tastytrade review 2023
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tastytrade: Best for
- Options traders
- Active traders
- Cost-conscious traders
Tastytrade may have a funny name, but it’s a great choice for serious traders looking to cut their commissions while enjoying a high-powered trading experience. It can compete with some of the best brokerages on costs, especially if you’re trading options and cryptocurrency, where it caps your commissions. While this broker debuted in 2017, its leadership includes some of the folks behind the creation of thinkorswim, one of the more popular retail brokers, which was swallowed by TD Ameritrade years ago. Short-term traders will likely find a cozier home here than will long-term investors, especially with the total lack of mutual funds and the overall emphasis on trading.
If you’re trading options with some volume, you’re probably going to like the commission structure here, and you don’t need gargantuan levels of volume to benefit, unlike if you were trading at Interactive Brokers, for example. Ally Invest and E-Trade are others that offer cheaper options commissions without having to trade too much.
tastytrade: In the details
Pros: Where tastytrade stands out
Focus on trading securities
Tastytrade really focuses on securities that are popular with traders, where money can be quickly won (or lost). So if you’re looking for that kind of access and focus, then the broker may work for you. For example, tastytrade offers the following types of securities:
- Futures options
While some of these security types are geared more toward long-term investing, such as stocks and ETFs, the rest are more like short-term trades than investments. And, as noted below, tastytrade really structures its commissions to attract this kind of trading clientele.
If you’re not here for this deep bench, you may prefer a broker such as Fidelity Investments or Charles Schwab which offers traditional securities with more of a focus on investing.
tastytrade has really designed its brokerage to appeal to active traders, especially in more niche securities such as futures and options. But even stock and ETF traders will find something to like here, with the broker’s $0 commission, which admittedly is on par for the industry today.
But you’ll see a real standout difference between tastytrade and other brokers when it comes to commissions on other products. Take options, for example. Unlike most brokers that charge you a commission when you buy and sell, tastytrade charges a flat rate on buys and no charge on the sale. tastytrade charges $1 per contract on the buy, translating into $0.50 per round-trip, compared to the industry standard of $0.65. Only a handful of brokers (Ally Invest, for one) hit that $0.50 level without a discount, though this doesn’t include other no-commissions players such as Robinhood and Webull.
But tastytrade actually does more than this for options traders. It actually caps the commissions on each leg of an options trade to a bare-bones figure of $10. Trade 10 contracts and it will cost $10. Trade 20 contracts and you’ll still pay just $10, and so on. Of course, if you’re doing more exotic options trades with multi-legs, you’ll pay more in total because of the extra legs on the transaction. But each leg will still be charged $1 per contract and capped at $10 total. So a two-legged trade with 20 contracts would cost you $20, while 40 contracts would still cost $20.
Tastytrade also offers cryptocurrency trading and charges a 1 percent fee on both the buy and sell, but it caps this commission at $10 as well. So once your trade value surpasses $1,000, you’re not paying any extra commission on that specific transaction. If you trade $10,000 at a time, your effective commission is just 0.1 percent – in line with some of the best brokers for crypto. So it’s an attractive commission structure if you’re trading significant volume at one time.
However, if you’re into futures, you’ll pay both an opening and closing commission of $1.25 for standard futures contracts. Micro futures and small futures are also available, at a lower price.
Access to cryptocurrency
Cryptocurrency has become a popular trading vehicle, and tastytrade gives you access to it, when many online brokers still won’t touch it (TradeStation, Robinhood and Webull being a few exceptions). Plus, you’ll have a decent percentage commission with a cap on it, as mentioned.
At tastytrade you’ll be able to trade 25 different types of cryptocurrency, including some of the most popular ones, including Bitcoin, Dogecoin, Ethereum, Solana and more.
Are you looking for a new trade idea? You can use Follow Feed to track the trades of select traders. You’ll see when they executed their trade, their strategy and their rationale. You’ll also get an idea of their trading expertise and record of returns, so you’re not following just anyone.
