In-Depth Tradenet Review 2020

Tradenet is an educational program that enables you to apply for a funded account to trade CFDs via another firm they are working with. Tradenet was in the news quite a lot in 2018/2019, so I was keen to find out what this is all about. I wanted to know from 100 of their customers why they chose Tradenet’s educational service over other brokers and what their experience with them was.

Besides customer feedback, I also dug deeper into the service Tradnet offers to see if you can trust them with your money. This review will tell you everything you need to know before you buy one of their trading education programs.

The main reasons people chose Tradenet

I collected this data over the course of several months asking current and past Tradenet customers in various chatrooms. The reasons below are sorted by popularity, whereas #1 is the most popular one.

#1: Leverage

89% of customers liked the considerable leverage they get with Tradenet the most.

What is leverage?

Leverage is simply an increase in buying power, which means that you can buy more stock than what your account size would allow. Let’s say you have a 6:1 leverage and $1,000 in your account. That would mean you can buy stock worth $6,000.

To give you an idea of how far leverage could go: Tradenet’s smallest package gives you a 35:1 leverage with a $399 investment. So that means you can buy stock worth $14,000 with very little money.

To make it even more clear how leverage works, I made an illustration down below.

They in total offer four packages with different amounts of leverage:

Why do they love leverage?

The consensus across all traders was, that leverage allows them to trade higher-priced stocks (stocks above $10) which is their preferred choice. Higher-priced stocks are generally known to be easier to trade than penny stocks with a technical trading approach.

Trading with leverage gave them discipline

That may sound the other way around from what you heard about leverage. But it gave all the profitable Tradenet traders more discipline, which is something I experienced myself. In fact, I only became profitable with a leveraged account. But why is that?

You will hear it time and time again: ‘leverage is bad for traders’ or ‘leverage will kill your account.’ Governments even try to regulate leverage to ‘protect’ investors. Very much the same protection as the beloved Pattern Day Trader rule ;-). Let me tell you the story of my first account to explain why leverage is not a bad thing.

My first account was a $50,000 account without any leverage. So I bought stocks as a newbie and started to average down once the trade went against me until I lost almost all of the $50k. I had no stop-loss in mind, I just wanted to make my money back and there I had it, a total disaster. So when did I start to rethink my trading style? That’s simple – when I finally sold my shares for a $45k loss.

But what if I had a similar Tradenet account? With $2,700 I would get an account with $80,000 of buying power. And here is the important thing: Even though I can trade with $80k, I can ultimately only lose $4,000 until my account gets closed down. So effectively, I would only lose the $2,700. Even if I open up another account with Tradenet and lose it again, I would be far away from the $45k I lost with my regular account.

Leverage will teach you the discipline to trade much more carefully as the max-loss will always be in the back of your head.

A lot of the profitable traders have blown through an account to learn their lesson, and it helped them to build up more discipline, so their next account does not end in a disaster.

#2: Trading education

86% of traders chose Tradenet for its trading education. Most of the traders buy into the education program because of the lead figure Meir Barak and his successful trading style.

Who is Meir Barak?

Meir Barak is a professional day trader, author of the trading book “The Market Whisperer,” and a leading Wall Street expert who regularly appears on TV and in the financial press. He founded Tradenet in 2004 and serves as the company’s chairman, chief trader and professional mentor. His financial success mainly comes from trading the US stock market.

You will find him trading daily with all the education program participants, sharing his ideas and trades with you live.

Can you trust his trades?

I personally watched his live streams on YouTube for several months to see if his trading system does work. Like every trader, he also lost money during this time, but overall, his P&L was hugely positive. In 2018 Meir made a total of $263,859 for the year. So the answer is yes, he certainly knows how to trade the market successfully.

What do traders particularly like about Tradenet’s education?

The consensus across all traders was that they like the mentoring and trading seminars the most, closely followed by Meir Barak’s live trading analysis. Adapting their strategies helped 72% of the traders to become profitable.

#3: Easiness of CFD trading

67% of traders chose Tradenet for the contract for difference (CFD) trading platform. CFD trading makes it easy to join trades as you don’t participate the market directly.

What is CFD trading?

A contract for difference (CFD) is a contract between a buyer and seller, stipulating that the seller will pay the buyer the difference between the current value and the value at contract time. If the difference is negative, then the buyer pays instead to the seller.

The main benefit is that you can get into every trade without directly moving the market with any shares size you like. The execution of the order is instant, which makes it very easy to trade CFD’s.

Also, any restrictions (like the short-selling restriction for a stock that is down more than 10%, for example) do not apply for this kind of trading.

What do traders particcularly like about CFD trading?

