E*TRADE was one of the first online brokers in the United States. In October 2019, it joined a growing list of online brokers who transitioned to commission-free trading on stock, ETFs, and options trades. E*TRADE has a range of offerings, including three web-based/downloadable platforms and two mobile applications, making it a good choice for both passive investors, casual traders, and everyone in between. Despite the fact it has robust features such as news, research and screeners, E*TRADE remains intuitive and easy to use. Beginner investors, in particular, will find E*TRADE as one of their best options because of the expansive educational resources it offers.
Aside from this E*TRADE broker review, we've also reviewed the E*TRADE Core Portfolios robo-advisor service.
- E*TRADE offers a range of platforms that caters to a range of investing styles and interests, including the robust Power E*TRADE platform.
- E*TRADE has a highly advanced mobile app that is intuitive and easy to use.
- The online broker offers an in-depth library of educational resources.
- E*TRADE provides a full range of investment selections that will appeal to both passive investors and traders.
- On October 2nd 2020, Morgan Stanley announced that it has completed the acquisition of E*TRADE in an all-stock transaction.
Who E*TRADE Is For
As a pioneer in the online brokerage industry, E*TRADE has positioned itself as one of the best online brokers for trading options. It is a solid, well-rounded pick for any investor, from beginner investors to advanced traders. E*TRADE has made a push to attract active traders with two quality trading platforms, a full-featured mobile app, a range of investment selections, and robust options trading tools.The Power E*TRADE platform is packed with intuitive, easy-to-use tools for stocks, options, and futures trading. If you’re passionate about tracking the markets and trading, this platform is for you. Its flagship website, etrade.com, offers plenty of education and research, as well as a wide range of no-fee funds. Like many other large online brokers, E*TRADE can bring value to all levels of investors.
Power E*TRADE options trading platform
Two mobile apps for investors with different interests
Automated portfolio builder integrated into the online brokerage platform
No access to international exchanges
Options trading is more expensive for less frequent traders
Fractional share purchases are only available through a dividend reinvestment plan (DRIP) or a robo-advisor portfolio
- After purchasing rival broker, OptionsHouse, top-notch option tools have been integrated into the Power E*TRADE platform. The web-based platform provides more than 100 technical studies and more than 30 drawing tools to help investors analyze potential trades.
- E*TRADE offers two mobile apps for investors with different investing styles and interests. The Power E*TRADE mobile app offers interactive charts and technical analysis. The E*TRADE mobile app is easy to use and lets investors stay connected to their brokerage accounts and the markets on the go.
- The online broker offers automated investment management built into the brokerage platform using Core Portfolios. The robo-advisor will build and manage your portfolio to help keep you on track for long-term goals.
- Investors who would like direct access to international markets or to trade foreign exchange currencies will be better served elsewhere, as E*TRADE does not have this capability.
- Although E*TRADE has discounted commissions on options trades, it is only beneficial for active, high-volume traders. Options commissions are priced at $0.50 per contract, but only if you make more than 30 trades each quarter. Otherwise, the standard price is $0.65.
- Although E*TRADE offers fractional share purchases, investors can only access them through E*TRADE's dividend reinvestment plan or robo-advisor solution. They are not available if you are trading and investing in a self-directed portfolio.
E*TRADE has a long track record as an online broker and is well known for its intuitive and easy to use platforms. E*TRADE has a user-friendly interface where the platforms can be customized according to the way you wish to interact with it. The broker has two web-based platforms, E*TRADE web and Power E*TRADE, each with a dedicated mobile app that mirrors the functionality of the web-based platforms. This is convenient as you can seamlessly open and fund accounts in minutes whether you’re on a desktop or mobile device.
E*TRADE web is a beginner friendly platform that provides streaming quotes, portfolio analysis market commentary, and educational offerings—all essential tools for the passive investor. Although it’s not built for investors who require advanced trading tools, its screeners will help you select the stocks, bonds, ETFs or mutual funds that align with your needs and investment objectives. The E*TRADE mobile app is one in the same. It is one of the best mobile trading platforms in the market as it’s very easy to use and offers plenty of convenient features. As an E*TRADE customer, you can effortlessly keep an eye on your portfolio, place trades, and stream real-time quotes and news on the go. The mobile app offers the full range of investment options available on E*TRADE web, and watchlists are integrated across the multiple platforms.
