Warrior Trading Blog

TradeZero Broker Review 2020

TradeZero
  • Value For Investors
  • Value For Active Traders
  • Commissions & Fees
  • Platform & Tools
  • Customer Service
  • Order Execution
  • Mobile Trading
  • Options Trading
4.1

Summary

TradeZero offers competitive commissions along with a powerful platform for active traders and direction market access. The biggest downside is they don’t allow US citizens to open accounts with them.

Pros

  • Wider range of investment vehicles than some other day-trading firms offer.
  • Several platforms to choose from.
  • Software fees are competitive.
  • Rebates are available for active traders.
  • Two separate insurance policies.
  • No PDT rules.
  • Only $500 is required to start day trading.
  • High degree of leverage with a small balance.
  • No additional fees for infrequent traders.

Cons

  • Not regulated by the U.S. government.
  • No SIPC insurance.
  • Both forex and futures are missing in action.
  • Customer service is available only during the weekday.
  • Wiring money into and out of an account regularly will get expensive.
  • Low-priced stocks have lots of restrictions.

TradeZero Brief Overview

TradeZero is a Bahamian brokerage firm that offers some enticing day-trading services at low cost. There are a few caveats that some traders will need to take notice of, however. Here’s the lowdown:

Insurance and Regulatory Framework

TradeZero is headquartered in the Bahamas and regulated by the Securities Commission of that country. It is not a member of FINRA, the SEC, or SIPC. Although it’s not a part of SIPC, TradeZero accounts are insured.

The broker-dealer has policies with Lloyds of London and Bahamas First General. The latter group has a rating of A- (considered excellent) from A.M. Best.

Available Services

TradeZero offers:

  • ETF’s
  • Stocks
  • Warrants
  • Options

This is a larger list than some offshore brokers offer. Capital Markets Elite Group, for example, only offers trading in stocks.

In addition to equity trading on the major American exchanges, TradeZero also provides access to the over-the-counter marketplace. Extended-hours trading (both pre-market and after-hours) is available; and so is day trading.

Day Trading at TradeZero

TradeZero provides many services that day traders need. These include margin, direct-access routing, Level II quotes, short locates, and a professional-level desktop platform.

Perhaps its biggest advantage in this area is the lack of pattern day trading (PDT) rules. Because the brokerage firm is not subject to SEC regulation, there is no $25,000 account minimum to day trade. The broker does impose a $500 account minimum for day-trading privileges.

Leverage

TradeZero allocates leverage based on account size:

  • Accounts that have at least $2,500 in assets can day trade with 6:1 leverage.
  • Accounts with 6:1 leverage cannot have more than 75% of margin buying power in a single holding.
  • Accounts above $500 get 4:1 leverage.
  • There is no leverage below $500.

TradeZero prohibits accounts from holding more than 2:1 leverage at 3:55 pm, EST (5 minutes before the closing bell). The broker states that it reserves the right to cover or sell securities to bring leverage below this level.

Account Policies 

There are a few policies that the most ambitious of traders may find unpleasant: 

  • Equities priced under $1.00 can’t be shorted.
  • Equities below $3.00 are cash only.
  • Equities under $0.10 can’t be traded at all.
  • The broker will close any account that slips below $100.

Nationality Restrictions

Maybe the worst policy of all is TradeZero’s nationality policies. The brokerage firm will not accept applications from U.S. citizens or U.S. residents. When we tried to open an account, the United States was not a selectable country in the online application.

Oddly, TradeZero also doesn’t allow Bahamian citizens to open accounts.

TradeZero Pricing

As its name implies, TradeZero offers (some) equity orders commission-free. To qualify for the $0 price tag, an order must be an unmatched limit order. And the stock must trade at $1.00 or higher on the Nasdaq, AMEX, or NYSE.

Other orders cost $0.005 per share with a $0.99 minimum. Placing a trade with a live agent costs $20.

Short locates for hard-to-borrow shares incur fees. They are based on the difficulty to borrow the stock on that market day.

Option contracts carry a 99¢ base with a 79¢ per-contract charge. Assignments and exercises cost $35 each.