This feature is fully customizable, so you can add and delete traders as and when you want. It’s similar to the CopyTrader feature at eToro, and it adds a social element to the experience.
Tastytrade has upped its game in this area since the last time we reviewed the brokerage when it didn’t offer fractional shares. Now it offers them on both purchases and dividend reinvestment. With fractional shares, you can put all your money to work in the market and even with dividend reinvestment plans, small amounts are fully put to work.
While fractional shares don’t mean much to traders, for newer or long-term investors they may be the difference between going with one broker over another. If they’re an important feature for you, have a look at Bankrate’s list of top brokers for fractional shares.
Cons: Where tastytrade could improve
Lacks major securities
Tastytrade offers many securities that are great for traders, but one could say it’s deep and not broad in that regard. For other investors, especially many typical long-term buy-and-hold types, it may prove less than attractive on this front. That’s because the broker does not offer some key areas at all, including bonds and mutual funds. It’s not just that tastytrade does not offer any no-transaction-fee mutual funds – there are no mutual funds at all! Ditto with bonds. And if you’re looking for another favorite of income investors, preferred stocks, you’re also out of luck.
If you’re not an investor in those areas – and plenty of people aren’t – this gap won’t bother you at all, especially given the popular securities already on offer.
Slow setup process
It may take you longer to set up an account on tastytrade than what you have become accustomed to. Often these days, you can establish a brokerage account in 15 minutes, fund it as part of the opening process or shortly thereafter and have a good look around on the inside.
When opening a tastytrade account, you may be hit with the following message: “Watch for a ‘Welcome’ email in 3-5 days when this account is ready for funding.” In a world where Robinhood will front you up to $1,000 immediately when you get started, tastytrade’ lead time seems surprisingly long. And you may not even be able to log into the trading platforms, either, until your account is fully authorized to trade. That could be a turn-off to traders ready to roll.
Lack of education and deep research resources
It’s clear that tastytrade caters to active traders, and often brokers with that focus prioritize cost and other more client-relevant features, compared to education and deep research. That’s the case at tastytrade, and that’s alright if you’re in the audience that doesn’t need these perks.
Tastytrade doesn’t offer the depth of educational and planning articles that you would find at a leader such as Schwab or Fidelity. And it doesn’t offer the depth of stock research that you can find at these players. But it does offer some basic research as well as its Follow Feed to track traders. Clients also get access to streaming video with topics of interest to active traders, so you can stay on top of what traders are looking at and maybe join in the action yourself.
If you’re a newer investor or trader then, tastytrade might not be quite the resource you need.
Tastytrade charges a $75 fee for transferring out your account – about standard for the industry. A few brokers charge more, but this price is what most rivals charge. That said, Fidelity is a notable exception and charges no transfer-out fee, so if that matters, check them out.
However, tastytrade does charge another non-standard fee, the IRA closeout fee, which it clips you $60 for.
Firstrade4.0 Bankrate Score
Firstrade is a solid brokerage offering that may particularly appeal to options traders because of its commission-free options trades. You’ll also get access to quality research and its mobile app, but mutual fund investors may be disappointed by the small number of no-transaction fee funds available.
TD Ameritrade4.5 Bankrate Score
TD Ameritrade still offers strong platforms and a range of research for its clients, making it a very solid pick for more advanced traders, even as it is about to merge with Charles Schwab. A wide range of tradable securities and plenty of commission-free mutual funds make this broker interesting for both new and advanced traders, as do the competitive commissions.
WellsTrade2.5 Bankrate Score
WellsTrade handles most of the basics well and could be a good fit for existing Wells Fargo customers looking to consolidate accounts in one place. However, active traders should likely look elsewhere for their brokerage needs due to high options costs and a barebones trading platform.
J.P. Morgan Self-Directed Investing3.0 Bankrate Score
J.P Morgan’s Self-Directed Investing platform is a good fit for existing Chase customers who are looking for a low-cost way to trade stocks, ETFs and mutual funds while getting access to the bank’s easy-to-use mobile app. However, only a few account types are offered and If you’re looking to trade forex, futures or crypto, you’ll need to look elsewhere.
