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CJ912

Tastyworks commissions

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Hello all,

Since commissions take a fairly huge chunk out of our profits, finding a good low-cost brokerage makes a huge difference in annual returns. The Tradier offer is extremely compelling and I recently tried to switch over from Tastyworks. I ran into some issues with Tradehawk and their mobile app is not working at all for me, which is something I can’t do without due to my lengthy commute during market hours (I’m based in Europe). This made me think if I couldn’t just get a better deal from Tastyworks. I contacted them and they were willing to talk if my volume was over 10,000 contracts monthly…..hmmmmm…not quite there yet. To have more negotiating power I would like to see how many Tastyworks users there are here and see if we can get a better deal for all of us based on our joint volume. So…please let me know if you use Tastyworks and would prefer a better deal!

 

CJ912

 

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43 minutes ago, CJ912 said:

 

Hello all,

Since commissions take a fairly huge chunk out of our profits, finding a good low-cost brokerage makes a huge difference in annual returns. The Tradier offer is extremely compelling and I recently tried to switch over from Tastyworks. I ran into some issues with Tradehawk and their mobile app is not working at all for me, which is something I can’t do without due to my lengthy commute during market hours (I’m based in Europe). This made me think if I couldn’t just get a better deal from Tastyworks. I contacted them and they were willing to talk if my volume was over 10,000 contracts monthly…..hmmmmm…not quite there yet. To have more negotiating power I would like to see how many Tastyworks users there are here and see if we can get a better deal for all of us based on our joint volume. So…please let me know if you use Tastyworks and would prefer a better deal!

  

CJ912

 

I am not a tastyworks user yet but if the deal is close to what we can get at tradier im in!

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35 minutes ago, Christof+ said:

@CJ912 Just saw the thread - please count me in, ready to open account there with some volume.

 👍 We will definitely need a lot more SO members here to weigh in, Trusty Jules has a point: they're re hard to impress by volume

Edited by CJ912
Typo

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I have a TW account.  To be honest, I've been using other platforms recently for my options trades.  Nothing against TW, it's just how things have played out lately. However, a great deal could trigger a reevaluation of my habits.  Feel free to throw my two cents in the ring if it furthers the cause.

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5 hours ago, skydragon said:

I have a TW account.  To be honest, I've been using other platforms recently for my options trades.  Nothing against TW, it's just how things have played out lately. However, a great deal could trigger a reevaluation of my habits.  Feel free to throw my two cents in the ring if it furthers the cause.

Same here.  I love placing Tradier trades directly from ONE (though I wish that were full 2-way communication), but I have a TW account sitting unused, not even for data.  I'll probably close it soon, but I'm open to a good deal.

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Hi everyone,

Quick update here: TW is happy to see if they can get us a better deal but they would really need to get a feel for what we're talking about here, both in AUM and volume. I can totally understand that you don't want to state those numbers here publicly, but please feel free to let me know by PM. Let's see where we can get...


 

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@CJ912  @DubMcDub @Christof+ @TrustyJules @TooEffingOld @skydragon   @SamirG91 @mccoyb53 @ChrisE @Bull3t007

Did you guys have any success doing a group negotiation with TastyWorks?  
 

Their fees on top of all of the exchange fees they charge to the customer are surprisingly high.  I’m down to $0.40/contract with ToS and will be requesting $0.30/contract in 60 days in hopes of getting to $0.35 and later to $0.30.  ToS keeps about $0.15 more payment for order flow, but they don’t pass on all the high exchange fees and they have the potential order execution advantages of using 5 wholesalers instead of 4, plus in house order executions at better than National Best Bid and Offer (NBBO) thanks to trillions in AUM.  Potential is the key word there though.  Hoping the merger with Schwab improves ToS execution quality to the level of Schwab’s and not the other way around.   

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9 minutes ago, QuickNick said:

@CJ912  @DubMcDub @Christof+ @TrustyJules @TooEffingOld @skydragon   @SamirG91 @mccoyb53 @ChrisE @Bull3t007

Did you guys have any success doing a group negotiation with TastyWorks?  
 

Their fees on top of all of the exchange fees they charge to the customer are surprisingly high.  I’m down to $0.40/contract with ToS and will be requesting $0.30/contract in 60 days in hopes of getting to $0.35 and later to $0.30.  ToS keeps about $0.15 more payment for order flow, but they don’t pass on all the high exchange fees and they have the potential order execution advantages of using 5 wholesalers instead of 4, plus in house order executions at better than National Best Bid and Offer (NBBO) thanks to trillions in AUM.  Potential is the key word there though.  Hoping the merger with Schwab improves ToS execution quality to the level of Schwab’s and not the other way around.   

