TradeZero Review: Low-Cost Platform With a Focus on Short Selling

TradeZero was founded in 2015 in the Bahamas to provide ordinary investors with professional hedge fund trading tools. Broker provides a larger easy-to-borrow list than other brokers and specializes in short-selling stocks and ETFs with free or minimal charges and fees. TradeZero has limited services and no portfolio management or analytics capabilities, making it more like a bargain broker. TradeZero’s specialized market of active traders and short sellers would benefit. This broker doesn’t care about non-traders or “buy-and-hold” customers, so they should go elsewhere for their portfolio needs.

TradeZero: Website

Country of regulation: Bahamas, United States

Trading fees class: Low

Inactivity fee charged: No

Withdrawal fee amount: $50

Minimum deposit: $250

Time to open an account: 1 Day

Demo account provided: Yes

Products offered: Stock, ETF, Options

TradeZero, a Bahamas-based broker, allowed non-U.S. people to trade U.S. stocks, ETFs, and options. TradeZero America gives U.S. investors access to its platforms. This platform attracts consumers with minimal trading costs, low minimum balances, and high intraday leverage of 4:1 for $500 accounts and 6:1 for $2,500 accounts. TradeZero U.S. offers 4:1 intraday leverage. The broker found that 70% of investors modified their strategy after Covid, 34% traded more, and 20% short-sold. Broker wants more regular traders, day traders, short sellers, and options traders on their platform. 

On October 12, 2021, TradeZero signed a $556 million merger deal with Dune Acquisition Corp., a SPAC, but the merger fell. However, TradeZero became a dealer member in February 2022. Dune sued TradeZero key officials in April 2022, alleging fraud. TradeZero partnered with TradeEZ for a chart overlay in May 2022. In January 2021, TradeZero America resolved SEC allegations of making misleading claims to consumers regarding banning meme stock trading.

TradeZero specializes in finding hard-to-borrow equities and ETFs to sell short. TradeZero’s technology lets traders pay to short a stock. TradeZero’s technology lets day and short-term traders route their own orders for improved execution if they have a $5,000 account balance. Screen modification is straightforward and tidy on the platform. Day traders, avid short sellers, and cost-conscious traders will choose this broker.

Customer Service

Customer service at TradeZero is good. TradeZero’s customer service has a rating of 4.7 stars on Trustpilot, with 86% of 2,388 reviews giving it an “excellent” rating. Our calls were answered right away, and the customer service reps were able to answer our questions or get them answered quickly. TradeZero’s customer service stands out because many online brokers have long wait times.

• 24/7 live customer support by chat, telephone, or email for international accounts
• U.S. accounts have 24/7 chat support and phone support from 8 a.m. to 6 p.m. EST (Monday through Friday)
• Email
• Access to licensed brokers

Products

TradeZero has a small selection of products. You can only trade U.S. stocks, ETFs, and options. TradeZero doesn’t let you trade in fixed income, mutual funds, futures, commodities, currencies, or cryptocurrency. Even though TradeZero is planning to add cryptocurrency, investors can already do the following:

• U.S. Stocks
• U.S. ETFs
• U.S. Over-the-counter-bulletin-board (OTCBB)
• Options

Pricing

TradeZero lets people trade without paying a commission, but they have to use certain order types, or there will be a commission. There are also some price differences between U.S. and international customers. The cost-per-option contract and the margin interest rate are the ones that stand out the most. If a fee is the same on both platforms, only one fee will be listed. If the U.S. fees are different from those on the international platform, both rates will be shown.

• Platform fees: Accounts under $50,000 pay $59 per month for ZeroPro desktop and ZeroWeb access. OTCBB/pink sheet issues level I and II quotes are paid add-ons on ZeroFree.
• Free stock trading: All markets and limit orders for any symbol trading on NYSE, AMEX, or NASDAQ for $1 or more are free for U.S. consumers.
• International consumers can place free orders for NYSE, AMEX, or NASDAQ equities trading above $1 with a minimum 200-share order size and a limit order that does not match.
• International orders under 200 shares cost $0.99 and $0.005 per share. Trading equities securities under $1 costs $0.005 per share with a $0.99 minimum and a $7.95 maximum of up to 250,000 shares.
• International users pay $0.59 per contract, plus OCC and ORF fees of $0.055 and $0.0388, and $35 for option exercise or assignment. Option contracts cost $0.6838.
• 6.5% (U.S. consumers) and 8% margin interest (international)
• No inactivity cost for any platform, but $5 unqualified account fee if balance dips below minimum and account does not own securities.