The consensus across all traders was the easiness of short-selling stocks that are under short-sell restrictions. It can be particularly hard for new traders to get into short trades when you can only get filled on an uptick. You are much more likely to miss trades like this.

The second largest reason they like in CFD trading was that you could get in at market price with any share size you want. It does not matter if there are enough sellers or buyers at that particular price point as you don’t participate in the market directly.

#4: Level 2 cost and commissions

56% of traders chose Tradenet for the overall cost of level 2 data and commissions.

What is level 2 data?

Level 2 is a subscription service that offers market depth with bid and ask prices and sizes. It shows you bid and ask prices and order volume (number of shares) for each price level. The following screenshot shows level 2 information as well as time & sales (executed orders).

Level 2 data is almost inevitable if you want to day trade and find good entries.

Is the level 2 information different from others?

Technically it is not different than others. Other brokers charge a monthly fee for this information, which is around $100 per month. People like TEFS (the investment firm Tradenet works with) level 2 because it is only $15 per month.

Why do traders like the commissions?

Commissions with TEFS are cheap! All you pay to trade CFD’s is $0.006/ share in commissions ($6/ 1k block) and $0.0015 in routing fees per share. $7.5 each way/ $15 round trip per 1k shares. The minimum commission for each order execution is $1.5 which equals the commission for 200 shares.

Additional customer feedback

I also asked the 100 customers additional questions about Tradenet to get a better feeling of what they chose, how they fared with it and if they would recommend Tradenet in general.

Let’s take a look at what packages they chose.

As you can see, most traders chose the student package. There were mainly two reasons people gave me why they chose it. One was leverage, and the other one was wiggle room (amount of money they can lose until the account gets closed).

In the end, I wanted to know other statistics and ultimately if they were profitable and if they would recommend Tradenet.

As you can see, most traders would recommend Tradenet. They especially noted that it is excellent for beginners because of the trading education you get.

What I was also surprised to see is the number of profitable traders. Now granted 43% does not look like much. But if you put it into perspective that 95% of traders lose money in the stock market, 43% is fairly impressive.

Let’s dig deeper into Tradenet

Now that we saw some customer feedback, we should take a look into the details of Tradenet.

What is Tradenet?

Tradenet is a trader education company that operates from England since 2004. They sell you various education packages. In return, you will get a funded account with a certain amount of buying power, maximum loss, and profit-sharing. The education packages include access to educational videos and other online materials. Some packages include access to the Tradenet chatroom for a specified period. In the chatroom, you get all-day education, commentary, and alerts live with guidance, targets, and stop-loss parameters. The larger packages include a mentor program and one on one personal coaching.

What is the investment firm Tradenet works with?

Tradenet works with the investment firm TEFS, which operates from the Seychelles. TEFS itself is using the Colmex exchange, which is an EU regulated firm operating from Cyprus. Buying a package on Tradenet will allow you to trade a funded account with TEFS.

Can I trade CFD’s in the US?

TEFS stopped accepting applications from US citizens in June 2020. At the moment, you cannot use the Tradenet services as a US citizen.

How much of the profits can I keep for myself?

Since you are trading essentially for TEFS, they will take a profit share. How much you have to give away depends on the Tradenet package you have chosen. The charts below show you how much of your profits you can keep for yourself with each package.

Can you upgrade a package?

Yes, you can upgrade to a higher trading package at any point in time. You can also directly use your profits for the upgrade.

14-day money-back guarantee

You can get your money back within 14 days as long as you don’t place any trades during that time.

How does the Tradenet withdrawal work?

You are allowed to withdraw money once a month. If you made a profit in the previous month, you could make a payout request up until the 10th of the month. TEFS will wire out the funds on the 16th of every month if it’s not a weekend and you should receive funds by the 20th.

When you withdraw money, you invoice TEFS for the amount you want to withdraw. You get paid as a freelance trader. They deduct from the equity over the original buying power in your account, plus the profit share percentage you owe them for that withdrawal, plus a wire fee which is $15.

How much money can you withdraw?

You can withdraw everything that is above the buying power you received. So for example, if you get $80,000 in buying power and you have made a $10,000 profit for the last month, you can withdraw $10,000 minus the profit share and minus the wire fee.

If you left the $10,000 in your account, your buying power would increase to $90,000. When you have losses that drops you below your buying power, you will not be able to pay out any profits.

If you lose money during the payout period, your withdrawal amount may get adjusted with the amount you lost. So it is good practice with Tradenet to leave some money in the account as a cushion and not withdraw the entire amount. Taking partial profits will also increase your maximum loss for your account, which will prevent your account from being closed down.

What is the maximum loss you can have?

