Safety and Legitimacy
TradeZero.Co is a Bahamas based, retail stock brokerage offering FREE execution of all limit orders. This is a real game changer. Trading costs are nearly zero. The company is also offering 6 to 1 leverage to small account traders. The company is owned and managed by a highly reputable industry veteran with over 16 years experience managing retail stock brokerages in the United States. Company is offering several different trading platforms, all are proven and battle tested over many years, with several major trading firms. Company is extremely compelling, has a highly enthusiastic following of existing customers, and excellent customer support.
Thanks for reading today’s review of TradeZero.Co
What is TraderZero.co? Trade Zero is an online stock and options broker located in Nassau, Bahamas. The main selling point for the company is that all limit orders for stock trades are executed for free. In addition to free limit orders, the company is also offering intraday leverage of up to 6 to 1. However, there are a few caveats: a deposit of $500 includes no leverage, a deposit of $1,000 brings 4 to 1 leverage, and a deposit of $5,000 brings 6 to 1 leverage. What does this mean? If you deposit $5,000, then you have purchasing power of $30,000, via 6 to 1 leverage.
What exactly is a limit order? A limit order is an order that adds liquidity to a market. In practical terms, suppose that you are looking to purchase 100 shares of ACME (not a real stock). The last executed price of ACME was 12.56 per share. If you are looking to execute a limit order to buy ACME, then you are looking to purchase ACME at less than, or equal to 12.56 per share. You are not lifting the price higher to 12.57. Therefore, you would be adding liquidity to the price of ACME. This is an extremely simplified example. Should you be using limit orders? Absolutely. In fact, most professional traders will use limit orders almost exclusively to enter and exit trades. A limit order trade is always closest to the best possible execution price that a person can pay for a stock. If you are an active day trader, then not using limit orders is a near guarantee of failure. Why? Because you are constantly moving the price and paying a premium to drive the price higher, or lower. To be a successful day trader, you absolutely must master the use of limit orders.
How could a limit order be a free trading transaction? The reason is because there are multiple venues in which a stock trade may be executed. Each of these venues is constantly fighting for market share of the daily trading volume. And so, each venue attempts to capture the highest amount of trading volume by offering discounts, free access, and sometimes actual rebates if traders will execute their trades on their venue. A real world example would be if several grocery stores were located on the same street. In order to drive customers to a certain store, this store might offer a gallon of milk at cost or slightly below cost, knowing that the customer will also purchase other items with a higher profit margin. Same goes with trading venues, the more volume that a venue commands, then the more overall opportunities to earn profits on a whole host of different trading products.
Does using a limit order make a big difference in trading results?
Absolutely. An example would be my own personal trading. In 2008, I executed over 3600 round turns trading the emini SP500 and mini Dow futures contracts. Out of the 3600 trades, 2800 were executed using a limit order. I currently pay $4 per round turn. If I were to receive free limit order execution, then I would of saved myself $11,200 in broker commissions. This is nearly $1,000 per month in extra income.
Free limit order trading presents some very interesting dynamics regarding the futures markets vs the stock markets. Lets compare the highly popular emini SP contract vs the SPY ETF. The emini SP is a futures contract that executes primarily over globex through the CME Group. This contract typically costs the average retail trader about $4.25 in commissions to execute a single trade. This contract has a daily volume that typically exceeds 1 million contracts per day. The SPY ETF tracks nearly identically to the emini SP, and its daily volume typically exceeds 1,500,000 shares. As you can see, both securities are extremely liquid, and both move in lock step throughout the trading day. So the question that traders should be asking themselves is why trade the emini SP futures contract at $4.25 per contract, when a person can trade the exact same thing (SPY) for nearly free?
Another advantage of the SPY over the ES emini contracts is that a person can reduce exposure down to only a single share of stock vs the emini contracts, where a person is exposed to a uniform tick amount of $12.50 per tick. On some days, the emini contract can whip up $2,000 and then close down $2,000, which is a hair raising experience for any newbie trader. The SPY can be scaled down to only a single share. A person can trade and learn on even the most scary days, trading the bare minimum.
Yet another very popular futures contract is the CL or crude oil contract. This contract also whips around several thousands of dollars on any given day. Its not uncommon to have $5,000 dollar swings happen in only a matter of minutes, which is just too volatile for the newbie looking to learn. However, a person can just as easily trade the USO ETF, which tracks lock step with the crude oil contract. The USO ETF is now averaging about 50 million shares daily…its a giant market. The advantage of the USO ETF is that a person can trade only a few shares at a time, learning and growing, and then add more or subtract more as the equity balance rises and falls. Lets take a look at the following example…
Suppose that you are a newbie trader looking to learn how to trade the crude oil market. You read my review on Jason Love’s Oil Trading Group and you think that it might be a good method for you to learn. However, upon reading the review you discover that Jason trades 3 crude oil contracts per trade. And you also read that it is not uncommon for Jason to experience $10k draw downs. As a newbie with probably only a few thousand dollars to trade, is Jason’s trading method a good fit for you, as a futures trader? Absolutely not. However, trading the highly liquid USO which moves identical to crude oil, you can actually follow along without the likely risk of being slaughtered on each and every trade. Look at the following example chart of crude oil.
