E*TRADE, an online brokerage pioneer, has been held back by higher than average commissions for the last decade. This changed in Oct. 2019, when E*TRADE joined a majority of brokers in cutting equity and per-leg options commissions to $0. E*TRADE offers three computer-based platforms and two full-featured mobile apps that will appeal to a range of investing styles and interests. Its flagship web platform at etrade.com has been remodeled to be easier to navigate. Options tools they acquired and integrated into the Power E*TRADE platform, after purchasing former rival OptionsHouse, have given them some top-notch options tools. E*TRADE Pro, a downloadable platform for frequent traders, offers streaming real-time data and excellent charting tools. Aside from this E*TRADE broker review, we've also reviewed the E*TRADE Core Portfolios robo-advisor service.
- Rated our best broker for ease of trading and best broker for beginning options traders.
- Highly advanced mobile app with a powerful, yet intuitive, workflow.
- Options trading tools integrated into Power E*TRADE give E*TRADE a top end options platform that will help you find and develop trading strategies.
- Morgan Stanley announced its intent to acquire E*TRADE in Feb. 2020.
We'll look at how E*TRADE ranks now that fees have come down and dig into its features and resources to help you decide whether it is the right fit for your investing needs.
Who E*TRADE Is For
For about a decade, E*TRADE has targeted engaged, active investors, and high-net-worth investors with over $100,000 to invest. E*TRADE was a top 5 broker in many categories last year, particularly in options and trading, and the fee elimination has bolstered its position for more active investors. The Power E*TRADE platforms, both desktop and mobile, bring clients robust options analysis and strategy development tools. That said, E*TRADE has continued to rank highly among the best online brokerages for beginners thanks to its excellent resources and usability. Like other large online brokers, E*TRADE has something to offer for all levels of investors.
Two excellent mobile apps aimed at different trading styles
Paper trading replicates the entire Power E*Trade platform
Get invested quickly by choosing a Prebuilt Portfolio
Per-contract options commissions are tiered with higher fees for less frequent traders
No direct international trading or data
No consolidation of outside accounts for a complete financial analysis
- E*TRADE's mobile apps are extremely well laid-out, easy to use, and are among the most comprehensive and extensive apps we tested. There are two mobile apps available: regular E*TRADE and the Power E*TRADE app. The latter is focused on derivatives—options and futures. E*TRADE did extensive work this year to make the user experience consistent across platforms with multiple paths to the most frequently used features.
- Paper trading capabilities are becoming harder to find, but E*TRADE Pro's desktop platform is being used extensively to test strategies and capabilities. The paper trading site uses delayed data so you won’t think you're placing real trades. E*TRADE executives report that the trading simulator is being used extensively, with approximately 500,000 fake trades being placed per year.
- For those with a chunk of change that they want to invest quickly, E*TRADE's Prebuilt Portfolios offer a fast track to the markets. You can choose from three different risk levels (conservative, moderate, aggressive) made up of ETFs ($2,500 minimum) or mutual funds ($500 minimum). There are no fees beyond the fund management costs.
- E*TRADE is hanging on to their tiered commission schedule for options trades, charging $0.65 per contract for less frequent traders and $0.50 for those who place more than 30 options trades per quarter.
- Investors who would like direct access to international markets or to trade foreign currencies will be better served elsewhere.
- Though you can see all of your E*TRADE accounts when you log in, you cannot consolidate your external accounts to form a complete picture of your net worth. Syncing of external accounts is a feature that many of E*TRADE’s direct competitors offer.
E*TRADE has a long history as an online broker, and this experience has paid off in terms of very intuitive and easy-to-navigate platforms. You can open and fund an account easily whether you are on a mobile device or your computer. There are two main web-based platforms that each have dedicated mobile apps mirroring the functionality of the respective web platform.
The Power E*TRADE app, for example, allows you to do almost everything you can through the Power E*TRADE web platform. The standard E*TRADE website and app, aimed at investors who are just getting started, have two-level menus with access to numerous screening tools, portfolio analysis, and education offerings. Placing an order with E*TRADE is straightforward with a Trade Ticket that you can save for later. Your portfolio positions are easy to monitor and E*TRADE provides analysis tools where you can measure your asset allocation against three model portfolios.
For active investors and traders looking for charting tools, price alerts, and more, the Power E*TRADE site and app provides a wider set of trading focused features. Power E*TRADE can be set up to put the functions you use most often front and center so you don’t have to dig around for them. Power E*TRADE is the place for derivatives analysis and trading as it has all the features inherited from the firm’s acquisition of the OptionsHouse technology. An update in April 2020 allows clients with multiple E*TRADE accounts to select and save a default account so it will automatically display when you log into Power E*TRADE
There is a downloadable platform, E*TRADE Pro, for advanced traders that can be customized extensively and is intended to be used on a desktop computer.
