Finance
How does a brokerage work?
A brokerage is a company that lets you buy and sell investments like stocks and bonds. It connects your orders to the markets, holds your investments in an account, and may earn money through fees, commissions, or interest on cash.
See it in motion.
Watch a 2-minute animated lesson that shows exactly how a brokerage works.
Step by step
- 1It lets you buy and sell investments.
- 2It routes your orders to the financial markets.
- 3It holds your investments in a brokerage account.
- 4It earns from fees, commissions, or interest.
Frequently asked questions
- How does a brokerage work?
- It connects your buy and sell orders to the markets and holds your investments in an account for you.
- How do brokerages make money?
- Through trading fees, commissions, account fees, interest on cash, or routing orders to market makers.
- What's the difference between a full-service and discount brokerage?
- Full-service offers advice and planning at higher cost; discount brokerages just execute trades cheaply.