tastytrade margin requirements

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Minimum account balance and deposit at tastytrade


Have you ever accidentally mixed up minimum account balance with minimum deposit? Rest assured, you’re not the only one. To prevent any confusion, we'll tell you what they are and how they differ from each other.

The minimum account balance is the amount that you're required to maintain on your account when you use leverage/margin in trading. Having this amount available is necessary to avoid negative consequences such as a margin call or the liquidation of your assets. If the amount of funds in your account falls below the minimum account balance requirement, you will have to deposit additional funds.Note that most brokers offer several account types. If you open a cash account, you don't have to worry about margin requirements because you can only invest the funds that you deposited in the account. Some brokers don’t even require a minimum deposit for cash accounts. In turn, a margin account allows you to borrow money from your broker so you will have to comply with margin rules.

Bear in mind that it is your responsibility to ensure your account is properly funded. You should monitor your account at least on a daily basis to make sure you always meet your broker's margin requirements. It is not a good idea to wait until you get a margin call, because if you miss it, your broker may liquidate some of your assets and you could end up with considerable losses.

The minimum deposit is the minimum amount required for opening an online brokerage account. While some brokers do not require a minimum deposit, others do. The minimum deposit requirement means that you will need to transfer this amount to your brokerage account from your bank account in order to start trading. You can check the minimum deposit at tastytrade here.

The term margin is used widely in the financial world. Note that margin requirements may be different for different asset classes such as stocks and options.

There are general margin requirements for all stocks when you trade stocks/ETFs on margin at a US-regulated broker. On the other hand, if you trade derivative assets such as futures or options, the minimum account balance depends on the specific asset you trade as well as the broker’s requirements. In both cases, you have to comply with margin requirements and maintain the minimum account balance at all times.

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Minimum account balance for stock/ETF margin trading


For trading stocks and ETFs at US-regulated brokers, margin accounts need to have a minimum balance of $2,000 (also called “initial margin”) in cash before the start of trading. Once you buy securities on margin, Financial Industry Regulatory Authority (FINRA) rules require your broker to impose a “maintenance margin requirement” on your margin account. This specifies the minimum amount of equity (cash and asset value) you must always maintain in your margin account.

The securities margin is the money you borrow as a partial down payment, up to 50% of the purchase price, to buy and own a stock, bond, or ETF. This practice is often referred to as buying on margin.

Source: Global derivatives marketplace CME Group


Minimum account balance for derivative products


tastytrade offers margin and derivative trading. You can trade stocks/ETFs on margin, meaning you can borrow money from the broker to increase your trading position. The following derivative products are also accessible:


Derivative product selection at tastytrade
  tastytrade ChoiceTrade TradeStation
Futures Yes No Yes
Options Yes Yes Yes
Forex No No No
CFDs No No No

Futures minimum account balance

tastytrade clients have access to futures trading on 8 exchanges.

For futures contracts, futures exchanges set initial margin requirements as a percentage of the contract to be traded. There isn't a legal minimum balance that you have to maintain to day trade futures. When volatility is high, future exchanges may increase margin requirements. The maintenance margin of S&P 500 futures (ticker: ES), for example, stood at $11,000 as of March 1, 2021.

Remember that margin requirements for different asset classes are different.

The futures margin is the amount of money that you must deposit and keep with your broker when you open a futures position. It is not a down payment and you do not own the underlying commodity. The futures margin generally amounts to a smaller percentage of the notional value of the contract, typically 3-12% per futures contract as opposed to up to 50% of the face value of securities purchased on margin.

Source: Global derivatives marketplace CME Group

Options minimum account balance

tastytrade provides options on the US Markets.

Options trading strategies involve different degrees of risk and complexity. Some riskier trade types, like selling call options on stocks you don't own or writing an uncovered put option, can only be executed if you have a margin account. However, less risky strategies, such as buying a call option, are permitted with cash accounts, too.

Remember that when you trade options, the minimum size is 1 contract, which represents 100 shares of the underlying asset.

Pattern Day Trading at tastytrade

The Pattern Day Trading (PTD) Rule applies at tastytrade. According to FINRA rules, you are a day trader if you execute at least four day trades within five business days.

Pattern Day Traders have to maintain a minimum account balance of $25,000 in their margin accounts. This allows them to engage in unlimited day trading. Brokers are free to impose a higher minimum requirement, which is often called a “house requirement”. If the account balance drops below the set minimum, traders are not permitted to day trade until the minimum level is restored. If the account balance is less than $25,000, maximum four day trades are allowed in five business days.

Minimum amount to open an account at tastytrade


Here's the good news: the minimum deposit to open a tastytrade account is $0. There are brokers that require as much as a couple of thousand dollars. You can check in the table below what is the minimum deposit at the competitors of tastytrade.

Minimum deposit at tastytrade vs its competitors
  tastytrade ChoiceTrade TradeStation
Minimum deposit $0 $100 $0

Bottom line


Now you know what the minimum deposit and the minimum balance are at tastytrade and you understand the difference between the two. If you want to dig deeper, read our article on margin calls and short selling

To recap in a few words. 

The minimum deposit is the minimum amount required to open a new online broker account.

In turn, the minimum account balance is the amount on your margin account or on your account for trading leveraged products that you’re required to maintain to avoid fees.

Don't forget that your maintenance margin requirement may change constantly and it is your responsibility to keep an eye on it. You should place additional deposits or close some other positions on your account if it is getting too close to the maintenance margin level. You definitely want to avoid getting that dreaded margin call or wait until your broker liquidates some of your assets and positions.


-> Back to tastytrade review for 2022


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Author of this article

Dan Sallai

Investments • Brokerage • Digital Business

I'm dedicated to ensuring our valuable content reaches people when they need it most. I leverage my extensive 10+ years of online marketing expertise in tandem with our team's financial acumen to achieve this goal daily. During my leisure time, I find enjoyment in bowling, playing tennis, and cherishing moments with my children.

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