Watchlists are integrated across all of E*TRADE's platforms, and the full range of tradable assets is accessible on the mobile apps. The workflow is smoother on the mobile apps than on the etrade.com website, though the website has been updated a bit over the last year. Using Power E*TRADE on a tablet, for example, is quite pleasant.
The standard E*TRADE website can be clumsy to navigate with its two-level menus. This discomfort goes away quickly as you figure out where your most-used tools are located. Compiling your watchlist is centered around the symbol lookup and your watchlists have a trade button inline with each stock if you decide you like what you see. New investors without a particular list can see stocks organized by common strategies and styles, including fundamental strategies like low price-to-earnings and Dogs of the Dow, and technical strategies like a long term RSI.
Power E*TRADE's workflow is designed to let you access all your favorite tools in a single layout that you can tweak to your preferences. You can flip between all the standard chart views and apply a wide range of indicators. The trade ticket for Power E*TRADE is more detailed than the standard one and provides snapshot analysis that projects max profit and loss, events to look out for, and more. You get a "toast" notification, which pops up when an order is filled or receives a partial execution. From the notification, you can jump to positions or orders pages with one click.
The options order ticket on the web platform was redesigned and relaunched in August 2020 to provide additional coaching on the available strategies while also allowing the client to create a custom strategy. The new order entry capability also displays the impact of a trade on your buying power. Power E*TRADE customers can simulate an order and see how it affects their accounts prior to placing it for real.
On all platforms, you’ll find a ubiquitous trade ticket with streaming real-time data. You can place orders from a chart and track it visually. You can also stage orders and send a batch simultaneously.
E*TRADE launched iOS widgets for Power E*TRADE and E*TRADE Mobile apps that allow clients to customers their home screen, track portfolios, and check out quotes. You can add up to three widgets to devices that are running iOS 14 or later.
Range of Offerings
E*TRADE offers a solid range of assets that are tradable on all its platforms, including:
- Stocks long and short (6,000 on easy-to-borrow list)
- OTCBB (penny stocks)
- Mutual funds (over 4,600 no-load, no transaction fee)
- Bonds: Corporate, municipal, treasury, CDs, international
- Single leg and multi-leg options
- Robo-advisor, E*TRADE Core Portfolios, is integrated into website and mobile app
E*TRADE offers prebuilt mutual fund or ETF portfolios that are sorted into risk strategies (conservative, moderate, and aggressive), and can be customized by the client. There's a minimum of $500 for mutual fund portfolios and $2,500 for ETF portfolios. The firm characterizes this offering as a "fast, easy way to kickstart your investing."
It is worth noting that E*TRADE does not enable cryptocurrency trading but you can trade CME Bitcoin futures. There is no international trading (outside of those available in ETFs and mutual funds) or currency trading. Other assets that can be traded online include U.S. Agency Bonds, initial public offerings, new issue program notes, secondary or follow-on offerings, and new issue preferred stocks.
E*TRADE clients can enter a wide variety of orders on the websites and E*TRADE Pro, including conditional orders such as one-cancels-another and one-triggers-another. Mobile users can enter a limited number of conditional orders. The most powerful order entry setup is on E*TRADE Pro, which allows trailing stop limit orders and several other advanced order types. When setting a trailing stop, you can enter a desired percentage as well as a dollar amount. Clients can stage orders for later entry on all platforms.
If you’ve been buying into a particular stock over time, you can select the tax lot when closing part of the position, or set an account-wide default for the tax lot choice (such as average cost, last-in-first-out, etc.). You can also set an account-wide default for dividend reinvestment.
The way a broker routes your order determines whether you are likely to receive the best possible price at the time your trade is placed. This is called price improvement, which is, in essence, a sale above the bid price or a buy below the offer.
E*TRADE's order routing technology utilizes both spray and sequential routing, and most orders are sent to market makers. Approximately 95% of orders for stocks on the S&P 500 receive price improvement. The router looks for a combination of execution speed and quality, and the firm states that it has a team dedicated to monitoring its advanced order routing technology to seek the best execution available in the market. E*TRADE publishes its order routing report on its website and updates it quarterly.
E*TRADE's fees are now competitive since it joined the race to zero fees by major online brokers in Oct. 2019. Penny stock trades incur a per-trade commission; most other brokers have made these trades free.
