TradeZero Review

Trading stocks might be a riskier approach when compared to long-term investing, but let’s be honest—trading just has a certain appeal to it that draws some of us in.

And there’s a reason why: Short-term trading can allow investors to grow a nest egg or increase the worth of their accounts much faster. 📈

So why doesn’t everyone do it? Well, active trading requires hard work, dedication, nerves of steel, and a lot of effort. Yet, even if all of those elements are present, it’s still riskier when compared to long-term investing.

There is, however, one thing that can go a long way in mitigating that risk—and that’s a good brokerage. Don’t get us wrong, even long-term investors will benefit from finding a good brokerage, but when it comes to stock trading—fast execution speeds, complex order types, and powerful analytical tools make a world of difference.

If you haven’t yet decided on a brokerage, or are one of the many retail investors that have entered the markets for the first time since the COVID-19 outbreak, getting your choice of broker right on the first try is of the utmost importance. TradeZero is an interesting case – it is a relative newcomer, only having been in operation for some seven years, but the brokerage has already made waves and amassed a loyal user base.

The brokerage offers plenty of features that short-term traders will find appealing. While this brokerage isn’t the end-all be-all for every investor out there, traders that have any interest at all in short-term trading should take a closer look at TradeZero.

What is TradeZero? 👨‍🏫

TradeZero makes up two distinct broker-dealers. TradeZero International is based in the Bahamas that was founded in 2014. As such, it is regulated by the Securities Commission of the Bahamas.

TradeZero America is a U.S. broker-dealer, on the other hand. It’s a FINRA member, and provides an investment offering that is tailored to investors and traders in the U.S.

The History and Growth of TradeZero 📖

TradeZero International is a Bahamian dealer-broker founded in 2014 and headquartered at 204 Church Street, Nassau. The brokerage quickly gained popularity owing to its competitive fees, direct market access, wide array of tradable assets, and features purpose-built for active traders and short-sellers.

That is a solid success story on its own – but it doesn’t end there. In 2019, the company expanded to the U.S. – with a Brooklyn-based branch called TradeZero America, which is SEC-regulated and a member of FINRA and the SIPC. It has also experienced tremendous growth, particularly since the GME and AMC short-selling saga has caused a surge in account applications for TradeZero.

Regulation and Licensing 📃

As discussed, TradeZero actually encompasses two entities – TradeZero International and TradeZero America. TradeZero International, headquartered in Nassau, is subject to Bahamian regulations and laws and falls under the purview and supervision of the Securities Commission of the Bahamas.

TradeZero America, on the other hand, is regulated by the SEC and FINRA. Although both of these regulatory bodies impose strict rules, offshore jurisdictions (like the Bahamas) sometimes get a bad reputation. Still, owing to the fact that TradeZero obviously has no issues with complying with very strict SEC regulations, it’s safe to say that they are trustworthy.

The differences between the two entities encompass a couple of fees, account types, as well as the pattern-day trading rule – but on the whole, the differences are quite minor.

Investment Selection with Trade Zero 📜

Both TradeZero International and TradeZero America offer the same type of investments. Clients will gain access to stocks, ETFs, warrants, and options – but there are a couple of noteworthy facts to mention here.

While this investment selection isn’t modest by any stretch of the imagination, it still struggles to keep up with some of the competition – the lack of bonds, futures, and mutual funds is keenly felt.

When it comes to stocks, only stocks that are listed on the major U.S. exchanges (NYSE, NASDAQ, AMEX) are tradable, meaning that there is no access to foreign markets – and options trading will incur a flat fee of $25 per month if done via the Zero Free platform.

The largest drawback in this regard is the lack of fixed-income securities. Although the brokerages lack the capacity for crypto trading as of early 2022, the feature is slated for release.

Another benefit of TradeZero is that the brokerage supports over-the-counter (OTC) trading. Penny stocks and pink sheets might be risky investments, but savvy traders who know how to utilize these volatile securities can make a lot of money off of them.

However, access to OTC trading isn’t free of charge – for basic access, a $5 monthly fee is charged, while level 2 data for OTC stocks will set traders back $15 each month.

Different TradeZero Account Types 🗃

TradeZero offers a couple of different account types – and while all of them offer enticing features, they do also come with different requirements and capabilities. Investors should make an effort to identify the account type that is best suited to their needs.

Demo Account ⏳

Demo accounts are a rather commonplace feature – they allow potential users to become acquainted with a brokerage’s offerings and trading platforms before committing. Both TradeZero America and TradeZero International offer a free seven-day trial account.

