Which Broker is for you: Tastyworks or Robinhood?
These brokers are very different and generally only one of them will suit your needs, with larger accounts generally preferring Tastyworks to Robinhood in the long-run.
This isn’t always the case though, as if you aren’t interested in options trading, futures trading, or other more advanced investing styles then Robinhood could be for you as they have a MUCH better mobile interface than Tastyworks with the same commission-rate on stocks (none), deposits, withdraws, etc.
Ultimately we prefer to use Tastyworks as they have commission-free stock trades like Robinhood has, but also the option to use margin, trade naked (uncovered) options, and futures, as well as some products that Robinhood simply doesn’t allow you to trade currently.
So Which Broker is for you?
I’ll go over a list of questions for you to answer to figure that out and give insights into each platform and what it exceeds in, as someone who’s used both platforms for over three years now.
In short: if you want to trade options primarily or have an account larger than a few thousand, sign up with tastyworks. If you want to be a dividend investor who sells covered calls go with Robinhood. If you want to dollar-cost average into stocks over the long-term go with neither and get yourself an M1 Finance account.
What Is Your Investment Strategy?
Are you planning on dollar-cost averaging over the long-term into companies? If so tastyworks wouldn’t be the best choice, but I’d argue even robinhood wouldn’t be the best choice, albeit a suitable one. I’d recommend checking out M1 Finance if that’s your style of investing.
However if you want to trade options and futures and do not plan to slowly buy into stocks over the long-term but instead trade them or options on them, then hands down tastyworks would be the better choice. However if your account size is less than a few thousand dollars then you probably shouldn’t use tastyworks quite yet as you won’t be able to take advantage of their key benefit which is margin trading and non-secured options trading.
If you’d like a mix I’d recommend signing up for both and using both independently.
BOTTOM LINE –
If you have an account above a few thousand dollars definitely go with tastyworks if you want to do options. If you aren’t interested in options at all, go with robinhood. If your account is small, but you want options, go with robinhood until it grows a bit. If you want to do both, get both accounts!
Do you care about customer support or quick advice/help?
If you do, especially if you want to trade options or futures, definitely go with tastyworks. During market (and premarket) hours you can call them and get a real person in their office to answer and help you out immediately. You can also email them if you’re like me and don’t like talking on the phone, and expect a response quite quickly that same day.
If you don’t care about customer service, then Robinhood is an option, just know you won’t get any support for potentially a few days and you’ll be unable to exercise your options on their platform before expiration without that potentially multiple day wait via email.
BOTTOM LINE –
Which one is Cheaper to use?
People debate this all the time, as many claim Robinhood gives worse price-fills and thus the lack of official trading fees is made up for by bad execution, but I’m not so sure that’s truly the case. My fills were always adequate with Robinhood.
However, I’d like to make it very clear, from someone who’s used them both and tried to skirt trading fees by using robinhood, DON’T DO IT.
The fees each brokerage charges should not be relevant to you whatsoever unless you’ll be dollar-cost-averaging into stocks frequently, as covered in the “What is your investment strategy” section. Pinching pennies and worrying about fees will bite you in the butt in the end. Be it trying to wait a trade out till it’s long-term capital gains only to have the stock crash from where you thought it was overvalued, or simply you being incapable of making proper trading adjustments because robinhood doesn’t permit you to do undefined-risk option trades.
I spend at least $40 on options trades a month through tastyworks, many months I spend much much more than that. I can promise you without the freedom tastyworks gives regarding options adjustments I’d lose multiple times what I pay in fees to tastyworks.
BOTTOM LINE –
While Robinhood is cheaper on paper in practice it’s more expensive for options traders and active-traders with mid-size accounts and above due to worse execution and account restrictions.
Do not regard price in your decision between these two brokerages. You’ll regret it if you do so.
So Which Brokerage is for you?
Before we get into the final analysis I’d like to mention that tastyworks has many promotions that I’ve talked about before on this blog. If you decide to sign up for them I’d recommend getting yourself one of those promotions. You can read about those tastyworks promotions more in detail here on this website.
As for Robinhood, the only promotion they have is a free stock when you sign up through someone else’s link. If you do sign up through my link I’ll also get a random free stock. You can get a free stock by using my link.
Onto it then, Which Brokerage should you choose?
Tastyworks is definitely the brokerage for me out of the two, and it’s the one I’d say would be the best one for most people who would be reading this. You can sign up for Tastyworks by clicking here.
Some people, albeit the minority, would be better off with Robinhood. Really that’s only if you aren’t interested in Options-trading and just want to be a dividend investor or you only have a few hundred dollars to invest and just want to get your feet wet rather than waiting till you’ve saved up more money to start with. You can sign up for Robinhood by clicking here.