E*TRADE, the grandaddy of online discount brokers, is still a good choice for active investors. Its platforms are easy to use, customer service is responsive, and trades execute quickly. However, there are now many less expensive rivals on the market.
- Active traders
- Low minimums
- Options traders
- Penny stock traders
- IRA investors
Review of: E*TRADE
Reviewed by: Larry Ludwig
Last modified: October 1, 2018
What Is E*TRADE?
E*TRADE Securities is the granddaddy of online discount brokerage houses. I opened my first brokerage account with them in 1996. I worked for a financial firm at the time and found it funny when the compliance officer asked me for my broker’s name and number. I stated I didn’t have a dedicated broker and I made my trades online with E*TRADE. They looked at me as if I had two heads; they had never heard of an online discount broker.
I signed up with E*TRADE because I wanted the ability to make stock trades online and to do online stock research without interacting with a broker. E*TRADE pioneered this with their low flat-pricing structure. Out of all of the brokerage firms I have used over the years, I find their website has the best user interface.
E*TRADE is easy to use, offers lots of research, and makes it a pleasure to place trades. In addition, I have never had any problems when I had to call their customer service. They were always prompt, helpful and solved my problems quickly.
E*TRADE Fees & Features
|Stock Trades||$6.95/trade ($4.95/trade for 30+ trades/quarter)|
|Options Trades||$6.95/trade + $0.75/contract ($4.95 + $0.50/contract for 30+ trades/quarter)|
|Investment Types||Stocks, Penny Stocks, Options, ETFs, Mutual Funds, Bonds, FOREX, Futures|
|Access||Website, iOS App, Apple Watch, Android App|
|Broker Assisted Trade|
|No Fee ETFs|
|Customer Service||Phone: 24/7; Live Chat: 24.7; Email; Branch Office|
- Trade in 77 international markets
- No minimum account balances
- No transaction fees on more than 1,300 no-load mutual funds
- Integrated checking account from E*TRADE Bank
E*TRADE has evolved from discount investment broker to a full service (but low cost) investment platform with every conceivable tool. Here’s a summary of just some of them.
Available investments — E*TRADE is a full-service brokerage, offering investments in stocks, bonds and other fixed income assets, more than 8,000 mutual funds, as well as exchange traded funds (ETFs), target date funds, options and futures. E*TRADE also enables you to trade on 77 international markets.
Account types available — In addition to regular, taxable brokerage accounts, you can also have a traditional or Roth IRA or a rollover IRA (from an employer-sponsored plan). Add to that a small business IRA, such as a SEP IRA or SIMPLE IRA, an Individual 401(k), a Roth Individual 401(k), or a Profit Sharing Plan.
You can open a custodial account for a minor, as well as a Coverdell Education Savings Account (ESA).
E*TRADE also offers investment accounts for businesses. Your business can be a sole proprietorship, partnership, or corporation. You can even open an account for an investment club.
Account protection — Securities within your account are protected by SIPC, for up to $500,000, including up to $250,000 for cash. E*TRADE also has “excess SIPC coverage” purchased from London insurers that covers up to $600 million ($150 million per customer), including up to $900,000 in cash. This coverage is for broker failure and not for declines in market value of your portfolio.
E*TRADE also has FDIC insurance coverage of up to $250,000 per customer if you have funds on deposit with E*TRADE Bank. In addition, E*TRADE’s Complete Protection Guarantee provides $0 liability for unauthorized use of your accounts, including trades, transfers, ATM usage and bill paying.
Clearing agency — E*TRADE uses its own clearing agency to settle investment transactions, E*TRADE Clearing LLC.
E*TRADE’s mutual fund fee is lower than many others we’ve reviewed, though their stock trade fees and options base are higher than others. E*TRADE does have a large selection of commission-free ETFs to choose from, so that should be taken into consideration as well.
Minimum deposit to open account — The minimum deposit to open an account is $500.
Power E*TRADE Pro — To make advanced trading software more understandable and relevant to regular Main Street investors, the E*TRADE Pro function has been upgraded. E*TRADE Pro is perfect for active traders, and their application for it is second to none. There is no additional charge to use this service. It’s available to any customer who executes at least 30 stock or options trades per calendar quarter or maintains a minimum brokerage account balance of $250,000. Power E*TRADE Pro comes with:
- Point-and-click order entry — just click the security symbol from the panel you’re in and the trade happens
- Professional-grade advanced trading tools — advanced options screener, analytics, strategy optimizer and margin analyzer give you some of the best tools in the business
- Real-time technology to track the markets with live streaming watch lists, straight-off-the-wire market news, sector and industry tracker, and on-air CNBC TV
- Sector & Industry Tracker — a bird’s eye view of the market and sectors
- Scan the market for trading ideas, using built-in back testing, as well as a probability calculator to evaluate the likelihood of an investment hitting a certain price
While viewing the orientation videos, the customer can launch a suggested layout. The E*TRADE Pro user orientation has been updated for a more seamless experience. The feature also provides at least two screens for personalization, including a total of six customized screens (up from four).
