tastyworks review 2022
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tastyworks: Best for
- Options traders
- Active traders
- Cost-conscious traders
Tastyworks – the new brokerage with the funny name might make you look askance, but it’s a great choice for traders looking to minimize their costs. Having debuted in 2017, this broker may not ring any bells, but this solid operation can compete with some of the best on price. Sure, Tastyworks doesn’t have the longevity of E-Trade or Charles Schwab, but its leadership has experience crafting a serious player – thinkorswim – a well-regarded outfit that was acquired by TD Ameritrade in 2009. Tastyworks brings the heat, especially for active traders looking for options at low cost. The broker is more focused on traders than investors, though, so some clients may not find what they need, for instance, mutual funds (since it doesn’t offer any.)
The commission structure should prove attractive to those dealing in volume, though you don’t need absolutely insane volume to score a lower cost. Those looking for good volume discounts should also consider Interactive Brokers or TradeStation, though even lower-volume traders could take advantage of cheaper commissions at Ally Invest and E-Trade.
tastyworks: In the details
Top features you’ll love
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.
Pros: Where tastyworks stands out
Focus on trading securities
Tastyworks 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, tastyworks offers the following securities:
- Futures options
While some of these securities 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, tastyworks really structures its commissions to attract this kind of trading clientele.
Tastyworks 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 par for the industry today.
But you’ll see a real standout difference between tastyworks 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, tastyworks charges a flat rate on buys and no charge on the sale. Tastyworks 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 (TradeStation and Ally Invest, for two) hit that $0.50 level without a discount, though this doesn’t include other no-commissions players such as Robinhood and Webull.
But tastyworks 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.
Tastyworks 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 tastyworks 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.
Cons: Where tastyworks could improve
Lacks major trading securities
Tastyworks 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 tastyworks 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.
No fractional shares
Tastyworks also doesn’t offer fractional shares, either when you buy or as part of 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. (The broker doesn’t offer dividend reinvestment anyway, so that’s something of a moot issue here.)
While fractional shares don’t mean much to traders, newer or long-term investors 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.
Slow setup process
It may take you longer to set up an account on tastyworks 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 tastyworks 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, tastyworks’ 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 Tastyworks 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 Tastyworks, and that’s alright if you’re in the audience that doesn’t need these perks.
Tastyworks 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, Tastyworks might not be quite the resource you need.