TradeStation vs Tastyworks

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Contributor, Benzinga
April 19, 2021

Options trading is a good way to generate extra income, cushion your risk or diversify your portfolio through increased exposure to certain indexes and stocks. Since options trading is more complex compared to stock trading, you need to be selective when choosing a brokerage.

Benzinga has analyzed 2 of the top players on characteristics that matter to you — who is it for, trading fees and commissions and research offerings. Luckily, you can sign up with either and enjoy low trading fees and commissions.

Overview

Here is a quick snapshot comparing TradeStation and Tastyworks:

Who is TradeStation For?

TradeStation really stands out for options traders since it is a 0-commission platform. However, the brokerage can serve you if you fit in any of these categories:

  • Expert traders: If you’re an expert trader, TradeStation provides a platform where you can back-test proven trading strategies.
  • Active traders: TradeStation also offers various benefits to active traders. The brokerage fees are typically volume-based, so you’ll incur lower costs if you’re a frequent, high-volume trader. You can also have your software charges dropped for being a frequent trader.
  • Beginners: As a rookie trader, TradeStation is a great brokerage since it has a simplistic design that makes it incredibly easy for you to understand the tools of trade. You can also take advantage of its customizable platform to create a dashboard that suits your trading needs.
  • Institutional investors: If you’re an institutional investor, you’ll enjoy a handful of services that offer comprehensive and tailor-made trading solutions. The brokerage boasts a vast exposure to serve institutional investors across North America, Europe, Latin America and other worldwide markets. You will also have access to electronic execution services across multiple asset classes, including currencies and equities.

Who is Tastyworks For?

If you’re an active trader, Tastyworks makes life easier for you through low pricing, handy technology and great customer service. The following investors will benefit from using Tastyworks:

  • Active traders: Tastyworks is a great brokerage if you’re an active options trader looking to become more skilled at executing trades. You can access and use this brokerage through its website or mobile application.
  • Beginners: If you are new to options trading, Tastyworks provides a great learning experience. The platform allows beginners to watch expert traders executing trades in real-time.
  • Experienced traders: Tastyworks also caters for the experienced options traders looking for advanced options to execute specialized trades by providing valuable educational content.

You can open an individual, trust or joint account with Tastyworks, with the options to have it held as a cash, margin or retirement account. With a margin account, the broker lends you money to trade and use the trading strategies available. With cash trading, you must fully fund your transactions but face restrictions to using some trading strategies.

The retirement account provides investors with tax advantages while allowing you to use basic trading strategies and defined risk spreads. Tastyworks offers Roth, SEP and Traditional IRA account options to its clients. You can open a retirement account as an individual, entity or jointly.

TradeStation Fees and Commissions

TradeStation’s 0 commission on equities trades only applies to the first 10,000 shares per trade. For every order that exceeds 10,000 shares, a charge of $0.005 per share is assessed on the shares that are in excess. The brokerage offers 2 pricing plans: TS Select and TS GO. TS Select requires a $2,000 funding minimum whereas TS GO doesn’t have a funding minimum. TS GO rates apply only to web and mobile app trading.

If you’re on the TS GO plan and place trades using the brokerage’s desktop platform, an extra $10 fee will apply to every options and equities trade made.

InstrumentCommission
Stocks$0 per trade
ETFs$0 per trade
Options$0.50 to $0.60 per contract + $0 per trade
Futures$0.85 to $1.50 per contract per side + $0 per trade
Mutual funds$14.95 per trade
Bonds$14.95 per trade + $5 per additional bond

TradeStation charges a $50 monthly inactivity fee if you fail to maintain an average month-end balance of $2,000, don’t perform at least 5 trades within 12 months of funding or 12 months following the anniversary of the first funding date. However, the minimum account activity fee is relatively easy to maintain.

Tastyworks Fees and Commissions

Tastyworks now offers capped commissions on equity option trades at $10 per leg.

  • For options on stocks and ETFs, the brokerage charges an opening commission of $1 per contract but doesn’t charge a closing commission.
  • For stocks, the brokerage doesn’t charge an opening or closing commission. However, all stock trades incur a clearing fee of $0.008 per share.
  • For options on futures, Tastyworks charges a $0.50 opening commission and a $0 closing commission. Futures options trade incur a $0.30 clearing fee per contract.
  • For futures, the brokerage charges $1.25 per contract to open and $1.25 to close. Futures trades also incur a $0.30 clearing fee

Banking fees associated with Tastyworks include:

  • Domestic check ($5)
  • Outgoing domestic wire ($25)
  • Foreign check ($10)
  • Outgoing foreign wire ($45)
  • Dividend check ($5)
  • Restricted stock processing ($205)
  • IRA closing fee ($60) 
  • ACH notice of correction ($5).

The brokerage also charges trade-related fees that include options regulatory fees, SEC fees, NFA fees, exercise and assignment fees and clearing fees on futures, equities and options.

ACH deposits and withdrawals are free. There’s also no annual IRA account maintenance fee.

TradeStation Research Offerings

TradeStation has various research offerings on its website. Although you won’t get the most comprehensive information about companies you’re looking to invest in, the platform gives you access to stock reports from Credit Suisse and Market Edge.

There are also videos and articles that give insight into the basics a beginner needs to make their first trades. Apart from owning a designated television network, TradeStation also hosts in-person education events across the U.S. in trading and investing.

If you’re a futures trader, you can check out its learning center, which provides explainer videos on futures trading and the Nasdaq-100 index. You will also learn about margin trading and how you can place a bitcoin order.

TradeStation also provides more than 150 indicators that you can include in your test strategies. You can also access over 40 years of intraday data and over 90 years of stock trading data. With this historical look at the markets along with low prices, you can afford to research and trade with TradeStation while most people must use one place to research and another to invest.

Tastyworks Research Offerings

Tastyworks has a handful of research tools and offerings that any options trader can use. Tastyworks allows you to create watchlists and portfolios where you can watch the brokerage’s seasoned investors executing trades in real-time. You can monitor all trades live without leaving the platform. Tastyworks video archive section also gives you access to more video content. It also hosts free live events across the U.S.

The platform is well designed and allows you to get reports, graphs and other helpful information you will need to make the right trade decisions. If you need a deeper analysis of your current portfolio risk, Tastyworks provides a Quiet Foundation platform where you can register for free and monitor all your brokerage accounts. The platform also offers educational content, most of which is used by expert options traders.

The company also recently launched Luckbox Magazine, a digital publication that offers guidance to investors looking to make intelligent investment choices based on various probability models. The brokerage’s professional traders also publish their trades and outcome, so you can choose your favorites and follow them to receive valuable trading info.

TradeStation vs. Tastyworks Bottomline

Although TradeStation doesn’t charge commissions to options traders, it boasts an advanced software best suited for expert traders. Tastyworks, on the other hand, is a discount brokerage designed for active options traders. The low trading fees and educational content available on the Tastytrade Network make this brokerage ideal if you want to advance your skills in analyzing portfolio risks while trading.

At times, you may use both platforms depending on your investment plan. You may find it helpful to keep two different accounts, learn which one works for you and move on to the platform that seems to have worked the best. Don’t be afraid to think outside of the box when you’re creating your investment portfolio.

Frequently Asked Questions

Q

What kinds of traders prefer TradeStation?

A

Experienced and professional traders like the platforms, costs, research and tools.

Q

How many trades per day can you do on tastyworks?

A

Tastyworks allows up to a maximum of 3 transactions per day.