How We Calculate Broker Costs: Our Sources and Methodology

This broker cost calculator methodology page documents exactly how our tool works — every number, every formula, every source. Most broker comparison articles don’t show their work. The numbers appear from nowhere, the methodology is vague, and the conclusions are whatever the affiliate program pays best for. This page is the opposite.

Why This Page Exists

When you read that Broker X charges a 10.5% margin rate and Broker Y charges 5.5%, you have two options. You can trust the author. Or you can verify it yourself. Most broker comparison content is structured to make the second option as difficult as possible — vague citations, outdated numbers, and claims that don’t trace back to a primary source.

This page is the opposite approach. Every number used in our broker cost calculator comes from a primary source, and every source is listed here with a direct URL. If something changes — and things change — you can verify it against the original. If we’re wrong, you can prove it.

The goal isn’t transparency for its own sake. The goal is that the calculator remains useful over time. Fee schedules change, margin rates move with Federal Reserve policy, and new pricing tiers appear. A tool that’s a black box becomes unreliable within months. A tool with documented sources can be verified, updated, and trusted.

The Four Cost Components

The calculator estimates four distinct cost components. Each comes from a different type of source and carries a different level of precision.

Commissions are the most precise. They come directly from each broker’s published fee schedule, which is legally required to be accurate and publicly available. The calculator uses the base rate for each asset class (stocks, options, futures) and applies volume tier discounts automatically based on the monthly volume you input.

Margin interest is also precise but more volatile. Each broker publishes a tiered schedule based on debit balance — the amount you’ve borrowed. These rates move with Federal Reserve benchmark rate changes, typically 2 to 4 times per year in a normal cycle. The calculator uses the current tiered rate and calculates annual interest on the average margin balance you input.

Option and futures fees follow the same logic as commissions, with one critical structural detail: Tastytrade caps equity option commissions at $10 per leg per order. This cap changes the math significantly for traders operating in size. The calculator applies the cap where applicable.

Execution shortfall from payment for order flow is the only estimated component. Unlike the others, there’s no single number to quote — the cost varies by order type, symbol, and market conditions. The estimate in the calculator is based on SEC Rule 606(a) quarterly disclosures and peer-reviewed academic research on retail order routing. The methodology for this estimate is explained in detail below.

Commissions: Primary Sources by Broker

Each of the four brokers in the calculator publishes a detailed commission schedule on their official website. These are the authoritative sources used for all commission data.

Interactive Brokers (IBKR Pro) — Tiered pricing structure with volume-based discounts. Base rate for US stocks: $0.0035 per share with a $0.35 minimum per order and 1% of trade value maximum. Options: $0.65 per contract at the lowest tier, dropping to $0.25 and below at higher volume tiers. Futures: execution fee plus exchange pass-through, around $2.25 per E-mini contract total.

• Stock commissions: interactivebrokers.com/en/pricing/commissions-stocks.php
• Options commissions: interactivebrokers.com/en/pricing/commissions-options.php
• Futures commissions: interactivebrokers.com/en/pricing/commissions-futures.php

Charles Schwab — Zero commissions on online-executed stock and ETF trades. Options at $0.65 per contract with no cap. Futures at $2.25 per contract plus exchange fees.

• Pricing overview: schwab.com/pricing
• Full pricing guide: schwab.com/legal/schwab-pricing-guide-for-individual-investors

Tastytrade — Zero commissions on stocks and ETFs. The distinctive feature is the options structure: $1 per contract to open, $0 to close, capped at $10 per leg per order. Futures at $1.25 per contract standard or $0.75 per micro contract, each direction.

• Pricing page: tastytrade.com/pricing
• Full commissions and fees document (PDF): published quarterly on the Tastytrade website

TradeStation — Zero commissions on stocks via app and web on standard plans. Options at $0.60 per contract at tier 1, dropping with volume. Futures at $1.50 per contract at tier 1, also with volume discounts.

• Pricing overview: tradestation.com/pricing
• Options pricing disclosures: tradestation.com/options-pricing-disclosures

Margin Interest: Current Rates and Sources

Margin rates are the most consequential cost for traders holding leveraged positions. The differences between brokers are large — on a $100,000 margin loan, the gap between the cheapest and most expensive broker can exceed $6,000 per year in interest.

Each broker publishes a tiered rate schedule. Higher balances get lower rates. The calculator applies the correct tier automatically based on the average margin loan input.

Interactive Brokers (IBKR Pro) rates as of April 2026:

• $0 – $100,000: approximately 5.83% APR
• $100,000 – $1,000,000: approximately 5.33% APR
• $1,000,000 – $50,000,000: approximately 4.83% APR

Source: interactivebrokers.com/en/trading/margin-rates.php

Charles Schwab rates as of April 2026:

• Under $25,000: 13.075% APR
• $25,000 – $49,999: 12.575% APR
• $50,000 – $99,999: 11.825% APR
• $100,000 – $249,999: 11.375% APR
• $250,000 – $499,999: 11.075% APR
• $500,000 – $999,999: 10.825% APR

Source: schwab.com/margin/margin-rates-and-requirements

Tastytrade rates as of April 2026 (base rate 10%):

• $0 – $24,999: 11.00% APR
• $25,000 – $49,999: 10.50% APR
• $50,000 – $99,999: 10.00% APR
• $100,000 – $249,999: 9.50% APR
• $250,000 – $499,999: 9.00% APR
• $500,000 – $999,999: 8.50% APR
• $1,000,000+: 8.00% APR

Source: Tastytrade commissions and fees document, published quarterly.