- E*TRADE charges no commissions for online equity, or ETF trades.
- OTCBB trades incur a commission of $6.95/transaction for clients placing fewer than 30 trades per quarter, or $4.95 with 30+ trades/quarter.
- There is no per-leg commission on options trades. Per-contract commissions are $0.65 for most clients; $0.50 for those who place more than 30 trades per quarter. Fees are waived for contracts priced at $0.10 or less.
- An order for 50 options contracts is $32.50 ($25 for frequent traders).
- Covered call trade of 500 shares plus 5 contracts would cost $3.25 ($2.50 for frequent traders).
- Mutual fund commission for funds outside the No Transaction Fee program is $19.99.
- Fixed income is $1 per bond with a minimum of $10 and a maximum of $250.
- Margin interest ranges from 10% for $10,000 balance to 8.75% for over $100,000 as of Jan. 2020.
- Futures transaction fees are $1.50; per contract per side plus exchange fees. Bitcoin futures fees are $2.50 per contract per side plus exchange fees.
- No fees for inactivity, account closure or transfer, exercise/assignment.
- Sending a wire is $25. Sending a paper check is $10.
- Voluntary reorganization fee for corporate actions is $38.
- Paper statements incur a $2 handling fee for accounts with low balances. Trade confirmations are free.
- Live broker fee is $25 per trade across asset classes. This fee is waived for Extended Hours overnight session trades placed via broker between 4 a.m. and 7 a.m. ET.
- Most orders incur exchange fees, which are typically fractions of a penny per share or contract, which E*TRADE passes through to its customers.
- E*TRADE's margin interest rate is about 1% higher than its peers. Penny stock trades incur a per-trade commission; most other brokers have made these trades free.
How This Broker Makes Money From You and for You
The pressure of zero fees has changed the business model for most online brokers. In lieu of fees, the way brokers make money from you is less obvious—as are some of the subtle ways they make money for you.
- Interest on cash: Like most brokers, E*TRADE generates interest income from the difference between what you are paid on your idle cash and what they can earn on customer cash balances. E*TRADE clients can earn a small amount of interest on their uninvested cash if they take no action. If you move cash into a money market fund or an E*TRADE high-interest bank account, you could earn more, but you must take action yourself.
- Payment for order flow: Quite a few brokers generate income by accepting payment from market makers for directing their customer's equity and options orders to those trading venues. This is called payment for order flow. E*TRADE accepts payment for order flow but its order execution practices generated significantly more price improvement than they received in payment for order flow.
- Stock loan programs: These programs generate revenue for brokers when the stock held in your account is loaned to another trader or hedge fund, usually for the purposes of selling that stock short. It is not obvious how much you will pay to borrow stock for the purpose of selling short. E*TRADE says that it shares approximately 50% of the revenue they generate from its stock loan program with the owner of the loaned stock. You can choose to enroll in its Fully Paid Lending Program but cannot control which stocks can be loaned.
- Price Improvement: E*TRADE clients enjoy a healthy rate of price improvement on their equity and options orders. On average, equity orders receive $0.0045 per share in price improvement and options orders receive $1.81 per contract.
- Portfolio Margining: E*TRADE clients who qualify can apply for portfolio margining, which can lower the amount of margin needed based on the overall risk calculated. Typically, portfolio margining works best for customers who trade derivatives that offset the risk inherent in their equity positions.
- E*TRADE clients who qualify can apply for portfolio margining.
- E*TRADE has a fully-paid stock loan program, in which it shares revenue generated by loaning stock to short-sellers with the clients who own the loaned stock.
- E*TRADE clients can earn a modest rate of interest on their idle cash if they take no action.
- Clients can manually move cash into a money market fund or an E*TRADE high-interest bank account, potentially earning a higher rate of interest. Since this isn't a sweep program, customers must keep an eye on potential asset purchases to make sure there is cash available.
- E*TRADE clients can enroll dividend-paying stocks in a DRIP program.
E*TRADE's research offerings on the website include flexible screeners for stocks, ETFs, mutual funds and fixed income, plus a variety of tools and calculators. Power E*TRADE features options-specific research and a great charting package.
The standard E*TRADE stock screener is customizable using 45 different criteria, across six categories. On Power E*TRADE, the Live Action scanner has over 100 pre-defined screens that scan the market in real-time on live prices and live analytical metrics based on unusual activity, volatility metrics, the Greeks, fundamentals, price movement or any option or stock activity. LiveAction provides numerous screens on technical, fundamental, earnings, sentiment and news events. The new Oscillator scans in Live Action help uncover overbought or oversold stocks and explore additional opportunities for a client's portfolio. Many of these built-in screens are unique to the Power E*TRADE platform. The Recognia scanner enables you to scan stocks based on technical events or patterns, and set alerts when new criteria are met.
