TradeZero Review 2022 – Investopedia
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TradeZero was established in the Bahamas in 2015 with a goal of providing retail investors with sophisticated tools comparable to what professional and hedge fund traders use. With no or low commissions and fees, TradeZero also has a niche in the short selling of stocks and ETFs, as they have a more extensive easy-to-borrow list than other brokers. That said, TradeZero is more like a traditional discount broker because they have limited offerings, and no traditional tools for portfolio management and related analytics.
TradeZero’s current options platform only supports one-leg options trades. TradeZero also has a very narrow range of offerings by only making stocks, ETFs, and options available for customers. TradeZero does offer a “platinum” service for accounts with at least $50,000, which provides these users with the ZeroPro and ZeroWeb platforms without the monthly charge, discounted short locate fees, a personal account liaison, and priority for platform feature requests. TradeZero is looking to improve by launching a cryptocurrency trading platform and by expanding its options trading capabilities so multi-leg options are supported by the platform. These planned improvements will help TradeZero serve its niche of active traders and short sellers. It is important to note that non-traders and buy-and-hold investors are clearly not a focus of this broker and are better off looking elsewhere for their portfolio needs.
TradeZero started as a broker, based in the Bahamas, for non-U.S. citizens to gain access to the U.S. stock, ETF, and options markets. Now, the company also offers U.S. investors access to its platforms through TradeZero America. This platform appeals to customers by providing very low cost trading, low minimum balances, as well as high intraday leverage of 4:1 for accounts with at least $500 and 6:1 for accounts with at least $2,500. TradeZero U.S. provides intraday leverage of 4:1. Research by TradeZero U.S. indicates that 70% of investors changed their strategy as a result of Covid, 34% of people are trading more frequently, and there has been a 20% increase in short selling. TradeZero is working to attract as much of this group of traders to its platform as possible, which focuses on more frequent traders, day traders, short selling, and options trading.
TradeZero announced in February 2022 that its Canadian subsidiary was admitted in Canada as a dealer-member. TradeZero had also entered into a $556 million merger agreement with Dune Acquisition Corp., a special purpose acquisition company (SPAC), on October 12, 2021, but the merger fell through. Dune filed suit in April 2022, contending they were defrauded by TradeZero’s senior leaders. In May 2022, TradeZero announced a partnership with TradeEZ for a charting overlay feature. During the same month, TradeZero America settled charges with the Securities and Exchange Commission (SEC) related to TradeZero making false statements to customers in January 2021 about restricting trading activity in meme stocks.
TradeZero has a niche speciality by helping traders find hard-to-borrow stocks and ETFs to sell short. TradeZero has built special technology that provides traders with an opportunity to pay for the right to short a specific stock. Day and very short-term traders also benefit from TradeZero’s technology, which allows traders to route their own orders for better execution if they have an account balance of at least $5,000. The platform interfaces are clean and easy to use, and allow for customization of screens. Overall, TradeZero will appeal most to day traders, active short sellers and traders looking for low costs.
Excellent primary trading platform
Extensive available to borrow lists
No commission for most ETFs and stocks
High intraday leverage
Limited product offerings
Single-leg options only
Higher transfer and other fees
Account setup, including options and margin agreements, is streamlined and simple with TradeZero, as it is at most other online brokers today. Once your account is set up, you choose which TradeZero platforms you will be using. There are four technology platforms available:
While ZeroWeb can be used on any connected device, ZeroPro is only available to Windows computers as it does not support the Mac operating system. Apple users will have to use ZeroWeb or run it in a virtual machine if they want a premium platform. All systems can be used simultaneously, and they all have streaming quotes.
All platforms have charting windows, real-time news, live streaming quotes, and access to the stock borrow locator tool, but there are some differences to note between the platforms. ZeroPro provides up to six level II quote windows, while there are only four level II quote windows on ZeroWeb, and just one on ZeroFree. Similarly, the platforms in the same order have limitations on the number of chart windows a user can have open at one time, with ten for ZeroPro, six for ZeroWeb, two for ZeroFree.
