E*TRADE was one of the first brokerages with an online presence, having executed its first online trade in 1983. The industry powerhouse offers free equity trading, as it did for a period in the late 1990s, along with a broad product lineup and robust trading platforms aimed at active traders and buy-and-hold investors.
Robinhood is much newer to the online brokerage space. The company was founded in 2013 and made its services available to the public in 2015. Its claim to fame is commission-free investing, with free trades in stocks, ETFs, options and cryptocurrencies. While that was a huge advantage in the company's early years, there are many commission-free brokers to choose from now.
- Account Minimum: $0
- Fees: $0
- Account Minimum: $0
- Fees: No commission for stock/ETF trades. Options are $0.50-$0.65 per contract, depending on trading volume.
Morgan Stanley announced in February 2020 its intent to acquire E*TRADE.
During the sharp market declines and heightened volatility that took place in early March 2020, Robinhood experienced extensive outages that affected its users' ability to access the platform at all, leading to a class action lawsuit.
In our 2020 Best Online Broker reviews, E*TRADE earned higher scores than Robinhood in every category except Best for Low Cost. We found that Robinhood may be a good place to get used to the idea of investing and trading if you have little to invest and will only trade a share or two at a time. E*TRADE is a better choice if you're an active trader or investor and want a customizable trading platform.
E*TRADE has been in the business for nearly four decades, and this experience has paid off in terms of offering very intuitive and easy-to-navigate platforms. There are two main web-based platforms—E*TRADE and Power E*TRADE—and two mobile apps with mirroring functionality. It's easy to open and fund an account, whether you're on a mobile device or computer.
Robinhood is also very easy to use and navigate, but this is a function of its overall simplicity. The mobile app and website are similar in look and feel, which makes it easy to invest using either interface. Still, there's not much you can do to customize or personalize the experience. You can open and fund a new account in a few minutes on the app or website.
E*TRADE offers more order types, including conditional orders like one-cancels-other, that you won't find anywhere on Robinhood. With both brokers, you can trade the same asset classes on the mobile and web platforms, except for E*TRADE's single name bond trading, which isn't available through its app. Both brokers support watchlists on all platforms, but only E*TRADE offers customizable charting.
Both brokers have easy-to-navigate web platforms; however, E*TRADE offers a richer experience overall. E*TRADE's platform is fully customizable, and you have access to streaming real-time quotes. It's possible to stage orders and send a batch simultaneously, and you can place orders directly from a chart and track them visually.
What Robinhood offers is a very basic platform with limited functionality compared to E*TRADE. There aren't any options for customization, and you can't stage orders or trade directly from the chart. Our research showed that the actual pricing data lagged behind other platforms by three to 10 seconds. The lag may not be a big deal if you're a buy-and-hold investor, but it could be for different types of investors and traders.
E*TRADE offers two apps: The E*TRADE mobile app and the more advanced Power E*TRADE app. Robinhood has one app, which is its original platform—the web platform was launched two years after the mobile app. While both brokers offer well-designed mobile apps that are easy to use and navigate, E*TRADE comes out ahead in terms of customization and functionality. You can trade the same asset classes on mobile that each broker offers through its respective web platform (except for single name bonds for E*TRADE).
Range of Offerings
E*TRADE offers all the usual suspects that you'd expect from a large broker: stocks, options, futures, ETFs, mutual funds, bonds and CDs. Futures trading gives investors exposure to commodities and Bitcoin. One thing that's missing from its lineup, however, is Forex. As with Bitcoin, E*TRADE investors can only get exposure to foreign exchange markets via futures trading.
Robinhood's range of offerings is very limited in comparison. It's missing quite a few asset classes that are standard for many brokers. Still, it comes out ahead in cryptocurrencies, and you can trade Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), Dogecoin (DOGE), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC). Data is also available for 10 other coins. However, Robinhood doesn't allow users to transfer their coins to their own digital wallets, nor can users deposit their coins with Robinhood for trading. Also, the company plans to roll out fractional share trading for customers. Stocks with a $25 million market cap and at least a $1 per share price will be supported.