E*TRADE added thematic investing screeners in 2020, with themes that include Playing Defense, Hedging with Gold, Undervalued Large Firms, Up and Comers, Emerging Economies, and Technology Pacesetters. The newest screener features Energy Powerhouses and Real Estate Trusts. New screens are added regularly.
The mobile stock screener has 15 criteria across six categories. Users can compare a stock to industry peers, other stocks, indexes, and sectors.
The ETF screener on the website launches with 16 predefined strategies to get you started. Scan and narrow ETFs using 74 different criteria including category, performance, cost, risk, Morningstar rating, and others. You can save custom searches and export results to a spreadsheet. Use the Comparison Tool to compare performance, fees and portfolio information of up to five ETFs and/or Mutual Funds. The Category Analysis Tool helps you compare and contrast the performance and risk of ETF categories. You can search to find all ETFs that are optionable too.
Options Strategy Tools
This is an area where E*TRADE shines. Power E*TRADE's Live Action tool to let you scan for unusual options activity or equities with outsized volatility, then dig deeper or place a trade. Spectral Analysis is a visually stunning tool that helps you visualize maximum profit and loss for an options strategy, and understand your risk metrics by translating the Greeks into plain English. It's a great way to learn how certain strategies work. The Risk Slide tool helps you quantify the potential impact of market events on your portfolio, and see how your investments could react to changes in volatility.
Mutual Fund Screeners
On the web, the All-Star Mutual Funds are a list of funds selected by E*TRADE Capital Management to get clients started. The list is selected from the universe of no-load mutual funds offered through E*TRADE Securities. E*TRADE Capital Management monitors the All-Star Funds and typically updates the list with fund additions and/or removals quarterly. There are typically 150–170 funds on the list. There is a fairly basic screener with a link to a more advanced screener.
Fixed Income Screeners
The Bond Screener allows clients to search for fixed income products by entering criteria that meet their needs. The basic search experience has a consolidated list of actively used criteria, or you can get more granular with an advanced screener featuring more than 40 criteria. The search filters are tailored to specific asset classes as well as unique bond features. Users have the ability to name and save custom searches.
Tools and Calculators
Power E*TRADE features numerous options-related tools including probability charts. The website includes a number of calculators including a taxable equivalent yield calculator, a marginal tax rate calculator, a retirement planning calculator, a Roth IRA conversion calculator, a required minimum IRA distribution calculator, and a loan repayment calculator, among others. A feature launched in May 2020 shows customers who are withdrawing from their IRAs their next three distributions, and lets them know whether there is enough cash to cover those payouts.
Trading Idea Generator
Power E*TRADE has the Live Action tool that includes technical pattern recognition. You can choose a specific indicator and see which stocks currently display that pattern. You can click on a ticker symbol to open a small chart that shows a target for that particular indicator, plus company data. At this point, you can add the stock to a watchlist, do more research, or place a trade. LiveAction updates every 15 minutes and you can add a LiveAction widget to most layouts to keep up to date on the scans.
The Strategy Seek tool is a rehash of an OptionsHouse feature that is intended as education as well as an illustration of how options work. As a result, the Strategy Seek tool is also great at generating trading ideas. All you have to do is enter a ticker, choose a market outlook (bullish, bearish, or neutral), decide how much you want to trade, and set when you expect it to pay off. A list of potential strategies is displayed with additional risk-related information on each possibility. Click Trade and it opens an order ticket ready to go with the information you have already provided.
Power E*TRADE features free Bloomberg TV plus real-time streaming news, Dow Jones, MarketWatch, PR Newswire, BusinessWire, GlobeNewswire and Briefing.com. The news sources are also available free on the website. Both mobile apps stream Bloomberg TV as well.
E*TRADE gives clients access to research and ratings from Moody's, Thomson Reuters, Morningstar, MarketEdge, Trefis, Research Team, TipRanks, and New Constructs free of charge. TipRanks offers aggregated opinions from more than 4,000 sell-side analysts and 4,500 financial bloggers. Clients with over $100,000 in assets can check out Credit Suisse research; new account holders are given a 30-day trial.
