TastyTrade

Today’s post looks at opening a TastyTrade account from the UK.

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:

1. 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.
2. 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:

1. Open a TastyWorks account
2. 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.
3. Move £££ from your UK bank into CF
4. Convert £££ to $$$ within CF
5. Send $$$ from CF to TW
6. 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.

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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:

CurrencyFair 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.

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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.

1. For some reason, Europoor only uses capital letters on his website, which can make the posts difficult to read [↩]
2. According to EuroPoor [↩]