2024.

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How to minimize costs when selling stocks

Here are practical, actionable steps that reduce explicit and implicit costs when you sell:

Choose a reputable zero‑commission broker with transparent order routing and published execution quality metrics.
Use limit orders instead of market orders to control the minimum price you accept when selling.
Consolidate trades where possible to avoid multiple per‑trade fees on brokers that still charge commissions for some instruments.
Favor in‑house or no‑transaction‑fee (NTF) mutual funds and ETFs to avoid fund transaction fees.
Avoid broker‑assisted trades unless necessary; do them online to keep fees lower.
Monitor account settings for cash sweeps; be aware of how uninvested cash is used to generate interest for the broker.
Check the broker’s fee schedule before placing the order and review the trade confirmation after execution.

Trade‑offs and investor considerations

Key trade‑offs to understand when commissions are $0:

Explicit vs implicit costs: $0 removes the visible commission but not necessarily the total cost paid via spreads or routing.
Service level: Full‑service brokers that charge commissions may offer research, advice, or tax planning that discount brokers do not.
Conflicts of interest: PFOF creates a potential conflict between routing that maximizes broker revenue versus routing that prioritizes best execution.
Tax consequences: Selling triggers capital‑gains or losses that affect taxes regardless of trading fees.

Investors should weigh the importance of low explicit fees against execution quality, customer service, and the types of products they trade.

Regulatory, tax and disclosure points

Selling securities has regulatory and tax consequences independent of commissions.

Tax: Capital gains or losses are realized on sale and may be short‑term (taxed as ordinary income) or long‑term (taxed at preferential rates if applicable). Brokers provide 1099 forms summarizing proceeds and cost basis for tax reporting.
Disclosures: Brokers must disclose order routing practices and conflicts in Form CRS and in publicly available order routing reports. Investors should read these documents.
Trade confirmations: Every executed trade results in a confirmation that lists execution price, number of shares, commissions (if any), and pass‑through fees.

Regulators such as FINRA and the SEC provide guidance on fees, execution quality, and required disclosures. Always check the broker’s most current fee schedule and regulatory filings.

Practical checklist before selling

Before you click sell, run through this checklist:

Confirm whether your broker charges commissions for the instrument and order type. If unsure, check the broker’s fee schedule.
Review potential regulatory and exchange fees that may be passed through on sale transactions.
Choose order type: limit order to control sale price, or market order for immediate execution with possible spread cost.
Consider tax consequences: short‑term vs long‑term gain, wash sale rules, and holding period.
Check your broker’s order routing and execution quality disclosures (Form CRS and any execution reports).
If you hold mutual funds, check for short‑term redemption or transaction fees.
After execution, verify the trade confirmation for price, quantity, and any fees charged.

References

As of June 30, 2024, the following sources were used to prepare this article and for further reading: Investopedia (commission‑free trading), FINRA pages on fees and how buying and selling works, Investor.gov commission glossary, Fidelity and Vanguard commission/fee pages, Robinhood fee schedule and disclosures, NerdWallet and SoFi educational articles, and community discussions on Money.StackExchange.

Further reading and next steps: review your broker’s fee schedule and order routing disclosures, consider limit orders to manage execution price, and explore Bitget products if you seek an integrated trading and custody solution. To learn more about order routing, regulation, and how to read trade confirmations, explore the regulator and broker disclosures available in your account dashboard.

Action: Check your broker’s fee schedule today and run the checklist above before your next sale. For Web3 custody and trading, consider Bitget Wallet and Bitget exchange services within the Bitget ecosystem.

The content above has been sourced from the internet and generated using AI. For high-quality content, please visit Bitget Academy.