For all platforms, OTC Markets Level I quotes cost $5 per month and OTC markets level II quotes are $15 per month. Additional add-ons available for ZeroFree include the ability to add a hotkey, which costs $15 per month.
The TradeZero trading experience is smooth. ZeroPro is the desktop app, and it is a professional layout that can be customized to the traders preferences. ZeroWeb essentially replicates ZeroPro, but has a bit less flexibility and bandwidth. ZeroPro page customizations include the ability to group different windows together so the symbol changes on all when a ticker is clicked or manually entered.
In addition to a generic order entry box for stock and ETF trading, level II quote windows have the same order ticket information and hot buttons to buy or sell. When you click on a price in the level II window it populates the order ticket automatically. It is also easy to create custom hotkeys, such as a button to automatically sell 50% of a position if clicked. Charting is also very good on TradeZero, but you can’t initiate orders via the charting functionality. TradeZero has four primary trade action buttons on the stock/ETF order window, buy, sell, short, and cover. This can be confusing compared to just having a buy and sell button and may lead to some rejected orders for hitting the wrong button.
The stock locator for shorting stocks is a very helpful tool not available at other brokers, making TradeZero a good choice for traders looking to actively short markets. Monitoring the status of the account through the portfolio window made it easy to follow key account details, such as equity, unrealized and realized profits, and buying power. This information remains clearly stated at the top of the portfolio window regardless of which tab of information you want to view.
If you want to trade options on TradeZero, you can pull up the option chain in a window that has an options-specific order entry. It populates when you click on any of the options in the option chain. While that order entry functionality worked well, being limited to just a one-leg options trade is disappointing considering the sophistication of the platform and the type of customer TradeZero targets. Also, while the options order entry was easy enough to use, there were no advanced options analytics such as profitability graphs. Many brokerage platforms have much better tools for options trading, including automatic order ticket setups for spread and other multi-leg options strategies.
It is important to note that non-U.S. residents interested in day trading are able to use a TradeZero account that allows traders to go in and out of a stock as many times as the trader wants, but this same strategy is not viable in the United States. Unless a U.S. account has a balance of at least $25,000, traders will violate pattern day trader (PDT) regulations which restricts trading in and out of stock on the same day more than three times in five days. This effectively takes away a U.S. account holder’s ability to day trade, but it is a limitation shared by all U.S. platforms.
ZeroMobile is a bit of a disappointment in that it does not support options trading, but it does have the short stock locator tool, watchlists, charting, and the ability to trade. When you pull up a single stock you have an easy to use menu that lets you chart, see limited fundamental details, history of trades made in that security, time and sales, and stock specific news. There does not appear to be a general news feed on mobile. For all of these views, there are action buttons on the bottom to easily start a buy, short, or locate for sale. To have the stock locator feature on the mobile device is nice, but it is unfortunate that the mobile platform can not be customized or support OTC market level I and level II quotes.
The mobile experience is functional, but lacking consistency with the other TradeZero platforms.
TradeZero has a small list of product offerings, with just U.S. stocks, ETFs, and options available to trade. There is no fixed income, mutual fund, futures, commodities, currencies, or cryptocurrency trading available on TradeZero. Although there are plans to add crypto, investors at TradeZero currently have access to:
Order types on TradeZero are limited to market, limit, stop market, stop limit, and range orders. A range order would be a combination of a buy limit order and a sell limit order, where the trader selects ranges for the two orders, and if one of the orders is filled, the other order will be canceled. This is essentially a conditional order called one-cancels-the-other (OCO). There is also a conditional order box where you can input two trades, with the second trade only activating once the first trade has been executed. TradeZero lacks a way to enter different types of OCO orders, such as using stops to play a breakout from a price range. Also, there are no trailing stops available.