TradeZero Available Account Types

TradeZero only offers three types of accounts, and customers can’t open retirement plans. Customers of Trade Zero can only choose from the following account types:

• Individual Accounts
• Joint Accounts
• Corporate Accounts 

Order Types

Market, limit, stop market, stop limit, and range orders are the only ones that can be placed on TradeZero. A range order is a combination of a buy limit order and a sell limit order. The trader chooses ranges for both orders and if one order is filled, the other order is canceled. This is basically a one-cancels-the-other conditional order (OCO). There is also a box for conditional orders where you can put in two trades. The second trade will only happen after the first trade has been completed. TradeZero doesn’t have a way to put in different kinds of OCO orders, like using stops to play a price range breakout. There are also no trailing stops that can be used.

Usability

TradeZero makes it easy to set up an account, including options and margin agreements. This is also true of most online brokers today. After you set up your TradeZero account, you can choose which platforms you want to use. There are four platforms for technology:

• ZeroMobile and ZeroFree are both free for users to use. ZeroFree is a browser-based platform that can be used on any connected device. 
• ZeroPro, the flagship desktop app, and ZeroWeb, the web-based version of ZeroPro. Both require a $59 monthly fee

ZeroWeb can be used on any connected device however, ZeroPro can only be used on Windows computers because it doesn’t work with the Mac OS. Apple users who want a premium platform will have to use ZeroWeb or run it on a virtual machine. All systems can be used at the same time, and all of them have live quotes.

There are some differences between the platforms. However, all of them have charting windows, real-time news, live streaming quotes, and access to the stock borrow locator tool. ZeroPro has up to six level II quote windows, while ZeroWeb and ZeroFree only have four and one, respectively. In the same way, a user can only have ten chart windows open at once on ZeroPro, six on ZeroWeb, and two on ZeroFree.

OTC Markets Level I quotes cost $5 a month on all platforms, and OTC Markets Level II quotes cost $15 a month. In addition, you can add a hotkey for $15 per month, which is one of the extra features that ZeroFree offers.

Trade Experience

TradeZero is simple. ZeroPro, the desktop program, has a professional layout that traders may personalize. ZeroWeb is ZeroPro with less bandwidth and flexibility. With ZeroPro page changes, you can group windows. Thus, when you click or type a ticker, the symbol changes on all of them. 

Level II quotation windows feature order ticket information and buy or sell buttons for stock and ETF trading. The order ticket populates immediately when you click on level II pricing. Custom hotkeys, such as a button to sell 50% of a position, are straightforward to design. TradeZero’s charting is excellent, but you can’t place orders from it. On the stock/ETF order window, TradeZero offers to buy, sell, short, and cover. When compared to a buy or sell button, this can be confusing and may result in rejected orders.

TradeZero is a great broker for active shorters because of its stock finder for shorting stocks. The portfolio pane made tracking equity, unrealized and realized gains, and buying power easier. Moreover, the portfolio window always displays this information at the top.

TradeZero’s option chain window features an options-specific order entry for trading options. Clicking an option chain option populates it. That order input capability worked well, but being confined to a one-leg options transaction is disappointing given TradeZero’s expertise and target consumer. Options order input was simple. However, profitability graphs were not available. Many brokerage platforms provide enhanced options trading capabilities, including automated order ticket configurations for spread and other multi-leg options strategies.

Security and Reliability

TradeZero’s security meets the standards of the business world.

• The ZeroPro desktop program, ZeroWeb, and ZeroFree trading platforms all have two-factor authentication, and the mobile app can be logged in with a fingerprint or face scan.
• There are also some differences between TradeZero International and TradeZero U.S. in how they are regulated and how they protect investors.
• TradeZero’s U.S. platform is regulated by the SEC and is a member of FINRA and the Securities Investor Protection Corporation (SIPC)
• TradeZero International is based in the Bahamas and is regulated by the Securities Commission of the Bahamas. It is not regulated by any U.S. organization.
• Both companies have Lloyds of London policies that protect investors for more than $250,000 per account over and above what is covered by SIPC.
• In the last four years, TradeZero’s systems and platforms have not had any major data leaks or major platform outages.

Transparency

TradeZero discloses its prices in its FAQ and explains how they charge for order flow to enable commission-free trading. Even though the FAQ sections have helpful information, they could be better organized. All of the commissions and fees were listed clearly on the website’s “Pricing” link in the top menu. The commission and fee structures are easy to find on the website, but they are more complicated than those of other online brokers that offer free stock trading. This is because a transaction may or may not result in a commission, depending on things like the time of day or the type of order.

