Let’s dive in with this TradeZero review. Looking for a way to get around that pesky PDT rule if you’re outside the USA? Want to save some coin in commission fees? Well today you’re in luck, we’re doing a review of this popular broker. As a result, this just might be the broker you’re looking for. Brokers are such an important part of trading because it’s the hub in which everything happens. Therefore, you want to make sure you pick the broker that best suits your trading style.
Table of Contents
Review of TradeZero
Trade Zero is a legit online discount brokerage firm offering commission free stock trading, free limit order trades, no PDT rule (as long as you are not a US resident, more info on that below), high day trading leverage and state-of-the-art trading software. In fact, they are attractive to active traders looking to keep costs down.
Can Us Citizens Use TradeZero?
- US Citizens cannot use Tradezero.co which is based in the Bahamas. You CAN use TradeZero America Inc, which is based in the US, and is the US compliance version of trade zero. Kinda confusing, but just know that there are TWO separate entities. If you’re outside the US, use the former, if you are inside the US, use the latter. For US citizens, there are other options for PDT avoidance.
- Even if you find your way around the PDT rule, you still need to know the right ways to trade. And not over-trade! (Don’t worry, we’ll teach you in our free courses!) Some of the benefits of using trade zero are:
Is TradeZero a Good Broker?
- Tradezero is a good broker because it offers zero commissions, high leverage, and customized trading software powered by DAS TRADER.
That,s right, TradeZero is one of the early brokers who made their claim to fame with 100% free limit orders. Of course, like anything in life, conditions apply.
Just as long as the limit order is over 200 shares and doesn’t create an immediate match, the trade is free. Keep in mind the symbol must cost more than $1 and trade on the NYSE, AMEX or NASDAQ to be eligible.
No free OTC or Pink Sheets orders, but that is pretty commonplace pracctice, even when comparing them to other free commission brokers.
That being said, you pay a .99 cent flat fee when buying less than 200 shares. Click HERE to see how the updated pricing works
What does “unmatched” mean? Well, it means you as the trader must provide liquidity. You do this by selling or shorting on the inside ask/offer or buying/covering on the inside bid.
High Day Trading Leverage
We have to give a shout out to offshore brokers and their ability to offer high day trading leverage. This can be a catch 22, so consider yourself warned.
Margin is a loan extended by your broker that allows you to leverage the funds and securities in your account to enter larger trades. You can get in over your head trading on margin, and we don’t want you getting carried away with that.
So, what does this mean for you? Well, margin is based on account size. If you have less than $1000 cash in your account you get zero margin. Cash accounts just under $2,500 receive 4:1 leverage.
Now this is where things get interesting, once you have over $2,500 in your account, leverage goes up to 6:1. In laymen terms, with a $5,000 account you can trade $30,000 worth of equities.
However, larger trades means larger risk and you don’t want to be gambling.
How Does TradeZero Make Money?
- Tradezero makes money a few different ways. The obvious ways are selling access to their ZeroPro and ZeroWeb platforms which are powered by DAS TRADER. Another way is they are paid for assisting with market order flow by other brokers. Lastly, they earn income on providing margin to traders.
- Zero Pro which is their desktop software, is $79 per month with level 2 data. Zero Web, the web based platform is $59 per month. If you like to trade while you wait for appointments, their Zero Mobile platform is free!
- In fact, if you trade high volumes your monthly fees are waived! Winning!
An inside look of the ZeroPro platform.
- Looking for a stand-alone program with precision control and depth? Look no farther than the ZeroPro platform. It provides all the bells and whistles needed for trading. This platform has advanced charting, direct order routing with short-locate request buttons, conditional orders, and options trading just to name a few.
Users of ZeroWeb have direct market access complete with level 2 data and hot keys. In fact, all of these features are mission critical for the active trader.
Since ZeroWeb trading is a browser based platform, it will run on any connected device. All windows update dynamically tick-for-tick and in real-time. As a result, windows can be linked with one another and the layout is totally customizable.
The ZeroWeb Level 2 window includes all market depth, Level 1 information and streaming time and sales. Orders can be placed by pointing or clicking or using advanced hot keys. Check out a list of the top trading companies.
Access your trading account wherever using your iPhone or Android mobile. Trade and locate stocks in real-time when you’re on the move.
View real-time streaming quotes, access account portfolio, charts, locate hard to borrow stock, check open orders and execution history.
The mobile platform links to THE Pro and web platform. Orders that are sent update dynamically in all platforms.
Borrows & Locates
For hard to borrow stocks (for example, low float stocks) – They are exceptional! Short-sellers take a deep breath, TradeZero has short-seller access to 14,000 symbols. Yes, I said it, 14,000. Thank the lack of SEC regulations for that.
For those of you who love to short like me, it’s a traders dream. Cost wise it will set you back about $0.03 on those hard to borrow intraday shorts. Looking to hold overnight? It’s 7x/share cost for the first night and 1x/share cost thereafter.
They have shorts on virtually any hard to borrow stock you can imagine, and of course, you do have a pay a premium to locate these shares (as you would with any other broker).
How Is the Execution?
Because TradeZero offers US market access and clears through a US clearing firm, Trade Zero is subject to Reg NMS. This means firms are obligated to provide investors with executions at the best possible price.
As long as you are trading high volume mid caps and large caps, you shouldn’t have a problem. Trading low float stocks will always bring execution issues no matter what broker you are using.
Knowing how to use hot keys is vital to success for day traders. The split-second order execution ability determines if you’re eating Filet Mignon for supper or ground beef.
In my opinion, the hot keys are the same caliber as Sterling Trader Pro and DAS Pro, both leaders in their field.
Here is the Zero Free Platform which works on all devices, ZeroFree is a browser based platform that will run on most devices, but like most of these platforms, works best on google chrome. Features you can expect with this are good. Direct hard to borrow locating, Hot-keys, Level 2, Custom Watch lists, and fairly decent charting to name a few This is a great platform for newbies to start with.
TradeZero Minimum Deposit
- Minimum deposit is $500 for a cash account. That means no margin for you.
- Accounts with $500 to $2499 will give you access to 4 to 1 leverage.
- Now if you have $2500+ you are getting access to 6 to 1 leverage.
What’s the Downside?
- Unfortunately, U.S. residents without citizenship in another country will have their application rejected, unless they go specifically for the US version of tradezero.
Also, there’s always a tad more risk with your money being offshore. However, according to their website, TradeZero has insurance through Bahamas First General and Lloyds of London.
In fact, they have an A, excellent rating. That’s a good peace of mind to have if you plan on opening an account. We also respect them for creating a US version and a global version…we think that shows they are trying to do the right thing.
What Type of Trader Is It Best For?
- In a nutshell, this TradeZero review shows that this broker is best for non-US traders who don’t have $25,000 cash in their account. If you can handle 200 share limit order trades it’s perfect. It’s a great starter platform and appears to be pretty popular with our members who are outside the USA.
- Short-sellers especially will love the short locates Trade Zero offers. US traders don’t despair, check out the discount brokerage ETRADE or Interactive Brokers for more advanced trading tools. We have a full list of reviews and data on all the brokers out there with our first hand experience.