Deposits and withdrawals could get really expensive for non-Bahamian residents. An outgoing wire is $70, and the other direction costs $30.

On the plus side, there are no inactivity fees.

Software Fees

There are three software programs at TradeZero:

The broker-dealer charges an extra $25 per month to trade options on ZeroFree.

The broker also has a mobile app. Derivatives can’t be traded on it; and it lacks several important features, including Level II quotes and alerts.

Trading Tools

ZeroPro

TradeZero’s flagship trading platform is ZeroPro. The software has some really nice features. During our trial run of the program, we found the Level II window easy to use.

The platform’s order ticket lies within the Level II quote box. There are separate buttons for sell and short. There are also distinct buttons for buy and cover. All four are color-coded for faster and easier order entry.

During our testing of the trade ticket, we had no problem submitting orders quickly. Level II numbers are shown in shades of blue instead of multiple colors.

Options traders will really like the derivative trading window, which is separate from the Level II box. Another ticker symbol needs to be entered here, because the one entered in the Level II window doesn’t transfer.

With a ticker symbol, the window shows put and call prices along with volume and the current bid-ask spread. The software incorporates a direct-access routing menu. There are several time-in-force choices, including on-the-open and immediate or cancel.

What we didn’t like about the options window was the lack of multi-leg strategies. Calls and puts are it apparently.

Charting on ZeroPro comes with roughly 100 technical indicators. For example, we found:

  • Chaikin Money Flow
  • Ultimate Oscillator
  • r-Squared

A chart can be expanded the width of the monitor for easier analysis. Drawing tools are integrated as well. Examples include polygons, lines, and rectangles.

A right-click of the mouse on a chart generates a drop-down menu. Here, the background color of a graph can quickly be changed. Missing in this menu is a trade button.

A really nice tool on ZeroPro that we liked was a hi/low ticker box. Streaming in here is a list of stocks that are hitting 52-week highs and lows and intraday highs and lows.

A watchlist makes an appearance, and the entries can be quickly changed. Hot keys are integrated as well; and not to be missed is a short locate window.

One of the really nice features of ZeroPro is the ability to move windows around, add windows, and delete them. Multiple chart windows can be created with different timeframes. ZeroPro permits up to six Level II windows to be open at the same time. 

ZeroWeb

One step below ZeroPro is ZeroWeb. As the name implies, the software operates through a web browser. It will work on any operating system. Some of the features include: 

  • Advanced charting with tick-by-tick price action. There are drawing tools, technical indicators, and extended-hours price-action.
  • Level II window. Both Level I and II quotes are available. As on ZeroPro, Level II numbers are color-coded, and the platform’s trade ticket is integrated.
  • Hot Keys. It’s possible to use ZeroWeb without ever using the mouse.
  • On ZeroPro, up to 5 watchlists can be created. Each can have up to 30 ticker symbols, creating a total list of 150 securities. The watchlists are updated with real-time market data. 

Other Platforms

Below ZeroWeb is ZeroFree. Although this one carries no monthly charge, a lot of advanced features are missing. These include OTCBB quotes, hot keys, Level II data, and options trading. They can all be added, but they come with monthly fees. Amazingly, a short feature is integrated in the software.

ZeroFree is able to function on tablets and phones and all operating systems. Charting comes with a few technical studies, multiple graph styles, and extended-hours price history.

The last piece of software TradeZero offers its customers is a mobile app. This one also has a short locate feature. Missing on the platform is options trading. During our investigation, we also didn’t find alerts or Level II data. Highlights include:

  • News articles
  • A watchlist
  • Trade ticket
  • Charting

    Final Thoughts  

    A Bahamian broker (SureTrader) recently went out of business. This event was evidence that the Securities Commission of The Bahamas is on its toes and doing its job.

    It was also a reminder of the difficulties of doing business with off-shore brokers.

    Keep in mind that US residents cannot open an account with their offshore branch, but are welcome to open one with TradeZero America. The PDT rule will apply with TradeZero America.

    Bottom Line

    TradeZero is worth a shot if you have less than $25,000 in assets but want to day trade inside a brokerage account with insurance.

    Broker Rebate Program

    Click on the image below to see how you can save on your Warrior Trading education through the special rebate program we’ve started with TradeZero!