The date is January 28, 2016. Suppose that Jason makes a call in the live trading room that he is going long at exactly 7am (PST) at 33.85 and he is going to hold the trade for the next thirty minutes and exit at exactly 7:30am (PST). Jason really believes that a bullish window has opened up and he goes long. Ok, thirty minutes have passed and Jason was wrong on the trade. He is now going to bail on this losing trade. He is long 3 contracts and each contract is at a loss of $630 plus $4 commissions. He dumps the trade and his net loss is $1894. However, you are trading with only 300 shares at 9.72 per share. You dump your trade for a loss of $19 per hundred shares, or a total loss of $57 and you paid zero commissions because you entered and exited on a limit order. The chart below is a comparison, and as you can see, the movement of the USO vs the (CL) Crude Oil contract are identical.
Astute traders have probably just read this prior scenario and are probably wondering, “Yes, Jason was able to quickly enter and exit the highly liquid futures market, but the person trading the USO ETF, was there liquidity for him to enter and exit at the same price as Jason?”. This is a valid question, and it can be answered simply by looking at the volume of trading during this 30 minute period. Lets take a peak…from 7am to 7:30am the CL traded 44,915 contracts, while the USO traded an amazing 3,988,000 shares. Looking at these volume figures, it is obvious that either trader would have absolutely no problem with trading volume.
In today’s highly liquid financial markets, the ETF’s are nearly ubiquitous to the futures markets. And with multiple venues now fighting over market share, and offering free limit order trades, then it is becoming very difficult to remain a futures trader, when a person can trade for nearly nothing with an ETF.
Thus far, I have only talked about some of the advantages of trading ETF’s vs futures. And have spent nearly zero time talking about Trade Zero.Co. Lets jump into this…
TradeZero contacted me in June 2015 and requested that I write a review of their trading platform and their product offering. The website and business had just gone live in May 2015. The website looked terrible. Seriously, it looked extremely unprofessional and quickly thrown together. Splashed across the home page was the offer of “Free Trading”. Immediately, the red flags came out and I thought that this has to be yet another offshore, stock broker scam. My initial thought was whom would be crazy enough to send this company any money to trade stocks? The website gave me zero confidence. To make matters worse, they are located in the Bahamas, and so what recourse does a person have if they suddenly close up shop and disappear with depositor funds? There was no possible way that I was going to recommend this business to TradingSchools.Org readers. Heck, I had just written a piece on a company named Nonko, which was operating an illegal broker dealer/bucket shop, and once I published the article, that company promptly shut down and disappeared. In a nutshell, I wrote back to the owner of the TradeZero and simply told him that they were not going to get a positive review. They were too young, unproven, and located in a place better known for pirates, conch fritters, and coconut smoothies.
Over the next several months, I started to receive private emails from readers requesting that I write about this “insanely cheap” stock broker named TradeZero. The messages were almost fervent and overly enthusiastic. One guy wrote that he had spent thousands of dollars in trading commissions with another Bahamas bases stock broker named SureTrader. Nearly all of his trading profits had been consumed by the $4.95 per trade fee. At the end of the year, he would of done well, but the only guy doing well was Sure Trader. He took a chance and opened an account with TradeZero, which is located up the beach from SureTrader. After a couple of months, he was amazed at how much he was saving in commissions and fee’s. In addition, he was surprised at the high level of customer service that he was receiving from TradeZero. During the trading day, he could always get on the phone and speak with the owner. And during the evening, someone was always available through the live chat feature.
Its one thing when a trading vendor contacts me, and tells me that they offer a great product. Its an entirely different thing when I am receiving anonymous emails and messages about a company that is offering something great. TradeZero has some really hardcore fans. Yes, its a new company, but in the short period of time that they have been in business…a lot of people are really, really enthusiastic about them. A really good sign.
