Zecco Review for Stock and Forex Traders

Who are Zecco?

UPDATE: Zecco has now merged with Tradeking. Both Zecco and Tradeking websites are both live, but client accounts are being merged together.

Zecco has been around since early 2005. For what it’s worth the company is rated four stars by Barrons, who rate their platform particularly highly, but more on that later.

Zecco were the original ZEro COmmission broker, hence the name Zecco. At one time Zecco offered all of its customers 40 free trades a month regardless of the size of their account. This offer brought them to the attention of many people who hadn’t considered trading before.

Today, Zecco no longer offers free trades but they remain one of the cheapest mainstream brokers around.

Why Trade With Zecco?

Zecco made a name for themselves as a low cost broker; this isn’t necessarily the right reason to choose them however. Cheap brokers are usually cheap for a reason and you’ll end up paying more in the long run. I personally would rather pay more for a reliable platform than be sitting around for several minutes waiting to see if my trade has been executed at the price quoted.

The Good

Competitive Trading Costs

With a base price of $4.95 per trade and penny stocks priced below $1.00 a little more expensive at $6.95 per trade, Zecco are very competitively priced compared to their rivals. These fees are about par the course for a discount broker these days, OptionsHouse come in slightly cheaper at $3.95 per trade but they can’t match Zecco’s trading community or platform simplicity, so are not so suitable for beginners. This has not changed since the merger with Tradeking.

Option trades cost $4.95 plus 65 cents per contract traded. There are no minimum contract requirements. This pricing is for online trades only. Broker assisted trades cost $19.99 plus 70 cents per contract.

Investment Community

The introduction of Facebook trading sits well with one of Zecco’s biggest selling points, their active investment community. Zecco is unique in that they allow users to follow other members of the community. You can follow along with live trades, watch how stocks are selected and look for entry and exit triggers, you can even ask questions along the way.

If you’re a beginner, trading this way is going to be of massive benefit to you. There’s no substitute for learning on the job. Spend a few weeks learning from the best performing members and you’ll be up to speed in no time and with the addition of Facebook you’ll make some new friends along the way.

Platform aimed at Newbies

Zecco’s website and trading platform are one of the best in the industry. Zecco knows their market and built their platform accordingly. As a result it’s completely intuitive, even a complete novice should be able to make a trade without having to resort to the training manual.

If you’re a seasoned investor you might find their stock screener a little too simplistic and their portfolio management tools aren’t as comprehensive as they could be. But this is a broker aimed at newbie investors where such tools are not really necessary. What they do provide is more than adequate for a part time trader sticking his toes in the market for the first time.

Good Mobile Platform

Trading with Zecco is a relatively painless experience; they enable you to trade from just about anywhere from the comfort of your own home to the confines of your office and anywhere in between using their excellent mobile platform. They even recently introduced trading via Facebook which is a novel experience. Trading can be a solemn occupation sometimes, so adding this social aspect to the mix is sure to spice things up.

Forex Trading

Another unique aspect of Zecco is their Forex (foreign exchange) trading platform which gives you unrestricted access to the Forex market. I should point out that if you want to trade Forex you’ll have to open a separate currency trading account and the trading platforms are completely separate so you can’t share funds between accounts.

Fantasy Trading

No trader should consider risking their own hard earned money without having a good understanding of how the markets work beforehand. There’s no substitute for practice in this game.

Fortunately Zecco offers a very comprehensive virtual trading account which comes complete with $10,000 of virtual funds to get you started. That way you can practice trading and develop a strategy with the help of others within the Zecco community without having to risk a dime of your own money.

The Bad

Transfer Fees

Whilst transferring money into your account is completely free, transferring out of Zecco will cost you. They charge a $50 transfer fee for all funds transferred out of your account. This is a slightly underhand tactic buried in the small print to prevent you from transferring your account to another broker. So make sure you’re happy with the platform and level of service before you commit to transferring funds into your account.

Poor Range of Analysis Tools

As I mentioned before Zecco’s platform is lacking in tools that allow you to evaluate and analyze your portfolio. Tools like this are vital if you’re to maintain a profitable portfolio over the long term. What they offer is fine for smaller investors, but once you’ve built up a significant portfolio you’ll find it hard to keep track of your investments.

And the Ugly

Customer Support

If Zecco has an Achilles heel it has to be their level of customer service. They’ve grown significantly over the past 8 years or so and that comes with its own complications. I think because they’re primarily web based they misjudged the level of support that’s required and significantly under invested in this area.

Fortunately they’ve realized their mistake and are trying to put it right. It will of course take time but at least they’re showing willing. At the moment though, emails aren’t answered as quickly as they should be and the level of support you get over the phone is patchy at best.

Should You Consider Zecco?

All in all Zecco is a pretty good broker, in some ways they’re the perfect broker for beginners due to their easy to use platform and excellent trading community. The later of which makes up for any misgivings I might have about their range of analysis tools.

However that slightly limited range of tools means they’re not suitable for intermediate type traders who have a significant portfolio of shares to manage. If that’s you you’d be better off choosing a broker like OptionsXpress who have a much more substantial trading platform.

If you’re a day trader or trade a significant number of times a week, Zecco is defiantly not for you, the complete lack of level II data and limited range of tools means they’re not a suitable broker for day trading.

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