TastyTrade
Today’s post looks at opening a TastyTrade account from the UK.
Contents
TastyTrade
TastyTrade is a US-based online brokerage and investment education platform.
- TastyTrade (the education platform) is the better-known brand within the group – the brokerage is called TastyWorks.
So we’ll really be opening a TastyWorks account today.
TastyTrade merged with IG during 2021, so it’s technically part of a UK group now.
Why?
Spoiler alert – opening and funding a TastyWorks (TW) account is a bit of a chore, so why do I want to go to the trouble of adding a new broker?
- TW has no commissions, but we have several UK brokers with that function, including some with low/zero FX charges if we are interested in US stocks (I’m looking at Stake and LightYear here).
TW has two further advantages:
- Access to options
- Interactive Brokers is the only rival platform that I know of for UK investors.
- IG will let you spread bet on options prices (which has the advantage of being tax-free on any profits) – I’ll look at this in a future post.
- IG also emailed me this week to say that 12 options markets (all individual US stocks) had been added to the platform – I’ll look at this in a future post, also.
- Access to US ETFs
- Stake will also let you access these, once you have $25K in your account and self-certify as a sophisticated investor.
- You can also spread bet on some (but not all) US ETFs via IG.
Both of these features are attractive to me.
The process
The key steps involved are:
- Open a TastyWorks account
- Open a CurrencyFair (CF) account
- This is the only way to get money into a TW account from the UK.
- Transfers need to be in dollars, and TW won’t accept transfers from Wise or Revolut.
- Move £££ from your UK bank into CF
- Convert £££ to $$$ within CF
- Send $$$ from CF to TW
- Buy an option or a US ETF on TW
The process is described pretty well on the TW site, but I have also leant on the Europoor.com website, which has a series of posts on how to carry out the above steps.1
Opening a TastyWorks account
The application process begins with you choosing a username, and entering an email address and a password.
You’ll need to choose between a cash account and a margin account.
- I chose margin because I want to trade option spreads.
Then you enter the traditional personal details (name, address, phone, citizenship status etc).
- This includes your employment status and your tax identifier (here in the UK, this is your NI number).
You also need to supply a trusted contact – I used my partner.
- And you will be asked about your trading experience and objectives.
UK investors need to take a photo of their passport and upload a document which verifies your address (I used a bank statement).
- The phone app will try to match a selfie with your passport photo, but this process failed for me.
I was contacted by the onboarding team via email and had to reupload the passport photo and bank statement.
- It usually takes three to five days for your account to be approved, and that was my experience.
Note that TW automatically complete a W8-BEN form on your behalf during the application process, so you won’t be paying more withholding tax than you need to.
Opening a CurrencyFair account
As discussed above, TW won’t accept transfers from Wise or Revolut, the more natural choices for sending dollars.
- The only alternative to a bank wire transfer is CurrencyFair.
The difference2 is that CF correctly uses the Swift payment network, whereas the other services try to use ACH, which can lead to a $30 reversal fee.
- EuroPoor found that CF was even cheaper than Wise, so the FX transaction should be at a competitive rate.
Setting up the CF account is a similar process to opening the TW account, and uses the same identity verification documentation (passport and bank statement).
- You’ll need to specify which currencies you want to use – I only ticked pounds and dollars.
You also need to choose a personal account rather than a business one and choose “investments” as the purpose of the account.
If you do decide to open a CurrencyFair account, please consider using my affiliate link:
Putting money into the CF account is simple – you just make a Faster Payment (in sterling) from your UK bank account.
- This usually arrives within a couple of hours, and often in a few minutes.
CF charges $4 plus a percentage fee for an FX conversion.
According to TW, although TW and CF don’t charge for the wire transfer, CurrencyFair’s intermediary bank charges $20.
- It doesn’t seem possible to avoid this, but it does mean that you will want to transfer cash in relatively large chunks.
On a £1K transfer, $20 works out at around 1.6%, which is more than double the typical broker FX charge of 0.5%.
- On a £10K transfer, it’s only 0.16%, which is much more reasonable.
Adding on the fixed $4 FX fee gets us up to around 0.2%.
- The variable fee would be around $50 on a £10K transfer (0.4%) which takes us up to 0.6%.
The bottom line is that you want to be making large transfers, and leaving the money in TW for a while.
The transfer process is a bit more complicated than the UK’s faster payments system – there are more fields to fill in.
- You can find your own TW account number under “Account Status”.
Wire transfers from CF can take up to 3-5 business days to arrive in your TW account.
- TW recommends that you forward the transfer confirmation from CF to banking@tastyworks.com, so that they know to expect the money.
Conclusions
That’s it for today.
- The process of setting up a TW account – and the associated CF account – is a bit more long-winded than using a UK trading app, but it does provide access to some new instruments (options and US ETFs).
I’ll be back with a review of the service when I’ve made a few trades.
- Until next time.
- For some reason, Europoor only uses capital letters on his website, which can make the posts difficult to read [↩]
- According to EuroPoor [↩]
Mike Rawson
Mike is the owner of 7 Circles, and a private investor living in London.
He has been managing his own money for 35 years, with some success.