E*TRADE clients have access to a wide variety of order types on the website and E*TRADE Pro platforms, including conditional orders. While mobile users can enter a limited number of conditional orders, you can stage orders for later entry on all platforms. Not surprisingly, Robinhood has a limited set of order types. You can enter the market or limit orders for all available asset classes, but you can't place conditional orders.
E*TRADE executes 94.2% of orders for S&P 500 stocks at or better than National Best Bid and Offer (NBBO). About 88% of orders for S&P 500 stocks receive price improvement. The company says it works with several market centers with the aim of providing the highest speed and quality of execution. Robinhood reports that it executes 95.12% of orders for S&P 500 stocks at NBBO or better. However, Robinhood doesn't disclose its price improvement statistics, which could lead one to make negative assumptions about its order routing practices.
Both companies are required by SEC Rule 606 to disclose its payment for order flow statistics every quarter. E*TRADE's report can be accessed here, while Robinhood's report can be found in its disclosure library. Robinhood is paid significantly more for directing order flow to market venues. For example, in January 2020, the most E*TRADE received was 0.2 cents per 100 shares for S&P 500 stocks. Robinhood in the same month earned between 0.26 and 1.13 cents per 100 shares for S&P 500 stocks.
E*TRADE doesn't charge commissions for online equity, options, and ETF trades for U.S.-based customers (there's a per-contract option fee of $0.65). You'll pay $19.99 to trade mutual funds outside the No-Transaction-Fee program, and its live broker fee is $25 per trade. Robinhood's trading fees are simple: You can trade stocks, ETFs, options, and cryptocurrencies for free.
Both brokers generate interest income from the difference between what you're paid on your idle cash and what they earn on customer balances. E*TRADE lets you move your cash into a money market fund to get a higher interest rate. It also has a stock loan program in which you can share the revenue it generates from lending the stocks held in your account to other traders or hedge funds (usually for short sales). Robinhood retains all the income it generates from loaning out customer stock and doesn't share it with clients.
E*TRADE has robust stock, ETF, mutual fund, fixed-income, and options screeners to help you find your next trade. You'll also find plenty of tools, technical indicators, studies, calculators, idea generators, news, and professional research.
Robinhood's research offerings are predictably limited. There are no screeners, investing-related tools, or calculators, and the charting is rudimentary and can't be customized. News is available from several outlets, though, and you can access Morningstar research if you're a Robinhood Gold client ($5 per month subscription).
E*TRADE clients have access to real-time buying power and margin information, plus real-time unrealized and realized gains. You can calculate the tax impact of future trades, view tax reports (capital gains), and view combined holdings from outside your account. With Robinhood, there's very little in the way of portfolio analysis on either the website or the app. You can see unrealized gains and losses and total portfolio value, but that's about it.
E*TRADE offers a decent selection of articles, glossaries, videos, and webinars. It holds about 30 live events each year and has a significant expansion planned for its webinar program for 2020. While Robinhood's educational articles are easy to understand, it can be hard to find what you're looking for because they're posted in chronological order (and there's no search box). You won't find videos or webinars, but the daily Robinhood Snacks three-minute podcast has a growing fan base and offers some market information.
E*TRADE offers 24/7 phone line support with access to brokers as well as to retirement specialists, financial consultants, active trader consultants, and product specialists. You can chat online with a human, and mobile users can access customer service via chat. There's limited chatbot capability, but the company plans to expand this feature in 2020.
Robinhood handles its customer service via the app and website. There's no inbound phone number, so you can't call for assistance. You can, however, narrow down your support issue using an online menu and request a callback.
E*TRADE's security is up to industry standards. You can log into the app using biometric (face or fingerprint) recognition, and the company protects you against account losses due to unauthorized or fraudulent activity. It carries excess Securities Investor Protection Corporation (SIPC) insurance provided by London insurers with an aggregate limit of $600 million. Robinhood's technical security is up to standards, but it's lacking the excess SIPC insurance.
During 2019, neither brokerage had any significant data breaches reported by the Identity Theft Research Center.
We found that E*TRADE is an excellent choice if you're an active trader or investor who wants a robust and customizable trading experience, useful research tools, and access to lots of trading products. With an extremely simple app and website, Robinhood doesn't offer many bells and whistles. But if you're brand new to investing and are starting with a small balance, Robinhood could be a good place to gain some experience before switching to a more versatile broker.
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