Zecco Goes All-In. Everyone Calling Their Bluff. A Tree Falls...(Archive from 3/4/2011)

So obviously the big news this week was Zecco sh!t!ng the bed with their decision to hose their loyal customers. Interesting choice to say the least. I am quite intrigued by it and has taken much more brain-power than it should of.

I came to Zecco and probably only made 5-10 trades a month. Maybe 1 option trade in there, max. I remember Oct 2008, I made 40 trades
(the month they gave us all unlimited free trading) and thought I had gone crazy. Those "10 free trades a month" turned me into a trading machine. It got me used to trading more frequently, being free and all. Then, I branched into options and average probably 30-50 options trades a month now.

Their strategy was brilliant! Give me a few low cost trades and have me branch into higher margin revenue streams. It worked perfectly! Zecco turned me into a $1000+ a month commission customer AND we both benefited from it. I became the trader I am today because of them offering me a few free trades to get my feet wet.

I appreciate they didn't come to this decision lightly. They most likely didn't rush in. They probably even came up with projections of exactly how many customers they would lose.

So why did they do it, then? My best guess is they are ramping up to be bought out by one of the majors. Just like every other start-up that gained a lot of accounts. Well, no one will want them if they are offering all their customers free trades. The buying firms current customers would be quite upset about that. Therefore, they need to convert their customer base into fully paying customers used to no free trades.

I get it. That's business. Thinkorswim, Ameritrade, many others cashed out big from selling out to another firm looking to grab their customer base and platform.

They will become just another brokerage with trading cost slightly below the majors. Their iphone app is a major flop(however, with potential). Most other trading platforms have mobile trading. They dropped the ball and probably spent way too much to develop a product that provides very little value to its customers.

I will be moving to another brokerage. I am not saying which, I only wish the best for Zecco moving forward. Maybe offering free trades doesn't work, yet I see many other brokerages offering it(generally, with caveats). I enjoyed my time here and felt their customer service was very good(even though, many have complained about it). The few times I called in I got very knowledgeable reps who were very friendly. Mostly communicated through email and they were prompt and efficient.

I will miss the community, even though I have really only been active for the last year or so. The ironic thing is I don't even use my 10 free trades anymore. This just ended up being a catalyst for me to evaluate my trading costs and alternatives.

Remember to learn from your mistakes. Remember not to let your emotions get the best of you with a trade. Remember the market will not generally do what you expect it to do. Remember to step back and analyze your trades and strategies. Remember that what we do here doesn't really matter, don't take it too seriously. Remember to take a day off every now and then. Remember its a very long race, one bad trade isn't the end of the world, learn from it. Remember you're not as great of a trader as you think you are. Remember how much of this game is based on luck.

Remember to sell in May and GO AWAY.

Remember to read the 10-Q's of the companies you own.

Remember to re-read those 10-Q's.

Remember to read "Fooled by Randomness".

Remember to re-read "Fooled by Randomness".

Remember to reward yourself when things go your way.

Remember not to be too hard on yourself when they don't.

Remember the market is rigged, has always been rigged, and will always be rigged.

Remember to diversify into physical assets.

Remember to smile.

Remember to remember.

Remember to forget.

Remember.