WHAT IS A BROKERAGE ACCOUNT & HOW TO OPEN
Opening a brokerage account enables you to trade and invest in stocks, ETFs, bonds, and more. Learn what a brokerage account is and how you can open one.
WHAT IS A BROKERAGE ACCOUNT?
A brokerage account serves as a gateway for individuals to participate in various financial markets. It provides the necessary platform for traders and investors to buy and sell a wide range of securities and derivatives such as stocks, exchange-traded funds (ETFs), futures, commodities, stock options, and more. Many people consider opening brokerage accounts to be a step towards taking control of their finances or strategizing for more financial freedom.
Designed for self-directed investors and traders, tastytrade is a brokerage firm that supports all experience levels. You can choose to buy and hold assets (investing) or speculate on which direction the market will move (trading).
HOW DOES A BROKERAGE ACCOUNT WORK?
You can use your brokerage account to invest or trade different assets. You will be able to make strategic decisions based on your level of capital, goals, and other important factors outlined in your trading or investment plan. A brokerage account allows you to:
- Invest in financial assets: Buying and holding shares of a stock, which is typically done over an extended period of time
- Trade financial assets: A shorter-term strategy as you can open, close, and adjust positions within shorter periods of time—this could be a matter of days, minutes, or even seconds
- Record your trades and investments: Easily review your account transaction history
At tastytrade, opening a brokerage account is completely free and there is no minimum amount required to open one. However, you do need money to invest and trade, so you must have a funded account to get started. There are some limits on the amount of money you can deposit or withdraw at once depending on the method of transfer.
Accounts linked via Plaid can withdraw or deposit up to $250,000 at a time. However, there are no limits on wire transfers. There is also no limit to how much money you can have in your account at any one time.
You can also have different types of brokerage accounts (such as cash, margin, or individual retirement accounts) all under one username. As an individual account holder, you have full ownership of the investments and funds in your account, including any profits, losses, and dividends. You have control over your account(s) and can sell your investments whenever you want.
Check out our How To Fund page for more information on funding your account.
WHAT CAN I INVEST IN AND TRADE WITH A BROKERAGE ACCOUNT?
You can invest in and trade a wide range of products across asset classes with a brokerage account. Among these, you can get exposure to the following on tastytrade:
- Stock options
- Broad-based indices
- CME futures (including micro e-mini futures and options on futures)
- Foreign currency futures (including micro contracts)
At tastytrade, you can see all of your positions in one place—that means futures, options, stock, and crypto positions can be seen and monitored from the same positions tab on the tastytrade platform.
HOW CAN I OPEN A BROKERAGE ACCOUNT?
You can open a tastytrade brokerage account with the following steps:
- Navigate to our online application
- Complete the application with all required information for our accounts team to review
- You’ll receive a follow-up email once your account application has been reviewed
If you have any questions, reach out to our friendly support team.
OPEN A BROKERAGE ACCOUNT
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Any profit or loss from an investment in a brokerage account such as an individual or joint account is subject to capital gains rules. A brokerage account is a taxable account, which means that any gains made in the account are typically subject to capital gains tax. All relevant tax documents that the IRS requires can be found in our Tax Center. Generally, you will receive an annual 1099 Consolidated tax form.
Your income and reportable transactions will be broken down into several types, including the 1099-B (proceeds from broker and Barter Exchange transactions), 1099-DIV (Dividends and Distributions), 1099-INT (Interest Income), 1099-OID (Original Issue Discount), and 1099-MISC (Miscellaneous).
There are no account minimums when opening a cash or margin account with tastytrade. However, to trade on margin, which allows you to borrow and collateralize your existing positions to establish and maintain other positions, a margin account is required with a minimum of $2,000.
If your account is below $25,000, you’ll also be subject to pattern day trader rules. While PDT doesn’t apply to futures or crypto, you’ll be limited to three trades in a rolling 5-business day period for stocks. Learn more about PDT rules here. Buying power requirements vary by securities, products, account type, and permissions. Learn more about trading, buying power, and margin.
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All investments involve risk of loss. Please carefully consider the risks associated with your investments and if such trading is suitable for you before deciding to trade certain products or strategies. You are solely responsible for making your investment and trading decisions and for evaluating the risks associated with your investments.