While seven days might be enough to get familiar with the platform, stock trading is generally risky and requires practice. Seven days certainly isn’t enough time to develop, test, and compare strategies – on top of that, the free seven-day trial account operates with a 15-minute information delay, and the execution of orders doesn’t accurately reflect real market conditions.

Fortunately, traders who have funded an account can gain access to a live paper trading account that doesn’t expire within a week and provides a much more accurate representation of a real trading experience – however, this doesn’t come cheap, as this feature will set traders back a hefty $79 per month.

Cash Account 💵

To open a cash account, U.S. traders will have to make a minimum deposit of $2,500, while clients from other jurisdictions will only have to deposit $500. 

Cash accounts offer U.S. traders an opportunity to make as many day trades as they want without triggering the pattern day trading rule – however, these trades can only be made with settled funds, and the rate of growth that can be achieved with a cash account is far inferior to that of a margin account.

However, investors that plan on long-term buy-and-hold investing will find this account type a good fit for the purposes of investing in ETFs, index funds, and stocks.

Margin Account 📝

Funding an account with the $2,500 necessary to access the trading platforms will also qualify users for margin. TradeZero International clients will have to pay a margin rate of 8%, while TradeZero America customers are slightly more fortunate, being subject to a slightly more appealing 5% margin rate.

Keep in mind, however, that U.S. clients cannot purchase equities that cost less than $3 on margin, and that for short positions priced at $2.50 or less, the margin requirement is 100%. The maximum leverage that is available to clients also differs between the two brokerages – but we’ll cover that later.

Corporate Account 💼

Although not geared toward retail investors (obviously), TradeZero does also offer corporate accounts. Opening such an account requires a $50,000 minimum investment, as well as a two-part onboarding process. 

The benefits of a corporate account aren’t publicly stated – instead, they are approached on a case-by-case basis in contact with TradeZero, but mostly concern trading fees – potentially making this account type the best for high-frequency trading.

TradeZero Platinum 🏆

TradeZero Platinum is only available to TradeZero America clients who maintain an account value in excess of $50,000. Users who qualify for this account type receive access to ZeroPro, ZeroMobile, and ZeroWeb free of charge, and the fees associated with level 2 data are likewise waived.

On top of that, Platinum members also receive a discount on the margin interest rate (3.9% down from 5%), as well as a 7.5% discount for short locations. Traders who qualify will also get access to a personal account liaison who is a licensed series 7 representative, as well as access to beta versions of upcoming software and the ability to submit feature requests that will be reviewed by TradeZero’s team for consideration.

All TradeZero America clients whose accounts exceed $50,000 in value are automatically enrolled and receive the benefits that have been discussed – there is no sign-up process involved.

Pricing & Fees – TradeZero 💰

Stocks listed on NASDAQ, the NYSE, or AMEX with a share price of over $1 can be traded commission-free using market and limit orders. Buying or selling these same stocks during pre-market hours trading incurs a small $0.003 fee per share.

Equities with a price of $1 or less will incur a $0.005 fee per share when traded, with a minimum fee of $0.99 and a maximum fee of $7.95 per trade. The same fees apply when buying and selling OTC stocks and pink sheets. Options can also be traded commission-free – however, traders will have to pay an options contract fee totaling $0.25 per contract. Exercising an option costs $35 per line.

When it comes to platform fees, access to both ZeroWeb and ZeroPro costs $59 per month. Access to OTC markets with level 1 data costs $5 a month while adding level 2 data bumps the price up to $15 a month. Clients who want to utilize advanced hotkeys on the free-to-use ZeroFree platform can purchase an add-on for $15 per month.

As far as other fees go, broker-assisted trades incur a $30 fee, unqualified accounts incur a $5 fee, outgoing ACH transfers will set investors back $5, while return ACH transfers incur a $50 fee. Outgoing wires are priced at $50, and so are returned wires – while outgoing account transfers cost $125. TradeZero International clients will also have to pay $50 per outgoing withdrawal and $25 for each incoming deposit under $500.

TradeZero’s Trading Features 👨‍💻

As we might have mentioned before, TradeZero’s features make it a particularly good brokerage for investors interested in short-term trading. In fact, the fee and commission structure, as well as the wide variety of features specifically made with the short-term in mind make this one of the top brokers for shorting stock.

Trading Tools Built for Shorting 🛠

TradeZero’s most notable feature for short-sellers, by far, is the short locate feature. Short-selling works by borrowing a stock, selling it, and then returning it to the lender at a later date – if the stock’s price falls in the meantime, the difference can be pocketed as profit.

