Hello traders. Today I am going to do a review of one of my current brokers – Trade Zero.
I have had a lot of people ask me about this broker, so I’m going to break down the good and the bad to help you make an informed decision based on my experience with them, and give some ideas on how to navigate around some of the potential drawn-downs.
What is Trade Zero?
Trade Zero is an online brokerage firm located in the Bahamas. They offer free limit order trades, no PDT (Pattern Day Trader Rule), and up to 6:1 leverage depending on your account size. Minimum deposit is $500 for a cash account.
Margin accounts leverage is broken down as follows:
Accounts under $1000 – Cash account with no leverage
Accounts of $1000 – $4999 – Gives traders 4:1 leverage
Accounts over $5000 – Gives traders 6:1 leverage
Trading and Platform Fees:
Limit Order Trades – FREE (adding liquidity to the market)
Market Order Trades – $0.005 per share (removing liqudity)
Zero Pro Platform – $79.00 Per Month with data and level 2 (This fee is waived if you trade more than 100,000 shares per month)
Zero Web Platform – $59.00 Per Month with data and level 2 (This fee is waived if you trade more than 80,000 shares per month)
Zero Mobile – FREE if you have an active Zero Web or Zero Pro platform.
We will go back to these numbers later – as readers of our blog and members of our trading community can get an even better deal in terms of leverage and pricing.
What Constitutes a “Free Trade”?
I’m going to break this down as simply as possible. If you add liquidity to the market, for example, put a bid on a stock at or below the current price the stock is trading and someone sells shares to you, that is a free trade.
Example 1: Stock ticker LPCN is trading at $3.00 per share (bid) and the offer is $3.01 (ask).
You put a bid for 2,000 shares at $3.00 and 10 seconds later that order gets filled, that is a free trade.
Example 2: Stock ticker AUPH is trading at $4.90 per share and the offer is $4.91.
You add liqudity to the bid side by sending a buy order at $4.89, minutes later this order gets filled… FREE trade!
In other words – Any time you add liquidity to the market it is a free trade.
What Constitutes a paid trade?
Any time you REMOVE liquidity from the market, they charge $0.005 per share.
Example 1: Stock ticker LPCN is trading at $3.00 per share (bid), and the offer is $3.01 (ask).
You want to buy the stock immediately, so you don’t want to add liquidity to the bid and wait for a fill. You send an order for 300 shares to REMOVE liquidity from the ask at $3.01 getting you shares immediately, that constitutes a paid trade, and would cost $1.50 (300 shares x 0.005 per share)
Example 2: LPCN is now trading at $3.21 per share (bid) and $3.22 (ask). You could send a limit order at the offer, $3.22 or higher, but you can feel the momentum shifting and you want to exit the stock immediately to take your profit. You hit the bid with a sell order at $3.21 for 300 shares (removing liquidity from the market), and again, that would cost $1.50.
So They Don’t Charge a Per Ticket Price?
Trade Zero does not charge a per ticket price on all orders like so many other brokers do, which is a huge advantage.
They do, however, charge a $0.99 cent minimum (per ticket) but only for orders under 200 shares. Any orders executed over 200 shares have no minimum (no per ticket price), and as long as you add liquidity to the market, they are free.
This is exceptional compared to other brokers in the same space who charge upwards of $4.95 per ticket on ALL executed orders.
How is it Possible for them to Offer FREE Trades?
I have spent a lot of time on the phone with Trade Zero’s management and have done a lot of research before I began trading with them. They route their limit orders through EDGX, ARCA, and other ECNs which provide a liquidity rebate, so when you place a free limit order trade they route it through EDGX (or another rebate route) allowing them to collect the liquidity rebate and pass the trade on to you for free.
OK, That Sounds Good… But How is the Execution?
So far I’ve been happy with the fills and executions. Trade Zero does not interalise orders and they are required to provide clients with the best execution price available at all times.
As TradeZero offers US market access and clears through a US clearing firm, Trade Zero is subject to Reg NMS. This basically states that firms are obligated to provide investors with executions at the best possible price.
