investing in stocks using zecco?

Question

i recently transferred my $ from etrade to zecco, because i heard zecco offers free trades (for stocks). i dont mean to throw accusations, but i believe these guys are stealing from their members. You see, every time i try to buy, i end up paying 3 cents more than the actual price of the stock (per share). so if the stock is 44.90 at the instant that i bought, they charge 44.93. i know 3 cent is not a lot of money, but if you are buying 1000 shares thats a $30 difference. Has this happened to anyone else?

Answer 1

If you had level II quotes you could see exactly how many 100 lot shares are being bid and what the level II ask prices are being quoted as. If Zecco doesn't offer this then you may want to consider using limit orders or going elsewhere. There really is no free lunch.
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Answer 2

The Zecco website states that more than 10 transactions a day OR 40 a month will be charged $3.50 per trade.

If you are over either of these limits, and buying 100 shares at a time, it will look like you are paying 3 cents more than you expected.

Additionally, the Zecco user agreement states that the data is not guaranteed accurate, timely, or sequenced. This means that your trades are conducted at the market price, which can be VERY different from the displayed price.

Obviously, they are not in business to not make money. They must have some form of income. The user agreement leaves open the possibility that they charge a "spread".

This refers to the difference between the "buy" price and the "sell" price on a single transaction. This is how traders on the floor of the markets make their money. Typically, traders on the floor work for a spread of less than a penny a share. This doesn't sound like much until you realize the BILLIONS of shares traded each day.

They can charge this spread because you don't have any way to confirm the actual price paid for the shares. The user agreement says you won't hold them liable for any discrepancy in the data, which is what their lawyers will claim in court. The legalese in the agreement protects them.

Answer 3

Always ask companies how they make their money. No one gives something for "free". There must be a way they make $$$. This is a fair question that should never be shied away from.

I don't know the details of Zecco. This could just be the "spread" or it could be something else. I look for speed of execution/routing, sophisticated charting and fair pricing. My broker has a "squak box" going for most of the day. I learn alot and get some ideas for trades. I pay .015 cents per share with a minimum order of $5.00. It works great for me.

Bottom line don't ever use a broker for price only. Newbe's should also avoid deep discount brokers, for many reasons.

BTW: Jimmie is totally off base.

Answer 4

How do they make their money? They aren't in business to give you free trades.

There is such a thing as "payment for order flow" where they are paid to direct the order to a certain market maker for matching rather than to the one offering the best price.

Answer 5

You won't go wrong with Scottrade. They are inexpensive, offer a lot of good research tools that others charge for, and they work well. I've been a customer of theirs for a year and am quite happy, even considering transferring other accounts to them.

Answer 6

Zecco's not ripping you off (probably). See the following:

http://www.investopedia.com/ask/answers/03/102303.asp

Answer 7

the price you see is delayed by at least 15 min. It is some kind of law or something. so the price you are being charged is the price ate the time you hit send to buy. It could be lower or higher than what you see 15 min delayed

Answer 8

if it is consistently 3 cents - then what they guy said above is innaccurate, and you are being charged a fee, despite their saying the transactions are free.

Answer 9

You are aware the stock price changes every nanosecond, right?

You are using MARKET ORDERS.
You must use LIMIT ORDERS. (If you want to pay exactly $44.90)