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ZacksTrade Review: Bringing Sophisticated Research to Low-Cost Investing

ZacksTrade

The name Zacks is familiar to many investors. Long known as a provider of top-notch investment research – with reports used by brokerages like Fidelity – those who rely on the company’s analysis can now also use it to trade, too. ZacksTrade an online brokerage firm committed to self-directed traders and investors launched last February. As users should expect, the firm’s research offerings are a key feature, and it also hopes to compete on price for retail investors, as well as institutional and corporate clients.

What should investors know about ZacksTrade?

For all but the most infrequent investor, cost plays a huge role when picking a brokerage, and according to ZacksTrade Managing Director Jason Toledo, it’s a huge priority for his brokerage, too.

“Our commissions generally start lower than our larger competitors,” he notes. Clients pay a $0.01 per share commission with a minimum of $4.50. This places the firm well below brokerages like Charles Schwab and TD Ameritrade. ZacksTrade’s broker assisted trades are a manageable $20 additional fee, regardless of the security.

Of course, commissions aren’t the only factor when it comes to costs. Customers will pay between $1 and $70 a month for supplemental data and $30 per year – charged quarterly – for IRAs. Many larger competitors don’t charge for either of these services, though smaller ones often do. On the other hand, ZacksTrade doesn’t charge inactivity fees and has a fairly standard surcharge – 1% of trade value – on stocks below a dollar. Its account minimum – $2,500 for most – is also reasonable. In addition, the firm charges a maximum margin rate of 2.59%. Toledo says this “can translate into hundreds or thousands of dollars in margin interest saved vs. our larger competitors.”

In order to evaluate the cost, it’s also important to note what other services a brokerage offers. With ZacksTrade, members can trade in 16 different countries – including Canada, Mexico, Germany, the UK and Japan – with typical commissions at 0.3% of trade value. Customers also have access to the company’s proprietary smart routing system and three platforms, including one mobile. ZacksTrader is a Web-based platform, and ZacksTrade Pro is fully customizable, aimed at more advanced traders.

What are ZacksTrade’s research options?

As prospective customers might expect, access to research is a centerpiece of ZacksTrade. All clients receive a subscription to Zacks Premium from Zacks.com just for signing up – a $199 value annually. This entitles them to all the quotes, charts and proprietary rankings of a basic subscription, in addition to stock screens, in-depth mutual fund research and Zacks Industry Rank, among other tools and reports. Though larger competitors, like TD Ameritrade, often provide a variety of third-party research sources, smaller competitors tend to struggle in this area.

Who should sign up for ZacksTrade?

According to Toledo, “Our customer is the self-directed trader. We keeps our costs low, and our customers make their own decisions about what to invest in.” He notes that the firm’s clients range from college students to retirees, long-term investors to daily traders.

While self-directed traders will do well at ZacksTrade, some will do better than others. The firm’s lack of inactivity fees suit long-term investors, but those wanting to open an IRA can find a better deal elsewhere – likely, with access to Zacks research. On the opposite end of the spectrum, hyperactive traders will probably prefer a firm with lower commissions, like Interactive Brokers.

However, the kind of middle-of-the-road investors – those trading in taxable accounts, making a few trades per month – who typically sign up with Schwab, TD Ameritrade or Etrade might be able to save money on commissions with ZacksTrade, especially if they’re interested in international trading. And for investors who prioritize research, ZacksTrade offers maximum access with minimum commissions.

Interested in ZacksTrade? You can learn more and sign up for an account here.