Time in force options for the trading window include good ‘til canceled (GTC), day, at the opening (OPG), immediate or cancel (IOC), and GTX (for orders from 4 p.m. to 8 p.m.).
TradeZero uses proprietary technology for order execution, with most orders spray-routed to different exchanges for the best execution. Orders can also be sent from its routers directly to the exchanges, including ARCA, NSDQ, BATS, or EDGX. Users can also send orders directly to the exchange of their choice. This leads to price improvement of $0.0076 per share for stocks and ETFs, and $0.03346 in price improvement for options contracts.
TradeZero’s trading technology stands out for short selling stocks and ETFs. TradeZero has multiple relationships that help it to obtain stock for its customers to sell short. Its short locator tool shows all the shares available to be sold short, and allows its customers to pay a locator fee to TradeZero that guarantees they have the shares to sell short. TradeZero is often able to find shortable shares that other brokers are unable to obtain.
TradeZero supports trading before the market open and after the close. Fractional share trading is not available, and TradeZero does not offer backtesting of trading strategies or automated trading strategies. TradeZero also does not allow users to select a tax lot prior to placing an order. Demo accounts with paper trading use 15 minute delayed data, and are limited to a 14 day trial for new customers, or are available to existing customers for a fee of $79 per month.
TradeZero offers commission-free trading, but this requires users to enter specific order types or there will be a commission. There are also some differences in pricing for U.S. and international customers, most noticeably in the cost per options contract and the margin interest rate. If a fee is the same on both platforms only one fee will be listed, but both rates will be provided if the U.S. fees differ from the international platform.
There are also other trading fees, which includes paying for daily short locates. Both international and U.S. customers pay nearly the same thing for these other trading fees, which are all fractions of a penny per share. In addition, there are both the locate fees for securing the security, as well as overnight borrowing fees of 4x the first night’s locate fee, and 1x the original locate fee for subsequent nights the short position is held. There are also margin rates charged for short positions held overnight.
Some of these “other account related fees,” especially any money or securities leaving the TradeZero platform are on the high side, as is the outgoing account transfer fee. International customers have to pay when sending money to their TradeZero platform.
TradeZero makes money in similar ways to other brokers that offer commission free trading, but TradeZero also uses its niche focusing on short sales to generate income which can sometimes help its customers. In addition to payment for order flow (PFOF) and use of cash balances, TradeZero also generates revenue from platform fees.
As a broker serving active, high volume traders, TradeZero offers some third party research to users for free, but it does not create proprietary research. The research offering is sparse compared to more full service online brokers. Further, TradeZero offers real time streaming quotes on its main platforms, and real-time news from Benzinga. With a low range of products available, TradeZero does not have much in the way of screeners, but they do have some fixed screens for stocks and ETFs.
TradeZero’s stock screener consists of two different lists with preset screens. One is a “Top List” that has a fixed drop-down menu the user can use to see stocks meeting various criteria. Choices available for the broad market are most active, biggest percentage gain or loss, and net change higher or lower. Each of these criteria can be run for each market—NYSE, NASDAQ, AMEX, and OTCBB/pink sheets. There is no ability to further filter this list, and this prevents users from listing only stocks or ETFs in the “Top List” or to filter for stocks meeting other criteria, such as stocks trading within a certain price range.
TradeZero also has a “Hi/Lo list” that is a waterfall listing of stocks and ETFs that have made a new daily or 52-week high or low, with the most recent high or low at the top of the list. This listing can be filtered further for listing exchange, the high/low filter (only lows, or only 52 week highs/lows), as well as filters for price range, net change range, volume, and percentage change range. TradeZero does not allow users to screen on technical or fundamental data, which is functionality widely available elsewhere.
