Trading Fees on Robinhood: A Guide to Low-Cost Brokerage and Day Trading

 

In recent years, Robinhood has transformed the investing landscape, appealing especially to beginner traders with its zero-commission structure and easy-to-use mobile app. While many users know that the app offers “free trading,” there’s still confusion around actual costs, especially when itcomes to trading fees on Robinhood, how it compares with brokerage firms with the lowest fees, and what’s involved in Robin Hood day trading.

In this guide, we’ll break down everything you need to know about the costs, benefits, and limits of using Robinhood—especially if you're considering an active or day trading strategy.

What Are Trading Fees?

Trading fees are the costs investors pay to place trades through a brokerage platform. These fees can include:

• Commission fees
• Regulatory and exchange fees
• Margin interest
• Premium account fees
• Spread costs (for options or crypto)

While some brokerages still charge flat-rate commissions for every trade, others—like Robinhood—have revolutionized the space by offering commission-free stock, ETF, and options trading.

Trading Fees on Robinhood: Are They Really Zero?

Yes and no.

Robinhood advertises commission-free trading for:

• Stocks
• ETFs
• Options
• Cryptocurrencies (on eligible platforms)

This means they don’t charge a flat fee when you buy or sell those securities. However, there are still some costs users should be aware of.

1. Regulatory Fees (Passed to Users)

Even though Robinhood itself doesn't charge a commission, it passes along mandatory regulatory fees:

• FINRA Trading Activity Fee (TAF): $0.000145 per share on sells only (with a $7.27 max per trade)
• SEC Fee: $8.00 per $1,000,000 of principal (only on sell orders)

These are standard across all brokerages and are nominal.

2. Robinhood Gold Subscription

If you subscribe to Robinhood Gold (at $5/month), you get:

• Level II Market Data
• Larger instant deposits
• Access to margin investing
• Stock research reports

However, if you use margin (borrowed funds to trade), you’ll pay interest on borrowed money, which starts at 8% APR (variable and subject to change).

3. Crypto Spread Fees

For crypto trades, Robinhood includes a spread—the difference between the buy and sell price. This is a hidden cost, even if there's no explicit commission.

4. Transfer Fees

• ACAT transfer (outbound): $75
• Bank transfer (ACH): Free for most cases

How Robinhood Compares to Other Brokerage Firms with Lowest Fees

If you're looking for brokerage firms with the lowest fees, Robinhood is at the top—but it’s not alone. Here's how it compares:

Brokerage	Stock/ETF Fees	Options Fees	Crypto	Account Minimum
Robinhood	$0	$0 (no per-contract fee)	Spread only	$0
Fidelity	$0	$0.65/contract	No	$0
Charles Schwab	$0	$0.65/contract	No	$0
Webull	$0	$0.00 + spread	Spread only	$0
SoFi Invest	$0	Limited option trading	Spread only	$0

Robinhood stands out particularly for zero options contract fees, which most platforms still charge ($0.50 to $1.00 per contract).

However, more traditional firms may offer:

• Better customer support
• More in-depth research tools
• Retirement and mutual fund accounts

Robin Hood Day Trading: What You Need to Know

Day trading refers to buying and selling securities within the same day, often multiple times. While Robinhood allows this, there are important rules and risks to be aware of.

1. Pattern Day Trader (PDT) Rule

FINRA’s PDT rule applies to all U.S. brokerages, including Robinhood.

If you make 4 or more day trades within 5 business days, and your account has less than $25,000, you’ll be flagged as a Pattern Day Trader. Once flagged:

• You must maintain a $25,000 balance to continue day trading
• If you fall below $25K, you’ll be restricted to 3 day trades every 5 days

Robinhood monitors this automatically and will alert you when you're at risk of exceeding the limit.

2. Margin and Robinhood Gold

To day trade effectively, many users subscribe to Robinhood Gold, allowing:

• Margin trading (with $2,000 minimum balance)
• Faster access to funds

However, trading with margin increases both potential gains and losses, and you'll pay interest on borrowed funds.

3. Real-Time Data Limitations

While Robinhood does provide real-time quotes, it delays some advanced order types and lacks support for features like:

• Level II order books (unless you subscribe to Gold)
• Direct access routing
• Pre- and post-market trading visibility

For full-time day traders, these may be deal-breakers compared to more advanced platforms like Thinkorswim or Interactive Brokers.

Is Robinhood Good for Day Trading?

It depends on your trading style.

Pros:

• No commission or contract fees
• Simple interface
• Instant deposit for quicker trades
• Fractional shares
• Crypto trading included

Cons:

• PDT restrictions
• Limited technical tools
• No direct order routing
• Customer support can be slow
• No futures or advanced derivative trading

Robinhood is a great place to start day trading, but professionals may need a more robust platform with deeper data access.

Tips for Low-Fee Trading on Robinhood

If you're trying to keep costs low, here are some best practices:

1. Avoid Overtrading
   While no commissions help reduce cost, frequent trading can rack up small regulatory fees and tax implications.
2. Use Limit Orders
   To avoid market slippage, always use limit orders when trading, especially for options and volatile stocks.
3. Monitor Margin Usage
   Only use margin if you fully understand the risks. Interest can eat into profits quickly.
4. Leverage Fractional Shares
   Build diversified portfolios with small amounts by using fractional shares, unique to Robinhood.
5. Stay Below the PDT Threshold
   If you're not ready to commit $25K, keep track of your trades to avoid PDT restrictions.

FAQs

Q: Does Robinhood really charge no trading fees?

Yes—Robinhood charges no commission on stock, ETF, or options trades. Crypto trades include a hidden spread.

Q: How can I avoid the Pattern Day Trader rule?

Keep trades under 4 per rolling 5-day period or maintain a balance of $25,000 or more.

Q: Is Robinhood safe?

Yes, Robinhood is regulated by FINRA and SIPC insured, but there are limitations in customer support and platform complexity.

Q: Can I switch to a different brokerage later?

Yes, but outbound ACAT transfers cost $75.

Final Thoughts

Robinhood has played a key role in democratizing finance, offering a sleek, user-friendly platform with no commission fees and simple investing tools. For beginners or casual traders, the low (or near-zero) tradingfees on Robinhood make it one of the brokerage firms with the lowest fees on the market today.

However, if you’re serious about Robin Hood day trading, it’s important to understand the limitations, including PDT rules, margin requirements, and limited technical tools.