TradeZero offers a short locate feature – basically, the brokerage finds someone willing to lend a share, in exchange for a small fee that varies on liquidity and the stock in question. While this is by no means a feature unique to TradeZero, the brokerage has executed it flawlessly – on top of that, TradeZero allows traders to sell back unused locates, or to pass them on to other traders, recouping up to 50% of the cost of the locate itself. 

Holding the locate overnight will incur a fee equal to four times the locate’s original price, and an additional fee equal to the locate’s price per subsequent day, including weekends and holidays. Keep in mind, however, that TradeZero does have a few rules regarding short selling. For one, cash accounts aren’t allowed to short sell – and if that wasn’t enough, stocks worth less than $3 cannot be shorted.

Level 2 🎚

Level 2 quotes offer investors additional insights into market depth and momentum. While level 1 quotes are sufficient for long-term investing and most purposes, many short-term strategies receive tremendous benefits from level 2 quotes.

Unlike level 1 quotes, which show the national best bid and offer (NBBO), level 2 quotes show who is placing orders, whether or not they are buy or sell orders, the size of those orders, as well as prices. Having direct access to the order book in this manner allows for a much more accurate approximation of liquidity, as well as a better idea of what the ideal entry and exit points for a trade are.

Although successfully utilizing level 2 quotes requires a lot of experience, several strategies such as day trading and scalping can reach their full potential with this feature.

Leverage ⚖

Leverage is universally held to be one of the more important features for short-term traders and day traders. Both TradeZero International and TradeZero America offer leverage, but the conditions and leverage provided vary between the two.

For TradeZero America clients, a leverage of 2:1 is provided to all clients who meet the minimum deposit requirement of $2,500. When the account value exceeds $25,000 (the same amount required for pattern day trading), clients gain access to 4:1 leverage.

Things are slightly different when it comes to TradeZero International. For clients whose account worth is between $500 and $2,499, leverage of 4:1 is available. When the account value is greater than $2,500, clients can make use of 6:1 leverage. However, in the case of both brokerages, a maximum leverage of 2:1 is in place for after-hours trading.

No Pattern Day Trading ☀

Brokerages that are regulated by the SEC and FINRA have to comply with pattern day trading rules. In essence, this rule stipulates that traders who make four or more day trades in a five-day rolling period in a margin account have to maintain an account balance of at least $25,000 in order to avoid a margin call.

However, while this obviously applies to TradeZero America, TradeZero International isn’t regulated by the SEC and FINRA – it is an offshore brokerage regulated by the Securities Commission of the Bahamas, and as such, it doesn’t have to comply with the same regulations. 

This means that there is no pattern day-trading rule associated with TradeZero International. Clients outside the U.S. can day-trade to their hearts’ content without worrying about maintaining a high account balance.

After-Hours Trading 🕔

After-hours trading refers to the ability to execute trades outside of regular market hours (9:30 a.m. to 4 p.m. ET). After-hours trading sessions experience lower liquidity and higher volatility – these aren’t exactly beginner-friendly conditions, but skilled traders can and do make large profits in these sessions.

There are two after-hours sessions – pre-market trading and post-market trading. Post-market trading begins at 4 p.m. and concludes at 8 p.m. – while pre-market trading begins at 8 p.m. and ends at 9:30 a.m.) TradeZero offers access to both of these trading windows. 

While after-hours trading is generally the domain of institutional investors, retail investors should take note – most of the gains in the stock market actually occur during after-hours trading.

The ability to trade after hours brings a couple of unique and important benefits to the table – chiefly, those who use the news to actively trade get an opportunity to react to any important announcements (such as earnings releases) before the opening of the next day’s market. On top of that, finding time to trade during regular market sessions isn’t always possible – a regular 9 to 5 job severely curtails trading opportunities.

Direct Market Access 🎯

Clients who maintain an account value above $30,000 get access to direct market routing. This feature allows investors to choose how orders are routed – with the possibility of receiving a small payment in return for providing liquidity.

Direct market access also makes orders visible to the entire market. This results in a more even playing field and allows investors to gauge liquidity. On top of that, DMA results in faster trade execution – something that high-volume traders will find most beneficial. And last but not least, DMA allows for complex algorithmic trading – a strategy that, while it is not beginner-friendly, holds the potential for great returns when executed by seasoned traders.

But it is hard to overstate how complex DMA trading is. It entails its own fee and commission schedule and its own set of regulations. This feature isn’t all that important for long-term investors – but for short-term traders, the lightning-fast execution speeds guarantee optimal prices.

Different Platforms Offered by TradeZero

TradeZero is quite a versatile brokerage as far as platforms are concerned – users have access to three distinct platforms with varying features. While the basic platform is free to use, the more advanced ones come with a monthly subscription.