TradeZero does not support mutual fund trading, so it does not have a screener for mutual funds. The screener for ETFs is the same functionality provided for stocks, with the output for both ETFs and stocks combined in the “Top List” or “Hi/Low” screener. Unfortunately for both the ETF and stock screener, there is no column showing security type, so the ETFs and stocks are listed together without an ability to filter or sort for one or the other.
TradeZero does not have a true options screener. Instead, traders can hit a button to obtain a common options chain for a security.
TradeZero does not provide a fixed income screener because it does not offer fixed income trading to its customers.
Beyond the stock locator to find hard-to-find stocks to short, TradeZero does not offer tools and calculators for retirement planning or other calculators that would be related to investing. This is because TradeZero’s customers tend to be active day traders that don’t have a need for those calculations. There is also an alarm manager that users can use to be alerted to various events, such as a stock trading at/above a certain level or if there is a new high or low. As mentioned, there is a “Top List” that shows most active issues in each market and a “hi/low” ticker showing when stocks or ETFs make a new high or low for the day or 52 week period. There can be multiple watchlists saved, and multiple watchlists can be used at the same time.
TradeZero has nice charting capabilities. Rather than building their own charting program, TradeZero uses ProCharts for its charting functionality. Although trading activity, such as orders and positions or the ability to initiate an order directly from a chart, are not supported in TradeZero’s charting system, the charting does work well for drawing lines and applying one of more than 80 technical studies to charts. Further, TradeZero’s charting platform has easy to use drawing tools for adding trendlines, channel lines, rectangles, and Fibonacci retracements and projections.
The user experience for charting is best on ZeroPro and ZeroWeb since they are TradeZero’s most robust platforms. Every element, such as price charts, studies, and drawing tools can be customized to show in any color. Charting on ZeroMobile is less detailed because of the smaller screens. As such, ZeroMobile offers users ten common indicators, including moving averages, Bollinger Bands, average true range (ATR), and relative strength index (RSI). Drawing is not supported on mobile because of the small screen size. Charting on ZeroFree is also good, as you have real time charting, line drawing functionality, and the ability to link charts with other screens for faster loading.
TradeZero’s focus on day trading and short term trading is reflected in their charts, which do not offer the ability to view a stock as either a monthly or weekly chart.
TradeZero does not have a true idea generator. Instead, they have a “Top List” that has a fixed drop-down menu the user can use to see stocks meeting various criteria. Choices available for the broad market are most active, biggest percentage gain or loss, and net change higher or lower. Each of these criteria can be run for each market, NYSE, NASDAQ, AMEX, and OTCBB//Pink Sheets. There are no specific trade ideas provided by TradeZero.
TradeZero provides streaming news from Benzinga. The news feed can also be filtered to show just news on a single stock symbol or filtered for specific keywords. Individual news feed lines can be clicked to read the entire story if one exists.
TradeZero does not currently produce their own research, does not offer third party research, and does not produce or provide a daily market research report.
TradeZero does not offer any cash management tools, and they currently only pay customers 0.01% interest on cash balances, so TradeZero benefits from interest revenue generated from unused cash in customer accounts. Investors looking for an account that combines banking, bill payment services, and a credit or debit card will look elsewhere for a more full service broker.
TradeZero offers a standard dividend reinvestment plan for its accounts where users can make fractional dividend reinvestments.
TradeZero does not have any built-in tools or screeners to help identify stocks and ETFs that meet socially responsible investing (SRI) and environmental, social, and governance (ESG) criteria.
TradeZero is geared more towards active traders and day traders who do not require in-depth portfolio analysis. The client portal does have some basic account monitoring, but this is geared more to the value of the account and not to analyze asset classes or the risk and diversification of a portfolio. Therefore, there is not much in the way of portfolio analysis tools on the TradeZero website.
There are trading journals and trading analysis tools available to TradeZero customers from third parties, including TradesViz and Tradervue, which TradeZero customers can use to journal trades and analyze trading strategies. Another third party platform is Kinfo, which has a direct integration to TradeZero for tracking trading performance. These third party apps have both free and paid services available.