The more advanced Power E*TRADE platform is meant for active traders and experienced investors. Thanks to E*TRADE’s acquisition of the OptionsHouse technology several years ago, Power E*TRADE offers charting tools, price alerts, real time data, more than 100 technical studies, over 30 drawing tools, streamlined trade tickets, as well as customizable options tools. The Power E*TRADE mobile app is similarly easy to use thanks to its modern design and platform layout.
E*TRADE also offers E*TRADE Pro, a downloadable desktop platform that has extensive customization capabilities. This tool heavy platform is meant for advanced traders. Overall, the user experience is better on mobile apps than on the web or desktop.
E*TRADE is one of the original online brokers and is still considered to be among the best. All the tools any trader or investor would need are provided across the various platforms. The trading experience on the E*TRADE website is very simple and straightforward. On E*TRADE web entering an order is as simple as typing in the ticker symbol, selecting an order type, quantity, and then previewing your order to ensure accuracy. All of E*TRADE’s trading platform interfaces can be customized to display your account and market information as well as other news and resources in your preferred layout. Watchlists can be created quickly using the symbol lookup. The watchlist views are also customizable, allowing you to personalize your view by selecting security types and groupings you'd like to see, as well as being able to apply over 100 metrics. E*TRADE has a trade button inline with each security on your watchlist, making it very easy to move from observation to action.
E*TRADE web recently underwent a platform redesign and significant improvements were made to the options order ticket. The ticket now has several options trading strategies provided in a drop down menu. The platform can also help you choose a strategy based on your risk tolerance and sentiment of the underlying stock and displays the impact of a trade on your buying power. Newer investors with limited options experience will find these features very useful.
The Power E*TRADE platform is packed with intuitive, easy-to-use tools for stocks, options, and futures trading. If you’re passionate about tracking the markets and trading, this platform is for you. It has charting tools that automatically populate charts with technical analysis patterns and education, as well as risk analysis tools that help you translate the options Greeks into plain English. Moreover, Power E*TRADE’s user experience and workflow lets you access all of your favorite tools in a single on-page layout that you can personalize to your preferences. As one would expect from a platform built for trading and derivatives analyses, the trade ticket for Power E*TRADE is more detailed than the standard ticket on the web platform. It provides a snapshot analysis tool allowing you to easily understand the probabilities of an option trade at a glance, as well as projects the max profit and loss associated with any particular order.
Although E*TRADE offers streaming real-time market data as well as real-time snapshot quotes through its website and mobile applications, real-time snapshot quotes are refreshed on demand and delayed quotes are 15 minutes delayed. Nonetheless, you will be able to trade directly from the charts and you’ll have the ability to select tax lots from your portfolio or from the order ticket. The web, desktop, and mobile platforms all allow you to stage orders for later entry, and all platforms support conditional orders, stop-limit orders, and enable trailing stops.
Mobile Trade Experience
E*TRADE pioneered mobile trading and continues to innovate in this area. The broker's award winning app lets you seamlessly connect with the markets and with your accounts from anywhere. The E*TRADE mobile app is ideal for new investors as it focuses on what matters most to this group—watchlists, market research, quotes, portfolio management and so on. Both the E*TRADE Mobile and Power E*TRADE Mobile apps also have high customization capabilities and can be personalized to the way you wish to interact with the platform.
The mobile apps support the same type of orders as well as the same asset classes as the respective desktop and web platforms. They are extremely similar in functionality to the web platforms as they offer resources such as third-party investment research, real-time data streaming and market news from Bloomberg TV. There are also drawing tools available in the charting functionality of E*TRADE’s mobile apps. Depending on whether you’re on a tablet or a phone, you can also view or insert drawings created from any of the various platforms.