On Power E*TRADE, charting enthusiasts have access to a wide array of technical indicators as well as Recognia's ability to recognize technical events. Charting maintains the light or dark theme from your settings. Quotes stream on Power E*TRADE, while on the website, you can access snapshot quotes that are refreshed on demand.
On Power E*TRADE, you can look at your overall portfolio risk as well as your asset allocation. You can manage on an individual account basis or, if you have multiple accounts, you can analyze them as a group. The risk slide feature looks at risk across various ranges in price and volatility to show you where you are most vulnerable to market changes. You can't consolidate assets held at other financial institutions to get a picture of your overall assets, though. Traders can also add notes to trades or watchlists on the Power E*TRADE platform.
Customers can nickname, reorder, and include or exclude their accounts on Complete View thanks to an update in October, 2020.
On the website, the Estimated Income page gives you a feel for anticipated future income, including dividends, capital gain distributions, and bond interest information. Buying power and margin requirements are updated in real-time. E*TRADE has integrated capital gains management into its standard transaction reporting for taxable accounts and there is guidance in the Tax Center.
E*TRADE’s website offers a Learning Center that contains investing-related articles, help using the technology, and trading-related content. Beginners to trading can check out the Getting Started section and move on from there as they get more comfortable with investing concepts. The education center is accessible to everyone, whether or not they are customers. It offers investor education in a variety of formats and covers topics spanning investing, retirement, and trading. Disclaimer: there is some Investopedia content included in E*TRADE's education center, along with content provided by E*TRADE Securities, Morningstar, and Forefield. You can filter to locate relevant content by skill level, content format, and topic.
E*TRADE offers a daily product webinar to help its traders and investors become proficient in the web, mobile and Power E*TRADE platforms. There are three to four virtual learning environment events (VLEs) each year, which are webinar-based all-day events with a structured, sequential learning format, which the firm plans to continue in 2020. The most recent event was the Options Forum which provided three tracks—Beginner, Intermediate, and Advanced—for a total of 12 education sessions directed toward options competency. The 2020 VLEs will be complemented by a complete on-demand library of all the content which will be delivered live, intended to allow customers to learn at their own pace and on their own schedule. Tri-weekly updates on the latest market and economic happenings amid COVID-19 crisis are also available to everyone who visits the website, whether or not they are customers.
E*TRADE, in light of the ongoing pandemic, has published a Covid-19 resource center for its clients. IRA-focused education offerings have been updated to help customers understand the new laws and support them to make optimal decisions about their retirement, given all the regulatory changes.
- 24/7 phone line with access to brokers as well as to retirement specialists, financial consultants, active trader consultants, and product specialists.
- Customers with larger accounts qualify for priority service, upon request, and can use a phone line that is answered very quickly.
- Financial consultants in E*TRADE's physical branches for face-to-face assistance.
- There is online chat with human representatives. E*TRADE's mobile users can access customer service via chat.
- Currently there is limited chatbot capability, but E*TRADE plans to expand this feature during 2020.
- Feedback can be submitted to E*TRADE at any time by clicking the "Suggestions" link found in the customer service menu in the top navigation on each page of the website.
E*TRADE's security is up to industry standards:
- Mobile app users can log in with biometric (face or fingerprint) recognition.
- E*TRADE's Complete Protection Guarantee covers any fraudulent use of a customer's account, and offers additional security software on demand.
- E*TRADE carries excess Securities Investor Protection Corporation (SIPC) insurance provided by London Insurers with an aggregate limit of $600 million to pay amounts in addition to those returned in a SIPC liquidation. The maximum for any single customer is $150 million with a cash limit of $900,000 per customer.
- Through Nov. 2019, there were no significant data breaches at any E*TRADE location reported by the Identity Theft Research Center.
With the acquisition of TD Ameritrade by Charles Schwab looming, E*TRADE is positioning itself as a nimble, yet full-functioned, player in the online brokerage space. The integration of the OptionsHouse technology provided E*TRADE with a major upgrade to its options analysis and trading capabilities in the Power E*TRADE platform, maintaining E*TRADE's edge as one of the top trading platforms. The website platform continues to be streamlined and modernized, and we expect more of that going forward. E*TRADE is great for options analysis and trading and for mobile app users who want analytical power. Less active clients who prefer a more passive approach to investing might be happier elsewhere, or using E*TRADE's Core Portfolios robo-advisory service.
Morgan Stanley announced its intention to acquire E*TRADE in Feb. 2020. We hope that the excellent options trading tools found on the Power E*TRADE platform are maintained, and that features for less sophisticated investors continue to be developed.
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In addition, every broker we surveyed was required to fill out an extensive survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.
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