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Review - Free Stock Trades With Zecco

Published 9/22/07 (Modified 3/22/11)
By MoneyBlueBook

Review - Free Stock Trades With Zecco

Zecco is a discount broker that's been generating a lot of buzz since they started offering free stock market trades last year as part of their very pink friendly trading platform. They currently offer 10 free market or limit trades per month, so long as you maintain $2,500 in total account equity (stocks and cash). There is no minimum balance requirement to open an account, but if you have under $2,500, trades will cost $4.50 each. There are no inactivity fees, which is quite a bonus for those who don't trade too frequently. Your securities accounts are also insured and protected against loss by the Securities Investor Protection Corporation (SIPC).

Is There A Catch With Zecco?

According to the Zecco website:

There is no catch. We can give away free trades because the cost of executing a trade has become very low. And like other brokerages, we make money on interest income and option trades. Pretty simple right?

If you're an active trader, the lure of free trades is tempting. However, keep in mind that free trades isn't everything. Zecco has been around for only a year, which is still a relatively short amount of time in the brokerage world. Questions remain such as whether they will be around for the long haul. What about customer service and trust? Can they execute timely trades and can they offer trading platform services that can compete with those offered by other brokerages?

Moving Towards a Free Trades Market

It is interesting to note that Zecco may have signaled the start of a trend towards a free trades business model. Currently, many large brokerages are starting to diversify and make a larger portion of their income through mutual funds and cash balances than they do through trading. Many brokerages are now moving into more advisory services and into banking and lending.

But don't expect customers to depart the big brokerages immediately. Larger brokerages such as Charles Schwab, Merrill Lynch, and Fidelity Investments have developed solid relationships with their customers over the years and many of the customers have come to rely on and expect a certain level of high class service from their investment brokers. These customers are not likely to move to a broker that has only been in existence for a year.

Despite that, Zecco and similar companies that offer free stock trades offer an interesting niche in the trading world. If you like to actively trade or even speculate a portion of your portfolio on the side, a free trading platform might be a very attractive alternative.

My Experience With Opening A Zecco Account and Trading

After doing my research, I decided to open a brokerage account with Zecco. The bulk of my investment money will remain with Fidelity, but I plan on taking advantage of Zecco's free trades and using it to handle my "play money". Basically I plan on using it to do a little speculating and riskier trading. But the key is that I'm only going to deposit a small sum - nothing more than $500 - $1,000.

The web based application process was quite straightforward and similar to that of most other brokers. The application was all online and did not involve any subsequent paperwork. The Zecco application has 3 parts:

  1. Step one requires you to register for a mandatory myZecco account, which allows you to participate on their blog and post messages. Step one only took a minute.
  2. Step two involves actually registering for a trading brokerage account. After submitting your online application, it may require an hour or so for the system to generate your account before you move to the next step.
  3. Step three requires that you fund the account. I chose to set up an external ACH bank account to transfer funds to Zecco and make trades. Keep in mind that Zecco uses two small trial deposits to verify your ownership of the bank account that you are trying to connect to Zecco. After verification, the deposited amounts are automatically withdrawn.

Zecco's trading interface is pretty basic with nothing fancy to blow you away. Their customer service is generally on par with other discount brokers. Obviously their biggest draw is the free trades so long as you can maintain the reasonable minimum balance requirement. I've made several trades without any problem. Since I'm using Zecco as my "play money" account involving small sums, it feels quite good not having to pay any commissions!

For those who want the complete and comprehensive evaluation of all that Zecco Trading has to offer, including not only its pros but also its cons, please check out my editorial review of Zecco Trading.

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6 Responses to “Review - Free Stock Trades With Zecco” 

  1. zecco reviews says:

    Nice breakdown. I agree with your point that many customers won't leave their brokers because of commission fees. Fees include fast and free customer service, along with the actual security trades.

    A good example of high price, high value is Fidelity. It costs me $20 per trade, but I love Fidelity's customer service & trading tools 100%. While I own ETFs at Zecco, I rather keep my Roth IRA with Fidelity because we have established a solid relationship.

    As long as they scratch my back and keep me happy, I'll scratch theirs.

  2. About Zecco says:

    Forget about Zecco's 40 free trades a month because they have taken that away. Oh, and the $0 minimum balance, yep that too - now its $2,500. If your balance is under $2500 then you'll be paying $4.50 per trade for every trade. If you have the minimum then you get 10 free trades per month. Kinda hard to swallow if you're an existing customer who's accustomed to the 40, don't you think? Trust me, I speak from experience, stay away from Zecco.

  3. Paul says:

    This still looks like a great deal to me. 10 free trades a month is more then enough for most small investors and still the best deal out there. I don't understand how existing customers can complain too much about the reduction in free trades. The bottom line is that they are still offering free trades! How can one complain about free? Baffles the mind.

  4. Walt says:

    Zecco is inexpensive. My trades appear to have done in a timely manner. My only concern has been that CONDITIONAL ORDERS are NOT accepted at this time. My contact at Zecco says that conditional orders will be avaiable soon, but I can't spend all my time watching for triggers. With other discount brokers I can place parameters around my orders and know that they will filled as I choose (and I don't have to watch constantly).

  5. Rakesh says:

    I checked Zecco website . Now you have to maintain $25000 account value or 25 trade per month to get 10 free trade otherwise flat fee of $4.50 per trade

  6. AlwaysReadTheTOS says:

    Zecco's Terms of Service says that they can bar your access and/or close your account any time for any reason, without prior notice, and that they aren't liable if they do. You got that? They can prevent you from getting to your money any time, for any reason, without telling you why, without saying that they are going to do it. And they are NOT LIABLE. Of course the government will protect you from losing your money. Bernie Madoff was just a fluke, right?

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