News and Education

News from Benzinga is streamed to TradeZero. The news feed can also be filtered. Thus, it only shows news about a single stock symbol or for certain keywords. You can click on each news feed line to read the whole story, if there is one.

TradeZero does not offer education. Their customers are active traders with trading expertise. Broker offers several useful instructional features, but not as many as full-service brokers like Fidelity and Schwab. TradeZero users likely choose day trading above retirement planning and investment portfolios. The website offers articles, videos, webinars, and live seminars. TradeZero’s websites also have a Learn link at the top right that leads to trading knowledge. Short, easy-to-read articles cover anomalous options activity, insider purchasing, market capitalization, earnings projections, and analyst rating trading.

TradeZero has trader education partners. Cameron Bennion and MyInvestingClub educate U.S. users. The worldwide platform works with MyInvestingClub, Livestream Trading, My Trading Club, and Arabic-language Balmohsin for trading instruction.

TradeZero also lets you trade with paper money. They give free paper trading demos for two weeks. After that, account holders can use paper trading for $79 monthly.

Pros and Cons

Pros Clarified

• Excellent primary trading platform: TradeZero Pro and TradeZero Web are advanced trading systems for accounts over $5,000 with streaming level II quotes, news, charting, and order routing. Trade order window hotkeys can be adjusted.
• Extensive available to borrow lists: TradeZero lists several easy-to-borrow and hard-to-borrow stocks. TradeZero’s locating service lets consumers pay to short hard-to-borrow equities. TradeZero lists several shortable equities from numerous sources.
• No commission for most ETFs and stocks: If criteria are satisfied, shares above $1 trade commission-free. The U.S. needs a market or limit order throughout the trading day, whereas the international platform requires a trade of at least 200 shares and an order that does not match immediately.
• High intraday leverage: Broker offers trading leverage. International accounts have leverage ratios of 1:1 up to $500, 4:1 from $500 to $2,500, and 6:1 above $2,500. U.S. accounts leverage 4:1 intraday. TradeZero customers must lower their leverage ratios to 2:1 before day’s end (4 pm. EST for the U.S. market).

Cons Clarified

• Limited product offerings. TradeZero solely offers U.S. equities, ETFs, and options. TradeZero has no mutual funds, futures, commodities, currencies, or cryptocurrencies.
• Single-leg options only: TradeZero only supports single-leg options trading, so spread or more complicated options traders must execute each leg individually. Short-stock traders utilize these tactics for leverage and risk management. Broker is disadvantaged in options trading.
• Platform fee: TradeZero costs $59 per month for desktop and web access to accounts under $50,000. TradeZero Free, like the smartphone app, lacks key things active traders seek. Most clients utilize Pro or Web. Many internet brokers provide free platforms. Order routing and a short stock finder are exclusive to TradeZero.
• Higher transfer and other fees: TradeZero charges $30 for an aided transaction, $25 for a dividend check, $50 for outbound wire transfers, $5 for ACH payments out, and $125 to transfer an account, which is greater than other brokers. The outbound wire transfer price is twice what other brokers charge, and $75 is typical for a full account transfer. U.S. accounts under $100 that do not hold securities and had no trading activity the previous quarter are charged a $5 quarterly unqualified account fee. International accounts require a $200 minimum balance (the fee is not applied if it would create a negative balance).

Is TradeZero A Worth Broker to Get?

TradeZero has higher fees than most brokers, including $30 for an assisted trade, $25 for a dividend check, $50 for outgoing wire transfers, $5 for an ACH transfer out, and $125 to transfer an account. The outgoing wire transfer fee is twice what other brokers charge and a full account transfer fee is usually $75. U.S. accounts with less than $100 that do not own securities and have no trading activity in the preceding quarter are assessed a $5 quarterly unqualified account fee. International accounts must have a minimum balance of $200.

Aside from short selling, there are a few other things that make TradeZero stand out, such as its excellent customer service. At the same time, TradeZero is missing some pretty standard tools, like multi-leg options strategies and the ability to trade options from a mobile app. Different brokers offer desktop and mobile platforms with drop-down menus that make it easy to set up complex options strategies. Even so, TradeZero is a good option for day traders and short sellers. To keep them and get more high-volume customers, the broker will need to make its options trading much better and add more assets that can be traded (like the planned addition of crypto).

FAQs

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Source: Investopedia