TradeZero Launches (Mostly) Free Trading for U.S. Customers

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TradeZero Launches (Mostly) Free Trading for U.S. Customers

Very frequent traders that want streaming real-time data search for low-cost suppliers who also give the necessary analysis capabilities. If free isn’t cheap enough, try TradeZero, which costs no fee on market orders of listed stocks and limit orders that match their specified restrictions. Options may also be traded for free. Short sellers will enjoy TradeZero’s proprietary Stock Locator service, which was recently released this week and assists them in locating shares of difficult-to-borrow equities.

Is this a Robin Hood assassin? TradeZero provides a lot more for the same fee for the truly active trader, albeit there are certain limitations.

How TradeZero Works

If the symbol is listed on the NYSE, AMEX, or NASDAQ and is valued at $1 or greater, you may trade shares for free. For OTCBB stocks, Pink sheets, and stocks under $1 per share, as well as any transactions done between 4:00 AM EST and 7:00 AM EST, there is a cost of $0.002 per share. The margin interest rate is equal to the federal funds rate + 3%.

On your transactions, you must still pay SEC and FINRA fees. Options transactions are commission-free, but exchange fees apply. There are no inactivity costs, however an outgoing ACH transfer to your bank account will cost $5.

Trading Platforms

TradeZero offers three software platforms as well as a free mobile app to customers. ZeroPro, their most expensive downloadable Windows-based platform, costs $59 a month and includes Level 2 quotes, charting, real-time news, a stock screener, and customizable layouts. You may trade options with ZeroPro at no extra cost.

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Except for options trading, the majority of ZeroPro’s functionality is embedded within the firm’s web-based platform, ZeroWeb. ZeroWeb costs $59 per month as well. The ZeroFree platform is, as the name suggests, free, but you must pay an additional $25 per month for Level 2 quotes and options trading. Clients that have more over $50,000 in their accounts qualify for ZeroPro as well as reduced margin interest rates.

According to co-founder Dan Pipitone, ZeroPro is intended for very active traders. It is a customisable platform with intelligent order routing and the ability for users to designate hot buttons for speedier order input. Watch lists may be arranged according to real-time data. Conditional orders may also be set up so that trades to leave a position are submitted when you execute an initial transaction.

Stock Locator for Short Sellers

Aside from no-commission trading, Pipitone believes TradeZero’s Stock Locator distinguishes itself. This tool assists short sellers in locating difficult-to-borrow equities that may be saved for their usage if they decide to sell in order to establish a position. The charge for reserving shares to sell short varies based on the amount of demand for that specific stock.

If you reserve any shares to sell short, you must pay the charge whether or not the sale is completed. Stock Locator also allows a client who reserved stock to sell short to bring those shares back into play and reclaim part of the reservation fee.

During Pipitone’s presentation of the platform for us, he reserved 100 shares of a company in decline for $2.10. When he returned that lot of stock to Stock Locator, another customer picked it up and Pipitone got $0.54, cutting his reservation fee to $1.56.

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Customers of TradeZero, according to Pipitone, have access to a large amount of stock that would otherwise be exceedingly difficult to borrow. “We believe that the common trader should have the same tools as the person at Goldman Sachs,” Pipitone adds. “You should be able to convey your pessimistic perspective by having access to shortable stocks.”

Reserving shares of stock to short using TradeZero’s Stock Locator 2.0.

TradeZero has been in business in the Bahamas and allowed non-U.S. customers to avoid the pattern day trading rules that required them to have at least $25,000 in their accounts. The Brooklyn-based company is operating in the U.S. under SEC and FINRA regulations so that $25,000 is mandatory for American residents.

How Does TradeZero Make Money?

How does TradeZero make money? They have four sources of revenue, the first of which is the platform fees that most customers pay for the ZeroPro or ZeroWeb platforms, and for add-ons to the ZeroFree platform. They also receive some payment for order flow, and earn money on margin lending. TradeZero shares the interest earned on cash balances with their customers. They also generate some revenue with their Stock Locator tool.

“We offer a lot more than Robinhood,” Pipitone says. “We’re not targeted to someone who is just figuring out the stock market though. We are making tools for the frequent trader.”

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