The maximum loss depends on the package you choose. Tradenet gives you a higher max-loss than what you invested, which is fairly nice. Below you will find the maximum amount you can lose per package until your account gets closed down.

What happens when you reach the maximum loss?

Once you reached your maximum loss or even went over it with an overnight trade, you will get blocked from trading. You are still able to enter the platform, but you can’t place any trades anymore.

Tradeable stocks

TEFS restricts the amount of stock that you can trade. That usually applies to small-cap penny-stocks. If you want to play these highly risky stocks, you can expect that you can only trade about 2/3 of the stock you put on the watchlist. Higher priced and well-known companies are usually all available for you to trade.

One of the great benefits you will notice trading CFD’s, is that you can short-sell every stock that is tradeable without any restrictions.

Does the Pattern day trader rule (PDT) apply?

The pattern day trading rule (PDT) does not apply for Tradenet as the account is not located in the US.

Pre-Market & After-Hours

Unfortunately, pre-market and after-hours trading is not possible with Tradenet. If you are a beginner, I would not recommend trading those hours anyways. It is way too dangerous if you don’t have the experience. If you still want to trade pre-market and after-hours have a look at the other brokers we recommend.

Tooling

You will trade with the ‘TEFS Trader,’ a custom made trading platform that is fast and reliable. It has every instrument and helper to chose from that you would expect from a professional trading platform and is highly customizable. I have not experienced one bug in the software in the few months I was using it.

Customer Support

As soon as you buy a package, you will get a personal account manager assigned. All of their customers said their customer support was excellent as they were very responsive and answered all the questions they had promptly.

How fast will I get access to the account?

As soon as you purchased a package, you will receive an email with confirmation and further steps. Those steps will include signing agreements, access to their education center and chat room, Meir’s book” Market Whisperer” and a 14-day DEMO trading account)

You will not get a real money trading account right away; that’s why you receive a demo account. They want you to get used to the software and trading in general.
After registering, it will take about five days to get your live trading account.

Can I trade options or Forex with Tradenet?

No, you can’t. You can only trade the US stock market and ETFs using their services and the funded account provided by TEFS.

Controversies around Tradenet

There are rumors on the internet that Tradenet is allegedly a scam because they circumvent the ban of CFD trading in the US. Now to make this clear, these allegations were spread at the end of 2018 by smaller YouTube channels (with less than 50k subscribers). I find it hard to believe that these channels have done that without having self-promotion goals in mind. Especially if you analyze the keywords they targeted makes it clear to me, that this was done to gain traction from possible Tradenet customers.

Ultimately these channels wanted to win more subscribers, which makes the legitimacy of the allegations questionable. Since a lot of people are still worried though whether Tradenet is a scam or legit, I want to go over the allegations those YouTubers made by answering frequently asked questions.

Am I doing something illegal trading CFD’s with Tradenet?

No, you are not doing anything illegal. CFD trading is completely legal outside of the US.

Is my money at risk?

People are referring to the Seychelles, where the investment firm TEFS is located, as a fraud zone. While people have a point that regulations are more lose with those countries, it does not mean that they will run with your money. Tradenet exists since 2004, and if they would possibly run with your money, they would not be able to operate for such a long time. So the answer is no, your money is not at risk with Tradenet.

Will Tradenet not pay me out when I have profits?

Together with fraud, there were allegations, that Tradenet would not pay out the full amount of profits that you made. From what I saw around the internet is that people don’t understand how the payout system exactly works. I mentioned this previously already that TEFS will subtract any losses from your payout that occur during the running month. This subtraction is a standard mechanism, in my opinion, to protect themselves and your account from blowing up. You should never withdraw all the profits you made each month. You should create some cushion to protect your account.

If you don’t think they are paying out profits, with a little google search, you will find a lot of payout proofs flying around the internet. And again, they could never get away without paying anyone for so many years.

Word of advice

Treat Tradenet as a learning experience and not as an account you are building up. They offer education packages which they clearly state, and that’s how you should treat it. Yes, you can make a lot of money in the process, but I would take the money you earned and put it into another brokerage account. As soon as you are more experienced and more confident in trading, you should make a switch to the regular account.

Final Verdict

Tradenet’s customers are overall very positive about the platform and also exceptionally successful compared to other traders. The education you receive (traders uniquely loved the one on one mentoring) is very beneficial for newer and even advanced traders. I was impressed at how many traders are successful with this education program compared to a typical trader. The fraud allegations are very exaggerated and don’t give a reason to be concerned. CFD trading is effortless and with the high leverage an excellent opportunity to make a decent income.

If you want to try out Tradenet before you buy any of their packages you can try out their free 5-day trading challenge. They also offer up to 20% off of their packages with this link here.