I had a couple of calls with them. Unfortunately they are not very willing to arrange a special offer for SO members. They feel they're relatively cheap and have the idea that their content is highly valuable to their customers and therefore justifies their pricing. After a few back and forths we got nowhere, they were very welcoming to signing a referral agreement. I send their offer to Kim but, not surprisingly, he wasn't willing to work with them on that basis.

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How about order execution quality comparisons between TW or ToS with Interactive Brokers, Tradier, Charles Schwab, Fidelity or even Robinhood since they’ve straightened up their act on that this year?  Do you guys have any insights there?  
 

I’m interesting in using whichever broker does trades for the best overall value consistently.  I don’t mind learning a new interface.  I’m also especially interested in helpful order types such as Interactive Broker’s Adaptive Algo and Charles Schwabs’s Walk Limit.   Any insights there guys?

Edited by QuickNick

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From memory I did a quick study on  the cost of Tastyworks vs IB. I remember there was very little difference so I stayed with IB as I have got used to their mobile app which I use to make all my trades. With IB I can even do trades  when I am having coffee or in the car with my wife driving, or before a round of golf!!!. I found Tasty works a bit different and it took me a while to get used to. There were videos to help. I did have a problem trying to work with two companies as I forgot the odd time that I had a trade to close on Tastyworks which cost me dearly on a couple of occasions so I lost enthusiasm. I am happy with IB as you can see. To each their own. Willing to change if there was a big cost difference though. Been in Europe there are no really low cost providers that I have found yet.

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Isn't TW run by the same guy that started TOS?  Back in the day, TOS was pretty expensive and I used IB as a an alternative but kept a small TOS account because I liked their pretty risk graphs, kinda like a simple minded raven playing with something shiny.  I moved back to TOS completely when the commissions went away and IB wouldn't even talk to me about it, I don't know what TW has but TOS just lowered me to .35 and doesn't have any other fees like IB.  I have not been able to determine any difference in fills and such between the two sites.

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9 hours ago, QuickNick said:

@CJ912  @DubMcDub @Christof+ @TrustyJules @TooEffingOld @skydragon   @SamirG91 @mccoyb53 @ChrisE @Bull3t007

Did you guys have any success doing a group negotiation with TastyWorks?  
 

@QuickNick  I've never tried.  I suspect my current level of trading wouldn't pull much weight...I'm basically taking a pause at the moment.

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@Ringandpinion  Yes, Tom Sosnoff and Scott Sheridan were cofounders in ThinkorSwim and are cofounders of TastyWorks.  The user interface of the desktop application is the a step forward in ease of use for active option traders.  You can also duplicate trades of his and several other traders which is cool for idea generation.  They also have thousands of hours of video mainly regarding selling premium.  A lot of what they teach and encourage is good, but although Tom tries his best to be open minded, you can tell it’s a real struggle for his data science team members when there are parts of their studies that he disagrees to based on anecdotal evidence and intuition.  Tom is such a good active trader that he seems to be able to roll and maneuver his way from large losses eventually to small ones and the rest of his trades are several dozen tiny wins that would eat you up in commission and time.  So I try to cherry pick the trade ideas of their data science guys and the veteran female traders because they don’t let their egos get in the way.  As well, despite some great promise, the platform lacks a lot of features that ToS has and tends to have glitches that get left outstanding for a while on new stuff that rolls out.  Like I’ve said in other threads, I think their execution may be tiny but better than ToS but I need to prove this with a lot of comparisons to be certain.  A tiny bit better execution can make some significant performance improvement in a strategy like SO though.  On very rare occasion I might miss a trade on ToS that TW fills but my ToS fees are a lot lower similar to yours.   
 

All of that rant, is why I’ve been looking for peoples insights regarding real world execution and cost analysis between the brokers that sound like they have the best options execution and cost combo base on all me research so far: TW,  IB, Charles Schwab, Fidelity

https://steadyoptions.com/forums/forum/topic/5969-how-does-payment-for-order-flow-work/?do=findComment&comment=145832

Edited by QuickNick
Added link to some stuff I’ve found so far, but I’d like insights from more experiences option traders or even market makers:

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@skydragon  Thank you for the good suggestion.  I have read some good things about them in these forums, but I saw little to no posts mentioning Tradier that were regarding orders filling well when other members’ brokers weren’t.  What I’m looking for first and foremost are the brokers that are usually getting fills on our official trades around the time of the alerts. 
 

With ToS, I watch level 2 and usually never see my order show up.  I’d be ok with that if their wholesalers were getting me filled on some market outside of the exchanges, but they aren’t.  Instead, when I watch the price action multiple trades for a couple cents worse than my order get filled, but mine at a better price doesn’t get filled.  Unless the price charts and level 2 I’m looking at are inaccurate, then my low cost broker may be costing me more on trades than they’re saving me in fees.  
 

