In a sea full of whales plying the hypercompetitive market of online brokers, you might not expect a small startup to make a big splash. But that’s exactly what Tastyworks has just done.
Born in January 2017, the Chicago-based online broker might be a smaller fish in terms of customer accounts, now at 132,000 vs. Fidelity’s 23.1 million. But this year, Tastyworks made its first appearance in Investor’s Business Daily’s annual Best Online Brokers survey, and it ranked among the five brokers honored for Overall Customer Experience.
The rankings are based on the Customer Experience Index (CEI) designed by IBD’s longtime polling partner TechnoMetrica Market Intelligence. Clients rate their brokers on 15 attributes that investors deem most critical. Those attribute ratings are used to compute the CEI scores in the 15 categories and overall Best Online Broker rankings. Tastyworks debuted with a No. 3 ranking overall out of 10 brokers analyzed.
Tastyworks has taken careful aim in its march to success with investors, particularly options traders.
“We built a platform that delivers opportunities for individuals to trade small, trade often and trade strategically,” Tom Sosnoff, co-CEO and founder of Tastyworks, told IBD in a phone interview. “We are 100% for the self-directed retail investor. And we want our customers to actually use their brain, and to give them an intellectual challenge.”
Can Tastyworks Help You Profit And Challenge Your Brain?
Customers can put their gray matter to work on Tastyworks’ robust trading platform. Some unique tools include “Curve Analysis,” or what the company calls “a visual way to intuitively set up trades for entry.” How is it visual? A click-and-drag interface allows users to see clear profit and loss price zones. They can also quickly adjust option strike prices and option expiration dates.
Want to figure out a price that gives you a higher probability of exiting a trade for a profit? Tastyworks offers a percentage-based forecast dubbed the “Percent of Profit Limit Orders” tool. This eliminates the need to pick a random price target in which to close an equity or option position. Tastyworks also offers stock liquidity ratings, earnings data embedded within the software, and beta weightings for both stocks and portfolios.
And customers can ponder plenty of investing ideas from eight hours a day of free online content via the affiliated Tastytrade online financial content network.
The Tastyworks platform is available in desktop, browser and mobile formats.
Tastyworks Rankings In Best Online Brokers Categories
Given its options focus, it might be no surprise that Tastyworks scored a 92 CEI rating for the category of Options Trading Platform. That was good enough for the top spot in the category and was well above all other brokers.
The broker also took top honors for Low Commissions & Fees, with a strong 93 CEI score. (See details in the Tastyworks At A Glance graphic.) Other top brokers in the category include free-trade innovator Robinhood and the big brokerages that competed in a late-year race to zero commissions on stocks, ETFs and mutual funds.
For now, just 2% of total trades on Tastyworks are plain-vanilla buys or sells of stocks.
In all, Tastyworks grabbed the top spot in seven of 15 categories. Besides the two already mentioned, it was No. 1 in Customer Service, Trade Reliability, Site Performance, Educational Resources and Trade Ideas.
The broker ranked among the five Best Online Brokers honored in five other categories: Website Security, Broad Choice Of Investments, Low Cost/Free ETF Trading, Mobile Trading Platforms/Apps, and Portfolio Analysis & Reports.
In grabbing the No. 3 spot overall, Tastyworks finds itself in good company. The other top five brokers are Fidelity, Charles Schwab (SCHW) (read more), Interactive Brokers (IBKR) (read more) and TD Ameritrade (AMTD) (read more).
Stock Trading And Tastyworks Technology
Sosnoff co-founded the Thinkorswim online trading platform with Scott Sheridan in 1999, then sold it to TD Ameritrade in January 2009 for $606 million. But a lot has changed over the two decades since then.
Back in 1999, brokers were routinely delivering 25,000 price quotes per second and executing 50 orders per second, Sosnoff says. Today? Those numbers have catapulted to 25 million quotes per second and 25,000 trade orders per second, respectively.
Therefore, Sosnoff and his team decided to do something different from the other online brokers when they created Tastyworks. They adopted what he calls a “high-frequency middleware” that he says is 40 times faster in handling orders and transmitting data than legacy brokerage trading systems.
“It’s incredibly stable,” said Sosnoff, a former floor trader on the Chicago Board Options Exchange. “It can handle 22- to 23-millisecond routing trades.”
The firm’s customers tend to be active traders and depend on Tastyworks doing well in many of the IBD survey’s key attributes. The average Tastyworks user makes 1,200 single-direction trades a year, or roughly 600 round-trip executions. With roughly 240 trading days each year, that comes out to five trades a day.
Tastyworks Co-CEO On The Future Of Stocks, Options Trading
Sosnoff sees a bright future for growth in the brokerage industry, and there’s a simple reason. From his viewpoint, 99% of Americans engage in their finances passively. So there is a lot of opportunity if those passive investors can be drawn to take an active role in their finances.
“I don’t get it. When it comes to money, there’s very little engagement,” he said. “We hold a different view on how individuals should be engaged in finance. Finance affords something that most people miss. One, it creates a very different intellectual challenge. Two, when you make financial decisions, your mind processes all these probabilities and it changes your world.”
Author: David Saito-Chung
Source: Investors: 12 Reasons Why Newcomer Tastyworks Catapulted Into Best Broker Rankings