TradeZero is one of an expanding number of trading platforms oriented around fast-action day trading. Unlike many of its competitors, this platform is built for the professionals. That isn’t a drawback, as day trading is a high-risk practice poorly suited to novice investors anyway. TradeZero is data rich, but asset limited. If you’re looking to get into high-volume equities trading this service may work fine for you, and it has a few interesting features, but there isn’t a particularly good reason to pick it out of the crowd.
A financial advisor can help you develop an investment strategy and financial plan for the future.
Services & Feature: What Does TradeZero Offer?
TradeZero is a feature-limited investment platform. This means it offers only a limited set of assets for investors to trade. Here, you can trade exchange-based products, meaning stocks, exchange-traded funds and warrants, as well as options contracts. TradeZero does not include major asset classes such as bonds, mutual funds, futures contracts or foreign exchange.
This is a Bahamas-based brokerage. All global investors can use TradeZero’s core brand, while U.S. investors will use TradeZero U.S. There are some differences between the services, chiefly because the company’s American service has been updated to meet U.S. securities laws and oversight.
As a service, TradeZero emphasizes day trading. This means that its service is built primarily around three forms of investment:
- Real-time data and responsiveness;
- High-volume trading;
- And highly leveraged margin trading.
It responds to these needs well. Among TradeZero’s services and features are a well-regarded shorts locating feature, which helps investors find lenders for hard to borrow short stocks. The platform offers Level II data, a niche (and often expensive) set of technical data that is largely of value to day traders and other high-volume investors. You can also select your routing options based on the speed and price that best fits your current trading, and risk-management tools allow you to liquidate positions automatically during intra-day trading if you start taking too many losses.
For high-risk investors, TradeZero offers 6:1 intraday leverage on their equity (that is, your leveraged position can be six times greater than your account holdings). Overnight positions are granted 2:1 leverage. This is higher than most platforms offer, although again that comes with commensurately greater risk.
None of these tools are unique in the market. This is the standard feature set that an investor should expect out of his or her day-trading platform, but TradeZero also does offer the full feature set that an investor should expect out of their day trading platform.
While TradeZero runs one platform, it offers four different ways to access this service. The firm’s core trading software is ZeroPro. This is a desktop client which offers all of the features that TradeZero supports, including modular windows so that you can set up your trading screen the way you want it and customizable charting across a wide spectrum of technical indicators. The browser version of this software is called ZeroWeb. This is the online portal for ZeroPro, but is surprisingly limited. In particular, ZeroWeb does not support the platform’s stock screener or options screener. This is a core feature which is very noticeable for its absence.
Investors can also use the free versions of TradeZero to access a limited set of features on their platform. One option is ZeroFree, a browser-based trading screen. There is also ZeroMobile, the firm’s app-based trading software. Both free versions of TradeZero support far fewer features than their paid counterparts.
Fees: How Much Does TradeZero Cost?
There are usually four types of fees to look out for when choosing a trading platform. You should look out for these when evaluating any investment or trading service:
- Trading Fees: Any fixed charge attached to each trade that you make. This can come in the form of a flat fee or what’s known as the “spread.” This is when your broker charges you based on the difference, if any, between the buying and the selling price of an asset.
- Trading Commissions: This is when a broker will charge you a percentage based on the volume or value of each trade.
- Inactivity Fees: Any fees that the broker charges you for not trading, such as for keeping money in a brokerage account.
- Non-Trading/Other Fees: Any form of fee for trading on this platform not covered above. For example, a brokerage might charge you for making deposits into your brokerage account, taking money out of it or signing up for additional services.
Most of the costs for TradeZero come in the form of software and data fees. Users who subscribe to the firm’s full-featured service will get access to both ZeroPro and ZeroWeb for $59 per month. ZeroFree costs nothing to access, but for a monthly fee you can add in certain features such as options trading or Level II data. At time of writing, ZeroMobile is free and had no additional options to sign up for.
TradeZero charges no commissions on most stocks and ETFs. For certain unusual transactions, the platform charges a $0.005 per share fee, which includes these types of stocks, warrants and ETFs: penny stocks; products not listed on the NYSE, NASDAQ or AMEX markets; or certain after-hours trades. Options cost $0 per contract, and $35 per contract to exercise or assign. These costs may change based on the routing options you select.
Margin loans starts at 9% interest annually, and broker-assisted trading is available for $30 per transaction. There is also a minimum account balance of $200.
Effectiveness: How Well Does TradeZero Work?
As a threshold matter, it is worth noting that SmartAsset had a very difficult time trying out TradeZero’s software, both its desktop and web-based platform. It is hard to say whether this technical problem represented a single issue or a larger problem with the firm’s usability, but it made their platform very difficult to use even from a testing perspective. However, the difficulties of a single user aside, TradeZero’s platform is generally fine.
This is a niche service, and proudly so. TradeZero is built almost exclusively for day traders and it doesn’t pretend to be anything else. That does help this platform stand out in an overcrowded market, at least to a limited degree. And the service is generally well built for this purpose. Although there are no surprises here, neither are there any disappointments. Investors looking to day trade will find all the tools they are looking for, all the data they would expect, and an interface built around industry standards.
However, while TradeZero meets expectations, it also wears its limitations on its sleeve. As a day trading platform, this service lacks most of the major asset classes that investors look for to round out the more stable sections of their portfolio. (It also lacks some of the most significant assets that many day traders look for as well, such as cryptocurrency and forex.) The withdrawal fees can also climb steeply if you move money in and out of this account frequently, as many day traders do.
You will need another brokerage in addition to TradeZero, one in which you manage your money over the long haul, and that’s ultimately this platform’s biggest problem. TradeZero is bringing nothing special to the table, and it competes against many high-quality, full-featured platforms that don’t have this platform’s limitations. While there’s no particular reason not to use TradeZero, ultimately you can just sign up for something like thinkorswim and avoid having to juggle brokerages to get everything you want.
Bottom Line
TradeZero is an investment platform built around day trading. It is a competently built platform that offers just about all the features a day trader can expect. It’s data rich but asset restricted. In the long run you’re probably better using a full-featured trading platform that can support your day trading and your mutual funds in one place. Just keep in mind that day trading is a high-risk practice poorly suited to novice investors.
Investing Tips
- Managing your investments over the long term can be tricky to do on your own. A financial advisor can help with this. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Understanding how investment returns work can be integral to your long-term success. Try using SmartAsset’s investment calculator to gain a better understanding.
Photo credit: ©iStock.com/Mirel Kipioro, ©iStock.com/Artur, ©iStock.com/Drazen Zigic