The Power E*TRADE app is an intuitive and innovative mobile application designed for active investors and casual traders. It’s loaded with easy-to-use tools that enable you to quickly trade stocks, ETFs, simple and complex options, and futures on a single trade ticket. You can also execute options strategies using the customizable options chain, along with custom and four-legged spreads. And because it is the companion to the Power E*TRADE web platform, you can view market movement with streaming quotes, news, earnings, dividends, gains, and more on the go.
Range of Offerings
E*TRADE customers can trade a wide variety of assets including stocks, bonds, funds, commodities and futures on all of their platforms. However, you will not be able to trade cryptocurrency or foreign exchange. To help decide if E*TRADE is best for your investing needs, below is a full list of the online broker’s offerings:
- Stocks long and short (6,100 on the easy to borrow list)
- OTCBB (Penny stocks)
- Mutual funds (9,083 total; 4,533 no transaction fee; 5963 carry a front-end or back-end load)
- Bonds (Corporate, Municipal, Treasury, CD, International)
- Futures options
- Single-leg and multi-leg options contracts
- Bitcoin futures
- OTCBB stocks (penny stocks)
- Fractional shares available through E*TRADE’s DRIP
- Robo-advisor integrated into the online brokerage platform
As an E*TRADE customer, you can enter a variety of order types using the web, desktop, or mobile platforms. The E*TRADE web platform will allow you to enter contingent, bracketed, one-triggers-other (OTO), one-cancels-other (OCO), and one-triggers-a-one-cancels-other (OTOCO) orders, while the mobile app only has functionality for contingent and OTO orders. Additionally, when investors are closing out of a position, you can select tax lots from your portfolio as well as the order ticket, enabling you to optimize for tax efficiency. A few other order types this broker supports include, market, market on close, limit, stop on quote, stop limit on quote and trailing stops orders (by dollar amount and percentage).
Trade execution quality plays a key role in determining where and how orders are routed. Since an order may go directly to an exchange or to a broker who then routes the order to an exchange, the method a broker uses to route orders will play a role in the price your order was filled at. E*TRADE works with multiple market centers for end-to-end control over orders in an effort to provide the highest speed and quality of trade executions.
In order to do this, the broker utilizes advanced smart order routing technology to seek the best execution available in the market. E*TRADE also uses smart order routers with features designed to access sufficient liquidity to fulfill customer orders while causing the least amount of market impact. Both sequential and spray techniques are used as a part of this strategy, but you can also choose to route your own orders.
E*TRADE’s execution quality metrics cover market orders sizes 100-9,999 shares. The average time between when your order is routed to an execution venue to the time a fill report is sent back to E*TRADE is approximately 0.32 and 0.41 seconds for S&P 500 and non-S&P 500 performance, respectively. Additionally, the online broker touts a price improvement of $0.007 per share and $3.38 per contract on all eligible options orders.
At this time, E*TRADE does not give you the ability to backtest your trading strategies. The broker recently decided to discontinue the Strategy Scanner tool in E*TRADE Pro as part of a larger plan to streamline its scanner tool offering. Although backtesting isn’t available, Power E*TRADE users can use the Live Action Scanner to uncover potential trading opportunities in real time. The broker offers an automated portfolio builder which can be accessed through the platform, but it doesn't give traders the ability to automate trading strategies in the traditional sense.
Like many online brokers, E*TRADE’s fees have become more competitive since the race to zero fees ensued. E*TRADE costs are as follows:
- E*TRADE charges $0 commissions on online stock, ETFs, and option trades. There is no limit on the number of shares that can be traded at this base commission rate.
- Options contracts are priced at $0.65 per contract if less than 30 trades per quarter, and $0.50 per contract if more than 30 trades per quarter. The cost remains the same for a single-leg order for 50 contracts.
- It costs $6.95 to trade OTC stocks, including OTC, OTCBB, grey market, and OTC-traded foreign securities. The cost is reduced to $4.95 if you execute at least 30 stock, ETF, and options trades per quarter.