I Like to Short Stocks… How are the Borrows?
Here’s where we get into the good and bad. First of all, for hard to borrow stocks (for example, DRYS) – They are exceptional!
As a Canadian based day trader who loves to short sell overvalued NASDAQ stocks, I’ve struggled in the past to get the locates I’ve needed on hard to borrow (HTB) stocks until I started trading with Trade Zero.
Many of the popular brokerage firms who are clearing through Wedbush do not offer their service to Canadian clients, so Trade Zero was a huge breakthrough for me in terms of short selling hard to borrow symbols. This is one of the reasons why I opened an account with them; for locating HTB stocks they are truly exceptional.
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). The cost of borrows vary depending on the demand for borrows on the stock, but on average it is around $0.023 per share for the average hard to borrow symbol if you want to short it.
Here’s the the bad side – There are very few easy to borrow (ETB) stocks with Trade Zero’s vision clearing. I’ve noticed that a lot of symbols which are normally easy to borrow will require locates to short, but the good news is that for stocks less in demand, the borrows are cheap, sometimes as low as 0.003 per share ($3 to borrow 1000 shares short).
I have a tip to save money on borrows. Since they virtually never run out of borrows, just pay for what you need at the time of execution, as opposed to borrowing everything at once in the morning. Ill often start by locating 1000 shares, and then after I execute those 1000 shares, Ill wait until my next entry point to borrow more (that way I don’t end up borrowing more shares than I am actually going to use).
In my opinion, this is a small price to pay for the amount of locates they have on hard to borrow stocks, but some people may find this annoying at times. I’ve heard they may soon be getting a relationship with another clearing firm so we can both have the great borrows on hard to borrow stocks, while having a more extensive ETB (easy to borrow) list.
I am still yet to find a stock that Trade Zero can’t get shorts on. As a big short seller I have to say this is an extremely valuable asset. If you spend most of your time going long, then you don’t have to worry about any of this, and you can just enjoy the free trades!
This Sounds Too Good – What’s the Downside?
Unfortunately, due to U.S. Regulations, at this time Trade Zero does not offer their services to U.S. Clients. Hopefully this will change in the near future, but for now, only residents living outside of the U.S. are acceptable candidates.
If you live in the U.S. and don’t have citizenship in another country, your application will be rejected.
Aside from the obvious downside of not accepting US clients at this time – the only other negative I could find with Trade Zero is the easy to borrow list.
Although I can get short shares on virtually any stock in play at any given time through their Vision clearing, many stocks that would be easy to borrow through ETC clearing require a small fee to borrow through Trade Zero.
At the end of the day, this is peanuts compared to what you save through trading and platform fees with Trade Zero.
Speaking of platforms…
What Platforms Does Trade Zero Offer?
Trade Zero offers three platform options. Zero Pro which is their desktop software ($79 per month with data), and Zero Web which is their web based platform ($59 per month), and Zero Mobile which is their mobile platform for mobile devices (FREE).
I can only comment on their Zero Pro desktop software at this time. After 11 years of day trading I guess you can call me old fashioned, but I really prefer standalone desktop software for my trading so I haven’t gotten around to trying the web based version and I probably never will.
Zero Pro Software
Alright, up to this point we haven’t had much constructive criticism so I’m going to bring it on in this section. First I want to explain that the software I’ve used with my previous brokers are DAS Pro, Sterling Trader Pro, and a proprietary trading software I used in my early trading days with the prop firm I started trading with in my early 20’s.
Zero Pro is basically an improved version of Turbo-Tick Pro which is a professional trading platform. Trade Zero’s version has added functionality specific to Trade Zero, for example, the improved hot keys – which makes it quite a bit better in my opinion.
The software costs $79 per month with data (and is free if you trade more than 100,000 shares per month) – which I always do, so the price is right!
However.. For me personally, the charts just don’t make the cut. I spend a lot of time reading charts and explaining setups with visuals on my live screen share, so I need something more than what they have to offer with Zero Pro charts.