Antonio Libreros, CEO
With all of this new information and positive customer feedback on TradeZero.Co, I decided to really dig into this company and investigate. Over the last two months, I researched and snooped and collected as much information as possible. During this time, I developed a good and open relationship with the owner of the company. Here is what I found. The owner of TradeZero.Co is Antonio Libreros. Although this name might not sound familiar, I am sure that many readers have heard of Lightspeed Trading. If you have ever had an account with Lightspeed, then there is a very good chance that Antonio was your broker. During Antonio’s tenure at Lightspeed, he was responsible for handling over 1000 of the firms 4000+ traders. In fact, Antonio came to Lightspeed Trading when Lightspeed Trading purchased his brokerage: Noble Trading. If you go to NobleTrading.com, notice that the web address forwards to Lightspeed Trading. Some readers might not be familiar with Lightspeed Trading, if not, its one of the largest and most respected retail stock brokerages in the United States.
During Antonio’s tenure at NobleTrading.com, he grew the company from nearly nothing, to up to over 4000+ traders. In addition to having a series 7 and 63, he learned all of the ins and out of the retail brokerage business. And more importantly, he understands SEC compliance issues. A deep search of Finra and the SEC reveals that Anthony has a clean record and no blemishes. In fact, in speaking with Antonio, you get a sense that he is very well organized and very risk averse.
Prior to starting NobleTrading.com, Antonio also worked at Cardinal Capital and Spencer Capital, LLC. In total, Antonio Libreros has over 16 years experience at running and managing different retail stock brokerages.
L. Sydney Saunders, Chief Compliance Officer
L. Sydney Saunders is the full time Chief Compliance Officer. Mr Saunders is a Bahamian citizen that has extensive financial experience and training. His education and registrations include being a former Series 7 General Securities Licensed Broker, a CPA registered in New York, Florida and Nassau Bahamas, as well as a former Vice President and current Member of the Bahamas Institute of Chartered Accountants. Mr. Saunders work experience is even more extensive than his training. His list of positions include: Senior Auditor for Bahamas Government in the Auditor General Department, auditor and audit manager for KPMG, a Financial Controller for McDermott International Investment Co., as well as a Senior Securities Manager for the Securities Commission of the Bahamas. Mr. Saunders provides TradeZero with its KYC and AML plans and is responsible for approving all trading accounts with the firm.
The Clearing Firm
In addition to TradeZero.Co having a reputable and capable CEO, and a full time time Compliance Officer, Trade Zero.Co has also partnered with one of the most reputable clearing firms in the United States: Vision Financial Markets. From January 20-25, I was able to confirm a positive relationship between Vision Financial Markets and TradeZero.Co.
In my conversations with Antonio, I asked him to provide a clear and concise description of how orders are routed…
The limit order trades are routed through DirectEdge (EDGX), and all marketable orders are routed to either NASDAQ (NSDQ) or the Apex Managed (MNGD) route. TradeZero does not in any way internalize orders. As we offer US market trading and clear through a US based clearing firm, they, and as a result TradeZero, are obligated to provide all clients with the best execution price available at all times. The stop limit orders are routed EDGX and market orders are routed through either NASDAQ or Apex Managed. These routing rules are subject to change as various rebate and take rates change. At this point in time, we are using EDGX as we can get the highest rebate there.
Currently, TradeZero.Co offers three types of software packages: ZeroWeb at $25 per month, ZeroPro at $79 per month, and ZeroMobile at $10 per month. The software is free if a customer trades a preset minimum of shares per month. If you are really curious about the individual capabilities of each of these software products, then please refer to the following page. Some traders might already be familiar with the TradeZero.Co software. Why? Because the TradeZero.Co trading software is just a white label version of the proven and battle tested Turbo Tick software that was developed by TurnKeyBroker.com.
No United States based customers
As many readers are already too aware, the SEC has some very robust regulations regarding stock brokerages and how they deal with a United States based retail client. For better or worse, these regulations are meant to protect investors. In 2001, the SEC passed the PDT rule or the Pattern Day Trader rule which in effect eliminated stock day trading for accounts with less that $30k. This rule was passed in response to the tech crash of 2000, and was supposed to eliminate bubbles from forming in the stock market by removing the small day traders from the marketplace. However, the PDT rule never really worked as intended. (like most governmental regulations) The net effect is that small stock traders were simply pushed out of the mainstream financial system and into the waiting arms of various schemes meant to circumvent the PDT rule. A good example would be Nonko trading that accepted client funds and then simply allowed people to lose their money on a trading simulator. Another example would be BullsOnWallStreet’s CliqueFund which allows traders to open an account with as low as $2,500. However, the customer must first purchase thousands of dollars in “education” and then are subjected to egregious daily fee’s that quickly drain the account to zero.
A sort of happy medium, that has been able to avoid SEC scrutiny would be SureTrader, also located in the Bahamas. They are essentially identical to TradeZero, but each trade costs $4.95 per trade. To enter and exit a trade, a customer is going to pay $10 in total. This commission structure guarantee’s that a day trader is going to lose. No day trader on the planet is going to be able to outrun that commission. However, SureTrader has devised a model that has been able to weather the scrutiny of the SEC for several years. Its a good bet that they are not going anywhere. Sure Trader accepts US based customers.
