Zecco: Discount Brokers and Social Networking for Trading Strategies

Zecco is a discount broker who offers zero/low commission stock trades. It is a good option for day and swing traders who buy and sell frequently - in such trades, the profits are usually small and large commissions can eat into your margins. Zecco offers 10 commission-free trades each month and charges $4.50 for excess trades if you maintain a net equity of $2500 in your account. Zecco offers only basic and bare-minimum trading and charting tools compared to bigger brokers. It also provides a social networking platform including forums and blogs for members to exchange their views and ideas on trading.

In fact, there are many online brokers like MBTrading, Interactive Brokers, etc. that offer commission rates comparable to Zecco. Bigger online brokers like Fidelity, Ameritrade, E-Trade, etc. charge higher commissions but they provide very sophisticated tools for the advanced trader - these tools are very useful for day and swing trading which capture short-term movements of the market indexes.

This is a trade-off you should consider when deciding on your broker - cheaper commissions increase your margins but better tools enable you to make smarter trades. One way to capture both these features is to have an account with both kinds of brokers. Use the tools and charting from the better broker but execute trades with the cheaper one. You do not need a brokerage account to access these tools from the bigger brokers; a Roth or traditional IRA account usually suffices.

As a trader on a small budget I have found this to be most optimal. My trading strategy mostly involves day trades where I try to capitalize on small price changes of stocks. For this, I have used trading tools from online brokers like Fidelity.com and Ameritrade.com successfully. I particularly like Fidelity's 'Active Trader Pro' tool. It provides streaming market data, advanced charting and data filtering options, independent research, etc. I use this information to trade via MBTrading.com which charges only $1 per trade (buy or sell) of 100 shares. The only trading tool MBtrading provides is live level-2 quotes but their low commissions, excellent customer service and easy account management make this a sweet deal.

Zecco's platform for sharing investment ideas and opinions is a good forum to exchange finance news and ideas. You can learn new strategies and improve your knowledge about investment from other people's experiences. The social networking platforms provide an idea about general trends - one may get useful tips for long-term investment strategies.

But for day trades and swing trades, in general it is a bad idea to use other's investment plans - stock trading is one area where mass adoption of an idea hurts your returns. If everyone buys the same stock, its price rises - so it is a bad time for you to buy it. Besides, I suspect that not all information on such sites may be genuine because no one like to reveal his/her investment strategy and rationale to others. So data from such forums and social networking sites is no substitute for your own educated assessment and should be used with caution while evolving a successful trading strategy.