The solution? Well, the software and data is free you trade over 100k shares per month, so why not roll $30+ of those savings into a good charting setup to use with Zero Pro?
There are a few cheap and even free options you can use for charts alongside your Zero Pro platform if you are as picky about charts as I am.
I use DAS Pro charts alongside my Zero Pro platform and several of my trading students use Think or Swim (TOS) charts alongside their Zero Pro platform and love it!
There are also some really great and cheap options for charting, such as TC2000 (google it).
For me personally, I’m currently using my DAS charts and would probably use TC2000 or E-signal for charting along side my Zero Pro platform if I had to switch.
If you are a newer trader I really think the charts included for free with Zero Pro should be adequate for you, its really just a matter of personal preference.
Zero Pro Hot Keys
You may have read my blog post on hot keys and how important they are to me as a trader. At first, their hot keys weren’t great and I was finding myself trying to point and click orders instead, which was difficult on some of the faster moving more volatile names that I trade.
As traders we are creatures of habit, and after spending so many years using one hot key setup, its very difficult to change.
I sent them some feedback, and less than one month later they made a huge update to their hot key setup so that they function EXACTLY the same as Sterling Trader Pro and DAS Pro – I couldn’t be happier with this change. I’m able to send and cancel orders with the press of one button and have full control with my keyboard for order entry and execution.
For those of you who are curious about my hot key setup with Trade Zero, I will be posting a video soon explaining how I use them to enter my orders into the market efficiently.
How is the Application Process?
Trade Zero’s application process is the easiest and fastest I have ever done. I had my account setup inside of 15 minutes. You can sign up for an account and trade with a free demo account for a week to see if you like it. If you do, you can go ahead and fund the account, if not you can play with the demo which includes free real time data for 7 days.
Here’s a quick tip to speed up the application process:
When asked for photo ID, passports, and/or utility bills, simply take a good clear picture of the documents with your cell phone and email it to yourself. Download the attachment from your email to your computer as an image file and upload it to the application as requested.
How is their Support?
So far their support has been great. I had one issue where my power went out while I was holding a trade. I called their support desk, the phone was answered immediately, and they sold the position for me immediately upon my request. I was very impressed. The best part? Their support telephone number is in Florida making it easier for clients to call, so you don’t have to worry about making a costly call overseas and waiting on hold for a representative.
So far I have nothing but good things to say about their support and management. I can and will update this blog at any time if anything changes down the road to ensure our followers can get the most up to date information.
Trade Zero and LiveStream Trading
At LiveStream Trading we are always looking for new ways to help our group traders get a better edge in the market, and Trade Zero has really given our new traders the opportunity to learn and grow an account without having to deal with huge commissions that can nickel and dime a traders account to death.
I never recommend a product or service that I would not use myself, and I can proudly say that I am actively trading with this broker and saving a TON of money on commissions with our group traders.
When I am shorting a hard to borrow stock, I am happy to know that ALL of our group traders who are using Trade Zero can participate in the trade giving everyone an equal opportunity to profit.
I never recommend a product that I don’t use myself – And I am just one of many traders in our private trading group who are very happy with Trade Zero thus far.
As a member of LiveStream Trading or a follower of our blog, I would like to extend to you a special offer we have worked out with Trade Zero.
All you need to do is open your account via this special link and you can enjoy some huge benefits including better leverage/margin, cheaper platform fees, and more.
All of the benefits are listed on this page and you will have them automatically applied to your new account.
Thank you for reading this review. In conclusion, I would recommend this broker to ANY trader outside of the U.S. who wants to save on commissions and have access to hard to borrow stocks. If you have any further questions about Trade Zero, please feel free to contact them via the live chat on their website.
As an added bonus, clients of Trade Zero are eligible for a 15% ongoing monthly discount with LiveStream Trading. Please reach out to me and I will be happy to set you up with our Trade Zero discount.
Thanks again for reading – See you on the LiveStream!
P.S. – Grab our FREE Webinar Video on tips for account building and learn about our risk management and trading techniques!