Is TastyTrade Safe?
When you log onto TastyTrade (also known as tastyworks), you’ll see that the broker stands out from its competition. Everything, from the referral rewards to the options chain design and even the website itself, feels different from other companies in the industry.
While being different can be good, it raises a question: can you trust this broker? Is TastyTrade a scam? Can you find positive feedback from customers at the BBB? Let’s find out.
TastyTrade Origins
TastyTrade is a highly-rated broker offering a wide range of investment products and services. The broker has a solid history in retail investment.
TastyTrade’s founders, led by Tom Sosnoff, are known for creating innovative products. One example is the Smalls Futures Exchange. The team also originally developed Charles Schwab’s ‘thinkorswim’ trading platform.
Is TastyTrade a Scam?
So, is TastyTrade a scam?
The answer is no. TastyTrade is not a scam.
There are many ways to check if TastyTrade is legitimate.
First, TastyTrade is a member of the SIPC. This membership means investors are protected against issues with the broker.
TastyTrade is also part of the National Futures Association, which regulates the futures industry in the U.S. Additionally, the company is a member of FINRA, the securities regulatory body. TastyTrade’s membership IDs are 277027 (FINRA) and 69649 (SEC). With these memberships, we can confirm TastyTrade is a legitimate and safe business.
TastyTrade also uses a clearing firm, Apex Clearing, to handle transactions. Apex is regulated and wouldn’t work with TastyTrade if there were any questionable practices.
Is TastyTrade Secure?
To maintain licensure and partnership with regulators, brokers must keep their customers safe. Protecting customer finances and personal data is essential.
TastyTrade uses various security strategies to protect its users. From software to hardware and real-time monitoring, it closely tracks accounts and funds.
Additionally, all personal and transaction data is encrypted with TLS v1.2 256-bit protocols while in transit. Customer passwords are hashed for added security. This setup creates a secure platform for trading and safeguarding funds.
TastyTrade Referral Code
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TastyTrade BBB Rating
The Better Business Bureau (BBB) is a good place to check a broker’s business practices.
The BBB rates companies based on many factors, including customer complaints, time in business, and licensing. TastyTrade’s current rating is A-, though the BBB doesn’t accredit the broker.
TastyTrade BBB Reviews
We’ve reviewed some BBB comments to help you see what others say about TastyTrade. Although there are positive reviews, the negative ones don’t indicate fraudulent activity.
Most complaints appear to be due to misunderstandings of the customer agreements rather than the broker acting dishonestly.
This is a reminder for newer traders to read through documents before investing. It takes time to understand how brokers work, but it’s worth it. See more on the BBB website.
Is TastyTrade FDIC/SIPC Insured?
Only banks are FDIC-insured. Since TastyTrade isn’t a bank, it doesn’t offer FDIC protection. However, as a brokerage firm, it is a member of the SIPC. This means that every investment account is insured up to $500,000, with up to half available for uninvested cash.
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TastyTrade Review
Now that you know TastyTrade isn’t a scam, we’ll share our thoughts on the broker.
TastyTrade is an innovative broker with diverse products and tools. It offers multiple account types, fair pricing, and more.
Here are some details.
Available Securities
TastyTrade offers stocks, ETFs, indices, options, futures, commodities, and cryptocurrencies. Investors can trade most asset classes from one account.
Stocks/ETFs
Investors can trade U.S.-based stocks and ETFs on margin, including short selling. ADRs are available for foreign stocks, but there are no OTC foreign stocks.
Futures & Commodities
Futures and commodities are traded through CME and SMFE exchanges. The CME is more liquid and suitable for day trading, while the SMFE, created by TastyTrade’s owners, offers smaller contracts, lower costs, and less risk.
Cryptocurrencies
TastyTrade offers a list of the most popular cryptocurrencies, although the list isn't very long.
When trading cryptocurrencies at TastyTrade, all transactions are made in US Dollars. There's no option to use a digital wallet, and you can't trade pairs of different cryptocurrencies.