- Outside of the NTF list, it cost $19.99 to trade no-load funds.
- Margin interest rates vary from 8.70% on a $10,000 balance to 5.45% on a $1,000,000 balance.
- Bond transaction fees are $100 with a minimum of $10 and a maximum of $250.
- Futures transactions cost $1.50 per contract, per side + fees, and $2.50 per bitcoin futures contract, per side + fees.
- There is no fee to close an account (besides an ACAT fee), no maintenance fee or charge for inactivity, and there is no minimum balance or number of trades to avoid inactivity.
- When transferring accounts out of E*TRADE, there is a $25 fee for partial transfers and a $75 fee for full transfers.
- A live broker is available at $25. This fee is waived for Extended Hours and overnight session trades places between 4am and 7am Eastern.
- There is no domestic wire fee for income transfers, but there is a $25 fee for outgoing transfers.
- International wire fees are $25, and other fees may apply depending on currency.
- E*TRADE charges $10 to send checks.
- Access to the E*TRADE platforms are free of charge.
How This Broker Makes Money From You and for You
Since the brokerage industry has made an aggressive pivot to lower fees, the methods in which they make money from and for you aren’t always easy to understand.
- Interest paid on cash: As an E*TRADE customer, you can earn 0.01% on idle cash held in your account. Additionally, if you are investing via a managed account, cash will be automatically swept into a money market fund.
- Payment for order flow: It is common for brokers to generate revenue by directing trade orders to different execution venues. On average, E*TRADE accepts $0.47 per contract for options trades and less than $0.0020 for equity trades. However, there are competing brokers that do not accept payment for order flow on equities.
- Stock loan programs: These programs generate revenue for brokers who are providing loaned shares to traders and hedge funds shorting the stock. You can offer shares held long to E*TRADE’s stock loan program, but you won’t be able to choose which stocks to loan. Nonetheless, E*TRADE will share the revenue generated from these activities with you.
- Price improvement: E*TRADE reports a net price improvement of $0.007 per share and $3.38 per contract on all eligible options orders sized between 100 and 9,999. Roughly 94% of orders were executed at or better than the National Best Bid or Offer as of February 2021.
- Portfolio Margin: E*TRADE offers portfolio margining to eligible investors. However, the interest charge is slightly higher than average. The broker charges 8.95% interest on balances less than $10,000 and 5.45% interest on balances of $1 million or more.
Account and Research Amenities
E*TRADE offers a lot of high quality tools for investors and continues to develop its options tools and resources in particular.
E*TRADE’s Stock Screener is customizable using 47 different criteria across six categories including market segment, price/volume, analyst opinions, fundamental metrics, earnings/dividends, and technicals. Additionally, investors using the stock screener can view search results across six different views, each of which provides numerous data points.
Power E*TRADE has a ‘Live Action’ scanner that has over 100 pre-defined screens that scan the market in real-time on live prices and live analytical metrics. Active investors and traders can scan for stocks, indices and ETFs based on unusual activity, volatility metrics, Greeks, fundamentals, price movement or any option or stock activity. You can further use scans in Live Action to help uncover overbought or oversold stocks & explore new opportunities for your portfolio.
ETF and Mutual Fund Screeners
E*TRADE’s ETF Screener has 16 predefined strategies to help beginner investors get started. You can scan ETFs using various criteria including fund category, expense ratio, performance, risk, Morningstar rating, and so on. You can even search for ETFs that are optionable. Not only that, but custom screens can be saved for future use, they can be turned into a watchlist and they can even be based on a predefined strategy as a starting point—a handy tool for any active investor. Similar to the ETF screener, the mutual fund screener has various screens to implement, including predefined strategies.
Power E*TRADE has a wide range of options screeners and tools, as well as standard tools that can be bent profitably to analyzing options traders. For example, the Live Action tool can be used to pick up on both volatility and unusual options activity in the market and Spectral Analysis visualizes the trade you are considering, assisting in maximizing the profit and loss in a given options strategy. This latter feature is also a useful learning tool as it makes the connects between the Greeks and the trade explicit and easy to grasp.