TradeZero states on its website that it is not an education company. This is probably because their customer base skews to active traders that typically have trading experience. However, TradeZero still provides customers with some helpful educational offerings and tools, even if they don’t provide the type of in-depth and fully comprehensive educational offerings available at full service brokers such as Fidelity and Schwab. That makes sense since TradeZero customers likely focus more on day trading than on investment portfolios and retirement planning. Educational offerings delivered on the website include articles, videos, webinars, and live events/seminars. There is also a Learn link at the top right of TradeZero’s websites, which brings users to a page that has information about various trading topics. Topics are covered in short, easy to read text, with examples being pieces on unusual options activity, insider buying, market capitalization, how earnings estimates impact stocks, and how to trade analyst ratings.
TradeZero also has partner organizations involved with trader education. The U.S. platform has education partnerships with Cameron Bennion and MyInvestingClub. The international platform has education partnerships with MyInvestingClub, Livestream Trading, My Trading Club, and Balmohsin, which provides trading education in Arabic.
Beyond that, TradeZero also supports paper trading. They provide a two week demo with paper trading for free. Following this, account owners can choose to utilize paper trading for $79 per month.
TradeZero has solid customer service. Trustpilot shows a 4.7 star rating for TradeZero’s customer support, with 86% of 2,388 Trustpilot reviews giving TradeZero an “excellent” rating. Calls were answered right away and we received good support, where the representatives were able to answer questions or quickly get them answered. Where many online brokers can have long waits, TradeZero’s customer service stands out.
TradeZero’s security is up to industry standards.
TradeZero is transparent about its pricing and explains in its FAQ sections how they take payment for order flow to enable commission free trading. While there is helpful information on the FAQ sections, it could be better organized. The commissions and fees were all presented clearly on a “Pricing” link on the top menu of the website. However, the commission and fee structures, while easy to find on the website, are more complex than other online brokers offering free stock trading because a transaction may or may not generate commissions based on factors like time of day or order type.
TradeZero only supports three different account types, and customers can not open any type of retirement plans. The account type choices for Trade Zero customers are limited to just:
TradeZero is a niche brokerage company trying to provide its experienced customers with the same cutting edge active trader tools that hedge funds and professional traders use. They accomplish this in some ways, but not in others. For active day traders, TradeZero’s order routing technology, proprietary short stock locator function, and level II quotes are very helpful tools—and the trading fees are very competitive. However, TradeZero does not offer many products such as futures, fixed income, currency, or cryptocurrency trading, so some sophisticated traders may look elsewhere for a platform that includes more tradable assets.
There are a few areas beyond the short selling picture where TradeZero stands out, including excellent customer support. At the same time, however, TradeZero is lacking in some pretty standard tools, such as multi-leg options strategies and options trading on the mobile app. Competing brokers have mobile and desktop platforms with drop down menus to easily set up complex options strategies. Despite this, TradeZero is still a strong choice for day traders and short sellers. To retain them and entice more of the high-volume customers, TradeZero will need to significantly improve its options trading capabilities and add tradable assets (like the planned addition of crypto).
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PR Newswire. "New TradeZero America Study: 70% of Investors Changed Their Strategy As A Result of Covid."
Bloomberg. "Active Trading Platform TradeZero Agrees to Dune SPAC Merger."
Bloomberg Law. "Dune SPAC Sues TradeZero for 'Outright Falsehoods' About Merger."
Benzinga.com. "TradeZero Inks Partnership with TradeEZ Over 'Chart Overlays' Feature."
U.S. Securities and Exchange Commission. "TradeZero America, Inc. and Daniel Pipitone."
Reuters.com. "TradeZero settles SEC charges it misled customers about meme stock trading halts."
TradeZero. "Why Trade Zero?"
Trade Zero US. "Software page."
TradeZero US. "TradeZero Platinum."
TradeZero. "FAQ Page."