Zecco: Stock Trading Goes Social
Posted by Miles Lennon on January 14th, 2008 4:43 PM
Despite early doubts of success, Zecco, the $0 commission trading platform and online investor community is thriving with 17,000 unique visitors every day and 95,000 members registered in the community. As long as your account balance exceeds $2,500, the free trading community gives you 10 free stock trades monthly ($4.50 for each additional) along with a slew of other benefits including low margin rates—for those of you whose middle name is leverage—and no minimum cash balances to open basic account or IRAs.
In addition to providing investors with a free, intuitive and comprehensive trading utility, Zecco gives users access to three crucial resources—namely, a community, quotes and research, and basic educational materials for noobs—to ensure smarter investment decisions. ZeccoShare, the company’s online community, is worth highlighting because it supports the popular business philosophy, “many are smarter than the few,” which seems to be influencing a number of startups in this space. Members of the community can join groups, communicate with fellow investors and debate investment strategies, all the while evaluating the sources of the information they receive from others by viewing their portfolio performances.
Fortunately, I had a chance to ask Tony Leach, ZeccoShare’s Product Manager, a few questions. When asked what type of investor is best suited for Zecco, he said, “Zecco is ideal for the self-directed investor - the kind that researches their own decisions and wants to use new tools like the ZeccoShare community to get an edge on the market.” Zecco lies at the intersection of a brokerage and a community of plentiful resources and thus “sets us apart from the competition.”
Part of Zecco’s plan for the future is to integrate with the broader online community and it appears they are heading in that direction. Zecco has implemented Motley Fool’s CAPS stock recommendation system, which produces ratings for stocks based the ratings of investors that take positions in them. Although the CAPS system has been somewhat controversial, it may for the time being give you a little edge to beat the market.
If you didn’t make the cut for Covestor because you aren’t “proven” and you’re looking for a more dynamic community with more resources than Cake, stop by Zecco and open an account (no minimum).
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They hood winked a lot of users by consistently scaling back their number of free trades and retroactively implementing a minimum balance requirement. That really hurt the small investors that had been taking advantage of their ill thought out business model. Frankly it was an embarrassing lack of foresight on their behalf by not anticipating the type of high volume, low balance investors that would become avid users.
That being said, I like the site quite a bit. They have enhanced a number of features and the community is growing. I was asked to become ac community rep and at the time declined, but since then the site has really improved in terms of organization and "cleanness."
The reality of the community isn't quite as great as you might think. The forums are somewhat useful but they lack the type of insight you can find at investors village, for example. The networking aspect should improve and I have interacted with others via the site and actually considered new trades based on their recommendations.
To summarize I like the company but I was very displeased with the consistent bait and switches they pulled on the community. If those are in the past I think they might have a future in an INCREDIBLY competitive industry.
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