Fixed Income Screener
The Fixed Income Screener enables you to search for fixed income products by selecting criteria that aligns with your needs. The fixed income screener already has a consolidated list of commonly used criteria, and the search filters are tailored to specific asset classes as well as unique bond features. Similar to the stock, ETF and mutual fund screeners, investors have the ability to save custom screens for future use.
All of E*TRADE’s platforms include charting capabilities that are built by Chart IQ and Markit Digital. The platforms support various types of charts, including line, bar, candle, OHLC and many more. Moreover, Power E*TRADE has over 145 chart studies, drawing tools and indicators, with the ability to save your setup and trade directly from the chart. From dynamic charting and risk-reward analysis to automatic pattern recognition, you will have everything you need to support your investing style.
Tools and Calculators
Power E*TRADE has a number of options related tools, including risk/reward probability charts and the StrategySEEK Tool, which is designed to assist with strategy identification based on certain input criteria you define, your outlook on the security, target price for the underlying security, time frame, and specified investment amount.
Through its web platform, E*TRADE also offers useful tools such as a retirement planning calculator, a Roth IRA conversion calculator, a taxable equivalent yield calculator, a marginal tax rate calculator, a required minimum IRA distribution calculator, a loan repayment calculator, and more. If you’re the DIY type, you’ll find these tools extremely beneficial.
Trading Idea Generators
E*TRADE utilizes Argus to deliver daily reports that contain actionable trade ideas on options strategy, whether you are a beginner or advanced investor. It also offers daily market reports, intraday trade ideas, market commentary, a weekly newsletter, and monthly portfolio selector reports from Argus.
In addition, E*TRADE has the Live Action tool that includes technical pattern recognition. With chart functionality that automatically draws support and resistance lines, traders will be able to seamlessly identify technical patterns and analyze the viability of potential trades.
Real-time streaming news is available via Power E*TRADE. The broker offers free Bloomberg TV, Morningstar Intra Day news articles, research reports, market commentary, articles and videos. It also offers daily stock and bond market reports from Briefing.com, a daily active trader commentary, and a weekly investing article. Additionally, it also offers a monthly market commentary.
As an E*TRADE customer, you will have access to research and ratings from Moody's, Thomson Reuters, Morningstar, MarketEdge, Trefis, Research Team, TipRanks, and Argus free of charge. TipRanks offers aggregated opinions from more than 4,000 sell-side analysts and 4,500 financial bloggers, which is very useful when brainstorming new ideas. Most recently, E*TRADE has added Likefolio consumer insights and Trendwatch to the Power E*TRADE toolkit, providing additional resources to novice and experienced investors alike. If you have more than $100,000 in assets with the broker, you will also be granted free access to Credit Suisse.
E*TRADE customers can earn 0.01% interest on cash balances and cash is automatically swept into a money market fund if you are investing using managed accounts.
Dividend Reinvestment Plan (DRIP)
E*TRADE offers a dividend reinvestment program (DRIP), in which fractional shares can be purchased.
SRI/ESG Research Amenities
If you choose E*TRADE as your online broker, you will be allowed to screen on environmental, social and governance (ESG) criteria and socially responsible investing (SRI) factors. E*TRADE platforms also offer thematic screening capabilities to identify companies that, for example, engage in robotics or infrastructure. This gives investors the flexibility to align their investments with their interests. Regardless of whether you are searching for ETFs, mutual funds or stocks, all of these asset classes can be screened according to themes or ESG and SRI factors.
All types of investors will find E*TRADE's portfolio analysis tools helpful. The portfolio reports and analyses are available in real-time and they are customizable to suit your specific needs. You also have the ability to view holdings for all US brokerage accounts, which gives you a cross account view of your portfolio.
As far as gains and losses are concerned, E*TRADE uses a time-weighted performance method, eliminating the distorting effects of money flowing in and out of your portfolio. With this method, the effect of cash flows are eliminated by assuming a single investment at the beginning of a period and calculating the average annual total return at the end of the period. One caveat, however, is that none of the E*TRADE platforms support internal rate of return calculations.