ZeroPro 🌟

ZeroPro is the brokerage’s flagship platform – it includes the most powerful features and is the best platform available overall. It doesn’t come cheap, however – at $59 per month, the price of using the platform comes in at just over $700 for one year – not exactly beginner-friendly.

However, investors that can afford the asking price won’t be disappointed. The platform is highly customizable, supporting up to six windows of level 2 information, and 10 windows of charting with technical indicators – along with the ability to save custom layouts. On top of that, traders looking to maximize execution speed and make lightning-fast trades will no doubt make use of the advanced hotkeys feature.

Although the platform might be a bit overwhelming, the sheer amount of features will appeal to advanced traders. An embedded stock screener, real-time news, watchlists, and a list of the top gainers and losers in the stock market make navigating through vast amounts of information slightly easier.

Like all the platforms that TradeZero offers, ZeroPro has a short-locate feature – but it is the only platform that supports options trading. That might not seem like a big deal on the surface – but it goes a long way in expanding the brokerage’s already limited offering of investments.

Like most high-end platforms, ZeroPro supports complex order types such as conditional orders, and also provides a neat overview of a trader’s portfolio, making it easier to backtest and review strategies.

The platform doesn’t have any major drawbacks – with over 70 technical indicators and features purpose-built for short-term trading, ZeroPro earns high marks across the board.

ZeroWeb 🌐

As expected, ZeroWeb offers less functionality than ZeroPro – but seeing as how both platforms come in a package deal, it still serves as a more accessible middle-ground between the free and premium platforms.

The only major advantage that ZeroWeb has over ZeroPro is accessibility – it can run on almost any device, including phones, laptops, tablets, and desktops. So, what’s the tradeoff?

Although ZeroWeb features a short locate service and real-time data, it lacks a lot of the functionality of its more advanced counterpart. There’s no built-in stock screener or alert feature, no list of the top gainers and losers of the day, and the platform does not support options trading.

However, it should be noted that we’re comparing ZeroWeb to a pretty advanced platform – ZeroWeb itself is nothing to scoff at. Advanced hotkeys are still supported, and the platform can display 6 windows of technical indicators for strategies such as swing trading and charting simultaneously – along with 4 simultaneous level 2 windows.

The custom layout and window linking features are on par with ZeroPro, and the platform also supports up to 5 watchlists that can each contain 30 stocks, all of which are updated in real-time, tick by tick.

Users will also find an intuitive and well-designed portfolio window that shows all open positions, real-time profit and loss, as well as buying power, order history, and the ability to cancel orders. 

Although ZeroPro is the more advanced platform, ZeroWeb deserves praise – it is quite customizable and powerful in its own right, and the drawing and charting tools, along with the technical indicators and hotkeys make it a powerful platform in its own right.

Zero Free 💸

ZeroFree is the only platform the brokerage provides (with the exception of the mobile app) that is free of charge. Understandably, it lags behind the other two platforms in terms of features, but it does have a few highlights of its own.

The most important thing to note is that ZeroFree is in a very specific and strange spot. While the platform is decent, both the $2,500 required for U.S. clients and the $500 required for international clients can be utilized more wisely in terms of platforms.

ZeroFree features level 2 data, real-time news, and the ubiquitous short locate feature, as well as real-time level 1 data and window linking. There are a few components that are missing, however.

The platform lacks the ability to trade options, doesn’t have a stock screener, and doesn’t support alerts. On the bright side, watchlists are included, and the amount of technical indicators available is the same as the other two platforms. 

However, this is significantly hampered by the fact that only one level 2 window can be open at a time, or only two windows of technical indicators and charting. Advanced hotkeys are available as a feature – however, ZeroFree users will have to fork out $15 per month for this addon.

ZeroFree is a decent platform – beginners and long-term investors alike should be perfectly content with what is on offer – but the large minimum deposits mean that the platform is sorely underwhelming when compared to competing brokerages.

TradeZero Mobile App 📱

Available for both Android and iOS devices, TradeZero’s mobile app, ZeroMobile offers quite a few appealing features – but it also falls short in a couple of key areas. The app is available free of any additional charge, no matter what account type/platform a user uses.

ZeroMobile is well-designed, sleek, and intuitive. It supports watchlists, charting with indicators, real-time quotes, as well as hard-to-buy locates, access to fundamental data, and a selection of curated headlines. The brokerage has also announced plans to include options trading in a later update – but for now, only stocks can be traded via the app.

So, what about the drawbacks? For one, the app is the same no matter what tier of subscription an investor chooses – and while the level of functionality is approximately on par with that of the free platforms, users who are used to ZeroPro will find the lack of functionality jarring.