Interactive Brokers5.0 Bankrate Score
Interactive Brokers keeps adding new features and improving its offerings year after year, and now has new mobile apps to pair with long-time strengths such as its wide number of tradable securities and access to global markets. Low margin rates, high interest rates on cash balances, and a leading number of no-transaction-fee mutual funds serve to make this broker a top pick.
E*Trade4.5 Bankrate Score
E-Trade is likely to be a suitable broker choice for many investors who will appreciate its low trading costs, high-quality research and education, and 24/7 access to customer service. However, if you’re starting small and looking to trade fractional shares, you’ll need to find a different option.
Ally Invest4.0 Bankrate Score
Ally Invest offers a solid brokerage with many of the features that investors have come to love, especially no-commission trades on stocks and ETFs, but it ups the game with low-cost options trades, too. All-hours customer support and an all-encompassing mobile app will make sure you get business done on your terms, though mutual fund investors may be a bit disappointed.
Merrill Edge4.5 Bankrate Score
Merrill Edge brings strong research and education to the investing space, offering a solid trading platform for stocks, bonds, options and funds. You’ll likely find some extra things to love here if you’re already a customer of parent Bank of America, with 24/7 phone support and in-branch service potentially making that relationship even more meaningful to clients.
Fidelity5.0 Bankrate Score
Fidelity Investments is back again with another blowout performance in Bankrate’s reviews. This broker seems to do it all right, from low costs to plenty of research to mutual funds to prompt and courteous customer service. And with so much under the Fidelity roof – banking, credit cards and more – you could capably run your financial life here.
Charles Schwab5.0 Bankrate Score
Charles Schwab is a great all-around broker, whether you’re just getting started investing or are more advanced, and it can bring the heat on almost anything you’re likely to need. Add on strong customer support, a wide investment selection, no-commission mutual funds, and tons of research, and you have the makings of a five-star broker.
Webull4.0 Bankrate Score
Webull offers a lot that investors will like such as commission-free trading, fractional shares and a slick mobile app that allows you to trade on the go or keep tabs on your favorite stocks. But only a few account types are offered and you won’t find the level of research that is available through other brokers.
Robinhood3.5 Bankrate Score
Robinhood has taken its game up a notch or two, pairing its traditional no-cost trading with new IRA accounts (and a special bonus match for clients) as well as improvements in customer service, including 24/7 chat. The mobile app remains an attractive place for options traders but is a no-go for those looking for mutual funds or a wide range of account types.
Vanguard3.0 Bankrate Score
Vanguard’s brokerage offering can handle the basics well and may be a good fit for long-term fund investors. But more active traders will be disappointed by the basic trading platform and high commissions for options trading.
TradeStation3.5 Bankrate Score
TradeStation’s brokerage offering is likely to suit active traders better than it does new investors or those just looking to save for retirement. Customers will get an advanced trading platform with low commissions, but you won’t find fractional shares and the mutual fund offering is limited.
SoFi Active Investing3.0 Bankrate Score
SoFi Active Investing is a low-cost broker that should meet the needs of new investors looking to only trade stocks and ETFs. More experienced investors may be disappointed by the lack of options or mutual fund trading and a limited research offering.
moomoo3.0 Bankrate Score
Moomoo joins a crowded field of discount brokerages with an appeal to individual traders, offering some atypical features, including access to U.S., Hong Kong and Chinese markets. Competitive pricing on stocks, ETFs and options will prove welcome with traders, though others may find the lack of account types, limited available securities and high transfer fees off-putting.
Zacks Trade3.5 Bankrate Score
Zacks Trade is a broker that should appeal to active traders with its advanced trading platform and ample research offering. New investors may be turned off by the high account minimum and fees for mutual fund trades.
Lightspeed3.0 Bankrate Score
Lightspeed is all about active traders who can deliver volume to the broker, and so everything is optimized around making the experience the best for them. That means discounted prices for high-volume trades and multiple high-power trading platforms, but it also means no concern for eliminating the nickel-and-dime costs that other brokers routinely slash.