The winning trades have tended to be the harder fills that ToS and other members’ “low cost” brokers sometimes aren’t filling as well.  Meanwhile, I’m reading posts from over the last several months from members using brokers that really prioritize execution quality such as IB, Schwab and Fidelity, mentioning that they rarely struggle to get filled near the official trade price/time.  
 

What’s worse is the losing trades seem to be easier fills  because the price drops a lot hours to a couple days later.  Not chasing the trades helps keep those to small losers at least, but this is a seemingly subtle effect that can compound into significant return differences for most traders that gravitate towards lowest fee option brokers.  Historically, most of the lowest fee brokers have had to make sure they’re maximizing their payment from order flow in order to pay the bills.  That bigger payment from order flow has to come from bigger spreads the wholesale market maker keeps.  They tend to concentration their order flow routing based on the PFOF the wholesalers gives them instead of the execution quality.  The broker retaining more of that PFOF, instead of giving more of it to the trader as price improvement, further degrades their fills.    

 

Since their recent class action lawsuit settlements over this, Robinhood and ToS have at least started  more evenly spreading their order flow out across their wholesalers a little better so it doesn’t show that they are completely favoring the the ones with highest PFOF.  However, I’m petty confident their “smart routing” is now focused on balancing between PFOF for the broker while keeping appearances better to reducing their risks to legal liabilities.  I don’t mind the wholesale setup for the brokers that appear using them advantageously for the customer such as Schwab and Fidelity.  From what I’ve read, these low cost brokers do the best job of prioritizing the wholesalers that executes best, plus they have an advantage huge internal order flow to execute orders against.  These two brokers are able to earn less profit revenue from PFOF because they earn more of their revenue from their wealth management and other businesses than the lowest fee brokers that don’t have as diversified of revenue streams.  


I don’t know all of these things for certain, they’re my best guesses.  My goal is to mitigate my/our disadvantages.  I appreciate your insights if you have some to share.  😀

Edited by QuickNick
Rewording

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3 hours ago, QuickNick said:

Most traders gravitate towards lowest fee option brokers.  Historically, most of the lowest fee brokers have had to make sure they’re maximizing their payment from order flow in order to pay the bills.

Very good point, Nick, and therefore I am quite happy with IB because the fills are quite good and commissions are ok, too (especially as they are sometimes negative if you get paid for your order ;-)) 

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@Markuse  I’ve read good things about IB fills and it’ll be one that I try out.  Thanks for confirming what I’ve read.  IB actually does take payment for order flow too.  There 606 report for Q2 2020 actually just posted.  Look for the options tables and then at the column that says non-marketable limit orders (bids placed below ask & asks places above bid).    https://www.interactivebrokers.com/en/index.php?f=563

They take about a similar amount as others brokers, BUT it’s from the exchanges directly, not from middlemen.  By cutting out the wholesalers entirely and using intelligent order routing, IB is known to able to get better fills than most brokers.  For this major differentiator, I will be funding an account and trying them out.  😀

Edited by QuickNick
Correction, IBK Pro get the majority of PFOF rebated to them. IBK Lite clients do not

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4 minutes ago, QuickNick said:

IB actually does take payment for order flow too.

At least they seem to share a part with their clients. Therefore it has happend to me to see sometime a negative commission which means I was paid for placing my order. 😊

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I use both TW and Tradier. My impression is that order filling is worse in Tradier, A few times, even with bid/ask price I was not able to fill the trade directly. It took some time, while in TW (and when I was using IBKR), I have no 'data' to back this up, so maybe someone else has different experience.

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@Markuse  I believe I was inaccurate regarding PFOF with IB.  As you suggested, this disclosure of theirs clarifies that IBK Pro tiered & fixed pricing clients get majority of the PFOF rebated to their order.  IB mainly just keeps bonuses for exceeding order flow tiers, which would be hard to divvy our to traders evenly.  https://gdcdyn.interactivebrokers.com/Universal/servlet/Registration_v2.formSampleView?formdb=3074 

 

I think it may be the reduced commission IBK Lite customers that are making up most of the PFOF retained in IB’s 606 report.  This means IB’s execution quality advantages probably outweigh their fees.  They save IBK Pro traders the wholesale market maker’s spread, they probably rebate most PFOF, their execution speed is as fast as it gets and the even offer algo order types that seek even more price improvements.  These points make them a clear winner for traders.  

Edited by QuickNick
Added points and fixed mobile typos

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49 minutes ago, QuickNick said:

I think it may be the reduced commission IBK Lite customers that are making up most of the PFOF retained in IB’s 606 report.  This means IB’s execution quality advantages outweigh its fees, saving traders the wholesaler spread, and rebating most PFOF; making them a clear winner in traders.  

Thanks for your research and clarification. 

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