The app lacks customization options, level 2 quotes, and a stock screener, along with alerts, customization options, real-time quotes, and window linking. The inclusion of these features would make actually trading via the mobile app much more viable – as it stands now, it is mostly fit for monitoring positions.

TradeZero Customer Support, Research, and Education ☎

TradeZero’s customer support can be reached via phone, e-mail, and live chat. Support is available in a wide variety of major languages, including English, Spanish, Chinese, German, French, Italian, Portuguese, and Turkish.

Customer support is available 24/7, although waiting times can last as long as 20 minutes, and getting an answer to a question might take a couple of minutes.

As far as research and education go, the brokerage’s offerings are slim. Apart from a few platform tutorials and rudimentary explanations, such as an FAQ page, there’s not much in the way of education – and the brokerage doesn’t offer any research, apart from a selection of third-party articles.

Advantages and Limitations of TradeZero

It wouldn’t be unfair to call TradeZero a broker with a narrow specialization – and that specialization is short-term trading. The ability to trade stocks without paying commissions or fees, along with level 2 quotes, short locates, and quite enticing margin and leverage make the broker a fantastic choice for short-term traders. 

The addition of after-hours trading, fast-order execution, and access to OTC stocks only serves to further sweeten the pot. However, that specialization does come at a cost – the brokerage sacrifices usability in several other areas to achieve this.

The most glaring limitation of TradeZero is the array of tradable assets. Although short-term traders like short-sellers and day-traders will find the investment offerings sufficient, the lack of fixed-income securities, mutual funds, and futures is quite a sore spot for more versatile investors. On top of that, there are still a couple of antiquated fees associated with the brokerage that most of the competition has already gotten rid of.

Another notable limitation is the supported withdrawal and funding methods. Clients can withdraw funds to credit cards, debit cards, and banks – but on the flip side, only wire transfers from a bank are supported for funding an account. And lest we forget, the charges for using the more advanced platforms that TradeZero has on offer are nothing to scoff at, either.

In comparison to many other brokerages, TradeZero America requires a high minimum deposit. Although that might seem like an accessibility issue, TradeZero’s suite of features isn’t really suited for beginners, so we wouldn’t necessarily consider this a significant drawback.

Setting Up the Account ⚙

Setting up an account with TradeZero is quite simple and can be done completely online – but getting approved might take a few days. After signing up on the brokerage’s website, investors can open an account by providing several documents. These include a proof of address such as a utility bill or bank statement no more than three months old, and a scanned copy of an identity document such as a passport or a driver’s license.

Once those documents are submitted, all that’s left to do is to fill out a relatively simple questionnaire dealing with risk tolerance and investment experience. Once that’s taken care of, the account should be approved within a couple of days.

TradeZero International: Pros, Cons, Similarities, and Differences 🌍

While both TradeZero America and TradeZero International offer access to the same securities and trading platforms, there are a couple of major (and more than a few minor) differences between the two.

Unfortunately, this isn’t a pick and choose situation. U.S-based traders can’t open an account with TradeZero International (and neither can Bahamian residents) due to local laws, and international clients can’t open an account with TradeZero America, due to the sign-up process.

As far as the biggest differences go, the minimum deposit, available leverage, and rules around PDT take center stage. While TradeZero International requires a modest $500 to fund an account, TradeZero America requires five times as much – a full $2,500. 

TradeZero America affords users maximum leverage of 4:1 if the account value exceeds $25,000 – in comparison, TradeZero International allows for leverage of 6:1 with the only requirement being an account worth more than $2,500.

As an offshore brokerage, TradeZero International doesn’t have to comply with U.S. regulations – the most significant result of this is that the brokerage does not enforce pattern-day trading rules. In effect, this means that the barrier toward high-frequency day trading is much lower.

TradeZero America, however, has to enforce PDT rules – investors planning on making four or more day trades in a five-day rolling period have to maintain an account worth at least $25,000 in order to avoid having the account flagged or triggering a margin call.

While the brokerages utilize different providers of insurance, in practice, this makes little to no difference. A similar situation is in play regarding fees and commissions – while TradeZero International might charge a slightly higher rate, the difference is in the order of cents, not dollars.

Final Word: TradeZero 🏁

Thanks for sticking with us until the end of the review. TradeZero is a fairly unique brokerage – it has identified a very specific niche and focused on providing the best possible service to short-term traders.

Although there are a couple of caveats associated with the brokerage, like the fairly high minimum deposit, investors that can afford the buy-in will find a brokerage whose platform, fee structure, and unique features are tailor-made for short-selling and day trading.