    As always if you have any questions or comments regarding Trade Zero, please leave us a message below!

    11 Comments

    • Jacob

      January 21, 2017 at 2:33 am

      Why does it say in the FAQ’s that US citizens cannot open an account

    • Steve

      January 21, 2017 at 6:03 pm

      Do you know if Trade Zero would have trade execution speed equal to Suretrader or Speedtrader? Thanks for the review!

    • Paul Zeymer

      May 19, 2017 at 3:23 am

      Ive been with them for 2 months and its true, free orders when its a limit order not to be executed too fast as it would count as market order I guess cause part of the money they make is from rebates from EDGX adding liquidity (limit order) … mostly Im entering positions on a market order (0.005 per share) and getting out on a limit order which I place at resistence (free) thats my strategy for now at least … so I pay 0.005 one way and FREE the way out, so its like Im paying 0.0025 round trade … platform is simple but cheap and with this free structure on limit ..Im not a big fan of the platform but for now TradeZero is my best option for sure .ps I hold a Canadian passport so I could open an acc with them .. Americans with 2 passports could do it too

    • Paul Zeymer

      May 19, 2017 at 3:27 am

      …and yes SureTrader is also in an island offshore and so many people use them so I decided to try TradeZero … I think SureTrader can accept Americans cause theyre using some loophole in the law that TradeZero decided not to use …the only explanation I see

    • Richard I

      July 3, 2017 at 10:23 pm

      I switched from Suretrader to Trade Zero for lower cost commissions and lower cost Lvl 2 feed costs. If anything, I am perceiving the trade executions are faster with Trade Zero. PROs: Personally, I find Trade Zero Pro desktop has great Level 2, Time and Sales and speed/reliability of trade executions. Hotkey features are modest, but have the essentials and work good. The News feed is good too. CONs: Charts are basic compared to other trading platforms. It’s challenging to know if shares are available to short or have leverage limitations. Compared to Suretrader Pro (DAS Trader), the TZ Pro platform is very basic and not as developed, but works very well.

    • Randy Copp

      July 15, 2017 at 11:37 am

      Not for US citizens
      is USA an opotion for Country?
      Unfortunately no, sorry. We require a foreign ID and a foreign PROOF of address.
      they can’t be American you can still use a US bank to deposit however.

    • Rahul karan

      August 3, 2017 at 5:09 pm

      This review seem to be legit. But i have some doubts like do they have shorts available compared to sure trader. I mean ETB like suretrader?

    • Charlie

      September 26, 2017 at 12:52 pm

      Very Very basic hotkeys. They don’t have a hot key for stop-loss based on price paid or stop-loss based on average price paid. Just bid ask ‘current’ and ‘last’. So you have to be creative and extra careful on volatile stocks.

    • Jonh

      January 16, 2018 at 1:28 pm

      Trade Zero fees for wires are ridiculous. Their web platform is slow, limited and suffer frequent outtages, They don’t offer market data for all OTCSs. Most Stocks cannot be shorted. Prefer to stay under PDT rules with US Brokers anyday than trade with them again

    • Chris

      February 18, 2019 at 8:16 pm

      I have been with TradeZero for over a year. Customer service from TradeZero should be 1/5. While they are always available and you usually have someone to help you within seconds… they are ZERO help. The platform is slow and plagued with bugs (VWAP calculations for example). The VWAP can be listed on the 3 min chart, 10 min chart, and in the level 2/ time & sales and all 3 will be different. I have screenshots of the VWAP being off by over a full $1! That is insane, and it has been like that for over 2 months. I am leaving this week and I would recommend everyone else avoid them at all costs. I am happy to pay a bit more for a broker that I can trust.
      $75 fee for wire transfers out of TradeZero….. case and point.

    • Ali Haider

      January 19, 2020 at 2:26 am

      I just opened account in trade zero. It’s going good. Wire transfer was very difficult. It takes for me 20 days almost. Secondly suretrader now closed, so I dont know what will happen with tradezero in future. So offshore brokers you cant rely on them now.

    Leave a Reply

    Your email address will not be published. Required fields are marked *