For active investors and traders utilizing portfolio margining, both margin and buying power are reported in real time. This data includes a buying power summary, requirements by position and a calculator in real-time.
When it comes to taxes, E*TRADE users are able to use a variety of tax or financial software with E*TRADE Securities, including TurboTax, H&R Block, GainsKeeper, and Quicken. You can also download capital gains tax reports, calculate the tax impact of a future trade,or view unrealized short-term and long-term capital gains.
Although E*TRADE clients cannot maintain a trading journal directly on the platform, it does offer a notes functionality to keep track of trades and strategies.
If you’re just getting started, E-Trade has you covered with tons of articles, videos and classes as well as a library of finance topics. E*TRADE’s Knowledge Center focuses on new investors, long-term planning, and tax planning, as well as advanced topics like options and futures. E*TRADE facilitates a full calendar of events including free live in-person events and online webinars, designed to help investors hone their skills and feel more confident in their investing decisions.
The broker recently introduced Virtual Learning Environments—full-day structured online events with a targeted learning objective. For example, E*TRADE offered an Options Bootcamp for beginner options traders in Fall of 2020. Investors have access to the full library covering a range of financial topics and areas of interest. You can also access a range of platform demos to learn how to use the E*TRADE tools and platforms. The Knowledge Center is a free resource for all site visitors, regardless if they have an E*TRADE account or not. You can even hone your skills and test strategies without committing real money using E*TRADE's platform for paper trading.
- 24/7 phone line with access to brokers as well as to retirement specialists, financial consultants, active trader consultants, and product specialists. One drawback is the average wait time on hold for customer service, which is currently 11:05 minutes.
- E*TRADE customers can chat with a live customer service representative 24/7, send an email, access FAQs, or use a comprehensive language search engine to find information on the website. The chat is available through the website as well as the mobile apps.
- As a qualified customer, you can speak with Financial Advisors in E*TRADE’s retail branches or speak with one over the phone if there are no branches in your area.
- E*TRADE has over 30 physical branches in the U.S.
Security and Reliability
E*TRADE's security is up to industry standards:
- Two factor authentication is available on all E*TRADE platforms.
- There have been no serious platform outages in 2020 and no data breaches within the past 4 years.
- If using a mobile device, E*TRADE offers both fingerprint and face scan log in functionality.
- E*TRADE clients will be covered under the Morgan Stanley excess of SIPC supplemental insurance policy, which has an aggregate limit of $1 billion. This amount is above and beyond the required insurance by SIPC.
- E*TRADE reports having no serious platform outages in 2020. However, the platform did experience some problems on its trading platform as customers reported incidents of having trouble logging in and placing orders. To be fair, several trading platforms have experienced technical issues due to the stock market frenzy linked to GameStop and other stocks.
- E*TRADE also reports having no significant data breaches.
E*TRADE’s pricing structure and fees are very clear and transparent. For example, the broker has a webpage dedicated to rates and pricing, highlighting costs associated with brokerage fees, margin trading and more. There have been no major regulatory actions brought against E*TRADE recently.
E*TRADE remains a powerhouse brokerage firm. It is an industry leader in its mobile, web, and options trading platforms and continues to innovate each year. Its user experience, investing tools, educational resources, large selection funds and innovative trading technology will be a good fit for equity and options traders. The integration of the OptionsHouse technology provided E*TRADE with a significant upgrade to its options analysis and trading capabilities in the Power E*TRADE platform, building E*TRADE's capabilities as an options trading platform to go along with the company’s existing strength in other areas.
Regardless of your investing experience or style, E*TRADE is a reliable, full-service broker that sets the bar high for its competitors. Overall, E*TRADE provides a well-rounded offering that will satisfy the majority. It is a good pick for both beginning investors and experienced traders who often have different needs and expectations, as the broker does a good job serving both markets adequately.
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