Very frequent traders who want streaming real-time data hunt for inexpensive suppliers that can also provide them access to the necessary analytical tools. If free is still too expensive, consider TradeZero, which doesn’t charge a fee for limit orders that adhere to their strict requirements or for market orders of listed stocks. Option trading is likewise free of charge. Short sellers will value TradeZero’s recently introduced proprietary Stock Locator service, which aids them in finding shares of difficult-to-borrow equities.
Is this a potential Robin Hood killer? Despite these limitations, TradeZero provides the professional active trader with far more for the same price.
How TradeZero Works
If a stock’s symbol is listed on the NYSE, AMEX, or NASDAQ and its price is $1 or above, you may trade it for free. For OTCBB, Pink Sheet, and shares priced under $1, as well as for any transactions executed during the pre-market period from 4:00 AM EST to 7:00 AM EST, there is a cost of $0.002 per share. The federal funds rate + 3% is the rate of interest on margin.
On your transactions, you continue to pay SEC and FINRA fees. Although there are no commissions on options trading, there are exchange costs. There are no inactivity charges, however an ACH transfer to your bank account costs $5.
Three software platforms are offered by TradeZero, in addition to a mobile app that is accessible to all users without charge. ZeroPro, a top-tier Windows-based platform that can be downloaded, costs $59 per month and comes with Level 2 quotes, charting, real-time news, a stock screener, and a variety of layout options. Option trading is available with ZeroPro at no extra cost.
Except for options trading, ZeroPro’s functionality is mostly integrated into the company’s web-based platform, ZeroWeb. ZeroWeb costs $59 a month as well. As the name suggests, the ZeroFree platform is free, however Level 2 quotes and options trading need additional monthly payments of $25 each. Customers get ZeroPro free of charge in addition to reduced margin interest rates if they have more than $50,000 in their accounts.
Co-founder Dan Pipitone claims that ZeroPro is intended for extremely active traders. Users may set hot buttons for expedited order entry on this customisable platform, which also has intelligent order routing. On the basis of current data, watch lists may be sorted. Additionally, conditional orders may be set up to initiate trades to close a position when an initial transaction is made.
Stock Locator for Short Sellers
In addition to offering no-commission trading, Pipitone claims that TradeZero also stands out for its Stock Locator tool. This function aids short sellers in locating difficult-to-borrow equities that may be held in reserve for them in the event that they want to sell in order to establish a position. The cost of holding stock to be sold short varies according on how much interest there is in that specific stock.
Whether or whether you execute the deal, you must pay the charge if you reserve any shares to sell short. Using Stock Locator, a client who reserved shares to sell short may now put those shares back into circulation and partially repay the cost of the reservation.
Pipitone reserved 100 shares of a stock that was falling for $2.10 during his presentation of the platform for us. It cost Pipitone $1.56 to make the reservation, but when he returned that quantity of merchandise to Stock Locator, another customer picked it up, earning him $0.54.
Pipitone claims that TradeZero clients have access to a large selection of stock that is often very difficult to borrow. According to Pipitone, “We believe that the common trader should have the same tools that the person at Goldman Sachs has.” So that you may convey your pessimistic perspective, you need have access to equities that can be shorted.
Since it began operating in the Bahamas, TradeZero has given non-American clients a way to get around the pattern day trading regulations that required them to have at least $25,000 in their accounts. The Brooklyn-based business must have $25,000 in order to operate in the United States in accordance with SEC and FINRA rules.
How Does TradeZero Make Money?
How is TradeZero profitable? The first of their four sources of income is the platform fees that the majority of their clients pay for the ZeroPro or ZeroWeb platforms as well as for add-ons to the ZeroFree platform. Additionally, they are paid for order flow and profit on margin lending. Customers of TradeZero get a portion of the interest generated on their cash holdings. Their Stock Locator tool also brings in some money for them.
We provide much more than Robinhood, adds Pipitone. “However, we are not intended for someone who is still learning the stock market. We provide tools for active traders.”
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