If SureTrader and TradeZero are essentially identical companies located in the Bahamas, then why will TradeZero not open US based accounts? In speaking with Antonio at Trade Zero, he explains that he is very cautious and he is looking into how SureTrader is operating. However, at this time, he simply does not want to risk the ire of US regulators. At some time in the future, this will change. However, at this time, he is taking a wait and see approach. Another thing we talked about is how the SEC has gotten much more loose in the interpretation of securities laws. A prime example would be the Jobs Act, which the SEC just released final rules on October 30, 2015. What is the Jobs Act? Essentially, the Jobs Act allows the securitization of just about any idea through the use of crowd sourcing. Have a magic hamster wheel that supposedly churns out cash whenever a hamster completes a loop? You can now sell this wonderful investment idea to the general public without incurring the wrath of the SEC. Try this a year ago, and the SEC would of kicked in your front door. However, the Jobs Act has essentially changed the basic foundation of the SEC. The Jobs Act is truly the wild, wild west of investment ideas. And considering how the SEC is now taking a hands off, non regulatory approach to the insane world of crowd sourced investing, then its a pretty good bet that they are taking a more liberal view of day trading. This is just a theory, but it seems to hold water. Especially considering that the SEC has been allowing many of the day trading groups to operate in the United States, for several years, unmolested.
Day Traders are a crafty sort. And of course they are going to find a way around the PDT rule. I spent a couple of weeks working every possible angle with Antonio on how a US citizen can access an account with TradeZero. Of course, everyone wants free trading. But how can a US citizen pull it off and actually get the account opened? Here a few possible scenarios, and I am sure that Antonio is not going to like what I am about to write.
- “If the person has a spouse that is not living in the US and have an ID and a mailing address in another country.”
- “If a US citizen is living outside of the US and has a government issued ID from that jurisdiction, they are a good candidate.”
- “If a person is part of a trading group or partnership that is based offshore and is not advertising US based customers, then we have no control over private parties.”
Truthfully, I could write another 3000 word article on how a US based trader could open an account with a reputable offshore stock trading company. There are plenty of angles and creative workarounds, but this is another topic altogether. And since I know that US regulators read this blog, I am not going to stir up any problems or start any fires. So for now, lets just stay focused on the review of TradeZero.
Special Offer for TradingSchools.Org readers
Thanks for getting this far into the review. It should be pretty obvious by now that I am a big fan of TradeZero.Co. They are offering a trading model that is a game changer for many traders. A lot of US based traders are probably pissed that they cannot open an account. And I am sure that a lot of US based futures brokers are probably upset that a person can trade ETF’s that trade exactly like futures, but without the commission costs. In short, this review is probably going to upset a few of my readers. However, for the few traders that can actually take advantage of what TradeZero.Co is offering, they have given me a special deal for my readers. If a person clicks through and opens a TradeZero account, then they will receive the following added benefits, that are exclusive to only TradingSchools.Org readers:
- Web Trader reduced to $20 per month and free after 20,000 shares – A $5 monthly value
- Free mobile platform – A $10 monthly value
- Discounted Level 2 platform of $69 a month. This is a $10 monthly discount.
- Level 2 free after 80,000 shares instead of 100,000 shares
- 6:1 leverage with $2500 opening balance. 6:1 remians as long as $2000 minimum account balance in maintained. 4:1 between $500 and $2000 and 1:1 below $500.
In addition to these added benefits, your patronage also supports this blog in the form a $20 referral fee that is earned for each new account that is opened as a result of TradingSchools.Org.
Wrapping things up
Thanks for reading this review. The two most important take away’s from this review are number one, that TradeZero is a real company that I sincerely believe that you can trust. I have spent a great deal of time vetting the owner, confirming every aspect of what he is offering, and checking that all of the industry relationships are in order. To be able to execute limit orders, for free, is a real game changer. If you are an active day trader, then this is going to massively reduce your monthly commission costs.
The second aspect of this review is that some traders, in particular small account traders should consider trading ETF’s instead of full blown futures contracts. At least in the beginning. Too often I correspond with readers of the blog that only have a few thousand dollars to trade with. They want to trade futures, but their chance of success is nearly zero simply because they are under capitalized. Trade Zero is offering TradingSchools.Org readers 6 to 1 leverage on a $2,500 account. This is PLENTY of leverage and enough to trade considerable size in the many markets.
Well that its it for now. Thanks for reading. And don’t forget to leave your comments and questions below.