Not only is the design more streamlined, but the revamped tool allows you to build multiple options strategies, run through various scenarios based on expiration dates and price points, more easily customize graphing features, and seamlessly send any strategy directly for trade execution.
E*TRADE Security — As a computer professional, security is of utmost importance to me. I understand how much the Internet can be like the Wild West, and I want to sleep at night knowing my financial information is secure. This is why I use E*TRADE’s Symantec Virtual Digital Security Token. You receive a keychain-sized device that generates a new personal 6-digit access code every 60 seconds. For individuals who have smartphones, Symantec also offers an app that effectively does the same as the key fob. It’s available for iPhone, Blackberry, Android and Windows smartphones.
You then log in with your username, password, and key code. This makes unauthorized logins to your E*TRADE account nearly impossible. In my opinion, all banks and brokerages should offer this feature as standard.
Investment assistance — E*TRADE provides financial consultants through E*TRADE Securities, LLC, who can help you create an investment plan, choose investments and manage portfolio risk
E*TRADE Capital Management — If you’re looking for active and ongoing portfolio management, E*TRADE Capital Management is available to work with you.
Managed Accounts — If you don’t want to deal with the responsibilities of day-to-day portfolio management, E*TRADE has you covered through E*TRADE Capital Management’s Managed Accounts. You must have a minimum of $25,000 in order to take advantage of this option, but it will entitle you to an actively managed portfolio of mutual funds and ETFs. The goal is to create and maintain a balanced portfolio that’s consistent with your goals, time horizon, and risk tolerance. They will also handle rebalancing and tax management of your portfolio.
|Stock Trades||$6.95/trade ($4.95/trade for 30+ trades/quarter)||$6.95/trade||$6.95/trade|
|Promotions||None||Get up to $600 when you invest in a new Merrill Edge™ account||Trade Free for 60 Days + Get Up to $600 Cash|
|Review||—||Read the Review||Read the Review|
E*TRADE Mobile App
Complementary to their Power E*TRADE Pro service, E*TRADE excels in mobile device support. Trade anywhere at any time. They currently support these devices:
- Apple iPhone/iPad/Apple Watch
- Android Phone and Tablet
- Amazon Fire Phone
- KIndle Fire
- Windows Phone
(New) If you want market information at a moment’s notice, E*TRADE has capitalized on the new functionality available in the second iteration of the Apple Watch software, which provides you with the ability to integrate E*TRADE Apple Watch app data directly into your watch face — a first for the industry.
Pretty much all of the functionality of their website is available on their mobile application. When I tested their iPad version, I couldn’t find any reason I would be forced to use their traditional website. This is nice if you are an active trader who needs access to your account anywhere you go.
Apple Pay (New)
E*TRADE now offers Apple Pay functionality for E*TRADE debit card holders. The simple, efficient payment option caps off an end-to-end experience for E*TRADE customers. You can now use the cash in your account for daily purchases, and you can now link E*TRADE debit cards directly to Apple Pay and enjoy safe, secure, card-free payment.
Pros and Cons
- Comprehensive Trading Platform — The trading capabilities, research and investment tools on the platform are first rate. This makes online trading as easy as it could possibly be.
- Best User Interface — It’s the perfect investment platform for the investor who is self-directed and wants to manage his or her own portfolio without the need to involve customer service in the process.
- Low Minimum Deposit — The $500 requirement opens the platform to investors of all sizes and levels of investment experience, including small and new investors.
- Accommodates Different Investor Levels — You can operate efficiently on the platform as a full-blown do-it-yourself investor, use financial consultant assistance, or have your entire portfolio professionally managed through Managed Accounts solutions.
- Expensive Trading Fees — Their transaction fees are not competitive with the lowest-cost providers.
- Oriented Toward Active Traders — E*TRADE offers lower transaction fees for active trading, but how many investors make 150 or more trades per quarter, so as to be in a position to get the benefit of those lower fees?
Though I started out with E*TRADE, I no longer call them my primary broker. E*TRADE has narrowed their services to focus more on investing than their previous full gamut of financial services. While they offer services for the causal investor, their services appear to cater more towards active traders — something which I am not — though E*TRADE’s research tools are very complete.
Today they aren’t the lowest priced broker, but their site is very easy to use. In addition, trades do execute fast, and from my experience their telephone customer service is responsive.
E*Trade is well suited to small investors who prefer buy-and-hold and execute only a few trades per year. The tools on the site are first-rate, and assistance is available as needed.
Kevin Mercadante provided assistance with this article update.