Here's what cryptocurrencies you can trade at TastyTrade:
TastyTrade Trading Platforms
TastyTrade's trading technology and mobile app create a quick and secure environment, so you can trade from anywhere.
The platforms at TastyTrade are unique, built from scratch to offer fast trade executions and excellent security.
When choosing the right platform, think about what each one is best at.
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Desktop Software
TastyTrade's desktop platform is full of features but is still easy to use.
The platform is user-friendly, helping you track the market with watchlists and make trades easily.
It handles options trading well, letting you set up complex strategies quickly with drag-and-drop.
The charting tools are improving, but they're not the best yet.
Browser-based Platform
The web platform at TastyTrade has all the same tools as the desktop version but is more streamlined.
It's great for trading when you're not at your desk, like on a laptop or Mac.
Mobile Application
The mobile app is straightforward to use, with simple controls and easy navigation.
One interesting feature is how easily you can follow and copy the TastyTrade team's trades.
Account Types
You can open many different types of accounts at TastyTrade.
‘The Works’ – This account gives you the highest level of trading permissions.
Individual Margin – A standard trading account based on your financial info.
Individual Cash – A basic trading account without margin.
Joint (TIC/WROS) – These are shared accounts.
Retirement – Offers several types of retirement accounts.
Corporate – For corporate entities.
Trust – For trusts.
International – For clients outside the U.S. (except Canada).
Fees and Commissions
TastyTrade's pricing can be very favorable, especially for large trades. Some fees are standard, but TastyTrade caps the commissions you pay.
Options fees are $1 per leg for stocks and ETFs (capped at $10), $2.50 for futures options, and $1.50 for micro futures options.
Trading stocks and ETFs is free.
Futures trading costs $1.25 per contract (round trip is $2.50), micro futures are $0.85 per contract (round trip is $1.70), and smalls futures are $0.25 per contract (round trip is $0.50).
Cryptocurrency transactions have a 1% fee, capped at $10.
Capped Commissions
TastyTrade's capped commission structure is a standout feature, especially for trading complex options or large volumes.
Commissions are charged per leg when you open a contract. But no matter how many lots you trade, you won't pay more than $10 per leg.
This is how TastyTrade's capped commissions compare to other brokers. This pricing is particularly beneficial for those making large or complex trades.
Margin Rates
TastyTrade's margin rates are average for the industry and vary depending on your account balance.
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Debit Balance
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Tastytrade Margin Rates
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under $24,999.99
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10.25%
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$25,000 - $49,999.99
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9.75%
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$50,000 – $99,999.99
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9.25%
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$100,000 - $249,999.99
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8.75%
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$250,000 - $499,999.99
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8.25%
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$500,000 - $999,999.99
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7.75%
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$1,000,000 +
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7.25%
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Is There a Cash Management Option?
TastyTrade does not offer a cash management option like a bank account or debit card, unlike some other brokers.
Which Investors Does TastyTrade Cater To?
TastyTrade is suitable for a wide range of investors, offering a variety of tools and services.
However, it's not ideal for those looking for penny stocks, advanced charting, or who need to trade very quickly.
But, if you're an options trader or someone who makes large trades, TastyTrade has a lot to offer. It's also good for those wanting to trade many types of securities from a single account.
Awards
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TastyTrade Pros and Cons
TastyTrade has its advantages and disadvantages.
TastyTrade Pros
- Quick and easy account setup
- Focus on complex options strategies
- Trade a variety of assets from one account
- Beneficial capped commission structure for cost savings
- Modern, fast trading platforms and interfaces
- Excellent mobile app
TastyTrade Cons
- Charting tools still need improvement
- Not suitable for very fast trading
- Chart trading needs to be more user-friendly
- There is no Pink Sheet support
- No cash management option available
Updated on 10/7/2024.
I work in investment analytics and have been investing in the market since I was in high school. I enjoy anything that involves lots of strategy (i.e. a good game of chess), which is why I was naturally drawn to investing and researching companies. Outside of investing, I’m a big fan of the outdoors. In summer, you’re most likely to find me kayaking, camping, and hiking in the mountains.
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