TradeStation rates as of April 2026:

• Under $50,000: approximately 11.75% APR
• $50,000 – $500,000: approximately 10.25% APR
• $500,000 – $2,000,000: approximately 8.25% APR
• Over $2,000,000: as low as 4.25% APR

Source: tradestation.com/pricing/margin-rates

Execution Shortfall Estimate: Sources and Methodology

This is the only component of the calculator that is estimated rather than directly quoted. Execution shortfall — the cost you pay through slightly worse fill prices when your broker routes orders to a market maker in exchange for payment — cannot be computed exactly from public data. It can only be estimated from aggregate statistics and academic research.

The estimate in the calculator is 2 basis points (0.02%) of notional value, applied only to market orders on stocks at brokers that accept payment for order flow. This is deliberately conservative. Some studies find lower, some find higher. The true cost varies significantly by order type, symbol liquidity, and market conditions.

How the estimate is derived:

SEC Rule 606(a) requires broker-dealers to publish quarterly reports on their order routing practices. Each of the four brokers in the calculator (except IBKR Pro, which doesn’t accept payment for order flow) publishes these filings. The filings disclose average price improvement per 100 shares, percent of orders executed at or better than the national best bid or offer, and the amount of payment received per share routed.

Academic research synthesizes these filings to estimate the true execution cost. Key studies include analysis published by the University of Chicago Business Law Review, the Congressional Research Service reports on payment for order flow, and SEC’s own 2022 proposal that estimated approximately $1.5 billion per year in execution shortfall across retail order flow.

Key sources on execution shortfall:

• SEC Rule 606 quarterly filings — available on each broker’s legal/regulatory page
• University of Chicago Business Law Review on disclosure gaps in order flow markets: businesslawreview.uchicago.edu/print-archive/disclosure-gap-market-order-flow
• Congressional Research Service on PFOF regulation: congress.gov/crs-product/IF12594
• Wikipedia article on payment for order flow, with sourced list of brokers that accept PFOF: en.wikipedia.org/wiki/Payment_for_order_flow

Brokers that accept payment for order flow (and therefore have a non-zero execution shortfall estimate in the calculator): Schwab, Tastytrade, TradeStation.

Brokers that do not accept payment for order flow: Interactive Brokers (IBKR Pro configuration). IBKR Lite does accept it, but the calculator uses the Pro configuration throughout.

What the Calculator Doesn’t Attempt to Estimate

Several real costs of trading are not included in the calculator because they vary too much to average meaningfully, or because they depend on factors outside the broker’s control.

Bid-ask spread on the underlying market. The spread you pay is determined by the market for the security you’re trading, not by your broker. All four brokers access the same underlying market. Spreads are negligible on highly liquid stocks like Apple or Microsoft, but can be substantial on small-cap names or during volatile conditions.

Slippage on fast markets. Market orders during news events or at market open can fill at prices noticeably different from the displayed quote. Better execution infrastructure can reduce slippage, which partially overlaps with the payment for order flow estimate the calculator already includes.

Stock borrow fees on short positions. When you short a hard-to-borrow name, daily financing costs can exceed 50% annualized. This varies constantly by symbol and is impossible to generalize.

FX conversion fees on non-USD assets. Trading European or Asian stocks from a USD account requires currency conversion. Interactive Brokers charges spreads under 2 basis points; Schwab is competitive; some brokers charge 50 basis points or more. Relevant for international traders only.

Inactivity, transfer, and wire fees. None of the four brokers currently charge inactivity fees on standard accounts. Outgoing ACAT transfer fees run $75 at all four. Wire fees run $25 to $45 depending on destination.

Update Schedule

All numbers in the calculator and on this page are reviewed on a fixed schedule to ensure they remain current.

Quarterly review (January, April, July, October): Margin rates across all four brokers are verified against their current official pages. Updates are applied within two weeks of the review date. Margin rates move with Federal Reserve benchmark rate decisions and require the most frequent attention.

Annual review (January): Full verification of commissions, option fees, futures fees, inactivity fees, and structural pricing changes. This is more thorough than the quarterly review and can take several hours.

Event-driven updates: If the Federal Reserve changes rates outside the normal cycle, or if any broker announces a significant pricing change, updates are applied within two weeks regardless of the regular schedule.

The last verification date is displayed at the bottom of the calculator. If you see stale data or believe a number is incorrect, email info@yieldova.com and we’ll investigate.

Why We’re Documenting This

Most broker cost comparisons exist to generate affiliate revenue. So does this one — there’s no pretending otherwise, and our disclosure policy is clear on every page that uses affiliate links.

The difference is that affiliate revenue does not change the calculator’s math. The broker that costs you the least for your specific profile is the broker the calculator recommends, regardless of which affiliate program pays better. This page exists so you can verify that claim. Run the numbers against the primary sources above and confirm that the calculator produces the same result. If it doesn’t, tell us — we’ll fix it.

The alternative is the standard industry approach: vague methodology, claims that can’t be verified, and conclusions that happen to align with whoever pays the highest CPA. That approach generates short-term revenue. It doesn’t generate trust, and trust compounds.

Related: What It Really Costs to Trade at Each Broker: The Real Numbers — the main article and calculator tool that this methodology supports. Also: How to Choose a Broker: What Active Traders Actually Need to Evaluate — the broader framework for broker evaluation beyond cost.