Investing > E*TRADE Review

E*TRADE Review

No commissions, great educational resources, and an innovative trading platform make E*Trade tough to beat.

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Founded in 1982, E*Trade is a popular online discount broker. E*Trade is a good option for both active traders and beginners due to its range of insights and research. It offers $0 commission fees and an intuitive trading platform, as well as a long list of no-transaction fee mutual funds.

In the midst of pressure from a commission fee price war, E*Trade surprised the broker world by acquiring student loan provider Gradifi in a $30 million deal.

E-Trade is a full-service, broker offering $0 commission fees, innovative trading platforms, $.65 per contract for options trades and a large Insights and knowledge section to help you go from beginner to expert.

Fast Facts

  • Account Minimum: $0
  • Fees: Commission free for ETF and stock trades. Options are around $0.50-$0.65 p/contract, depending on trading volume.
  • Best for: Active traders and beginners
  • Highlight: Power E*Trade Platform

Rating

  • Research and Date: 10/10
  • Tools & Resources: 10/10
  • Commissions & Fees: 9/10
  • Usability: 8/10
  • Investment options: 10/10
  • Customer experience: 6/10
  • Overall: 9/10
Visit E*TRADE on E*TRADE’s website

Investor Warning: Futures and options transactions are intended for sophisticated investors and are complex, carry a high degree of risk, and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure Statement for Futures and Options prior to applying for an account. You can also view the E*TRADE Futures LLC Financial Information and Disclosure Documents. An Exchange-Traded Fund’s (“ETF”) prospectus contains its investment objectives, risks, charges, expenses, and other important information, and should be read and carefully considered before investing. For a current prospectus, visit the Exchange-Traded Funds Center at www.etrade.com/etf. Investing in securities involves risk, including possible loss of principal.

What is E*Trade?

E*Trade has grown beyond its roots as a discount broker into a full-service investment brokerage firm, offering a range of tools no matter what level you’re on.

E*Trade offers no minimum account balances, zero transaction fees on more than 1,300 no-load mutual funds, and an integrated checking account.

Overview and Summary

  1. E*Trade has grown from a discount broker into a full-service investment broker with a wide range of tools catering to all level of trader.
  2.  E*Trade is best for active traders and the mass affluent (ie. investors with more than $100,000 in tradable assets).
  3.  E*Trade has three innovative trading platforms, E*Trade Web, Power E-Trade and E*Trade Pro.
  4.  E*Trade believes in giving you the opportunity to choose, with a complete range of investment options.
  5.  E-Trade offers two free innovative and intuitive mobile apps, and they’re arguably the best available out of all the online brokers.
  6.  E*Trade wants their educational section to help beginners and more experienced traders.
  7.  E*Trade’s website isn’t very transparent and can make it difficult to find the information you’re looking for, such as how to close an existing account.

E*Trade buys student loan provider Gradifi for $30 million

A photo of entrance to E*Trade's building
E*Trade bought student loan provider Gradifi as a part of expansion into adjacent markets.

In Early December 2019, discount brokerage E*Trade announced that it acquired a student loan provider known as Gradifi, in a deal worth $30 million. E*Trade’s expansion into adjacent markets like student loans underscores broker industry trend towards lower fees. As new FinTech Firms put increasing pressure on discount brokerage firms like E*Trade to lower or eliminate commission fees, the discount brokers are seeing their competitive positioning erode – forcing them to look elsewhere for new revenue streams. Industries facing cost pressure respond by looking for increased economies of scale, which results in mergers and acquisitions among the existing players.

The Gradifi deal inspired rumors of the possibility of online broker Charles Schwab would acquire E*Trade. However, in late November 2019, in what came as a shock to the industry, Schwab instead announced its plans to acquire TD Ameritrade in a $26 billion deal. The merger will result in a brokerage giant.

This deal resulted in a 9% fall in E*Trade shares, and left investors worried about the company’s future. David Ryan, Managing Director at JMP securities said,

The market wasn’t anticipating the Schwab-Ameritrade combination, I think people were more looking at who would be buying E*Trade.

Upon announcement of the deal, shares of Schwab increased by 7.3%, while shares of TD Ameritrade soared 16.92% in late November.

How E*Trade’s acquisition will improve their company

E*Trade has a powerful business managing finances and stock plan accounts for corporate clients, and this acquisition will create more financial security and student loan tools to the range of products that E*Trade can now offer their corporate clients, the firms stated.

The merger was agreed on Monday, December 9th in a deal worth $30 million cash, according to the statement. Gradifi’s former parent company, First Republic, will continue to act as a provider in its student loan refinance business, the company concluded.

Why market pressure will benefit the customer

On October 7th 2019, E*Trade eliminated commission fees for customers. E*Trade CEO Mike Pizi said in a statement,

With this new commission schedule we are further raising the bar, delivering an unrivaled experience at price points that cannot be beat—main street investors will now trade the stocks and ETFs of their choice for $0.

The news was announced after competitors, TD Ameritrade and Charles Schwab cut their commission fees. The previous week, Interactive Brokers Group (IBKR), a smaller competitor, started a new IBKR Lite service, which eliminated commissions on stock and ETF trading in the United States.

This industry change has been welcomed by retail investors, but stocks in the companies have been severely impacted as shareholders struggle to adapt. Commission fees have traditionally driven online trading firms. Now, firms are being forced to think of new and more innovative ways to make money.

In a statement from E*Trade, the company said it anticipated a revenue hit in that quarter, of around $75 million, due to the move towards no commissions.

After Charles Schwab’s and TD Ameritrade’s zero-fee commission announcement, E*Trade’s commission elimination was inevitable. Twitter was awash with customers venting over E*Trades hesitance to follow suit and threatened to move to another broker.

This industry change has been prompted by upstarts including Robinhood, who are fighting to create a more accessible industry for young investors. Robinhood are now almost as big as E*Trade, with a value of $7.6 billion, in comparison to E*Trades market value of $8.4 billion.

A Robinhood spokesperson, Jack Randall said,

The changes taking place across the brokerage industry reflect a focus on the customer that’s been inherent to Robinhood since the beginning.

We remain focused on offering intuitively designed products that reduce barriers to our financial system, including account minimums and commission fees,” he concluded.

Reduced commission fees will potentially result in more mergers, but all of which will be a positive for the customer.

Morgan Stanley acquisition of E*Trade

On February 20th, 2020, investment bank and financial services giant Morgan Stanley announced that it was acquiring E*Trade for approximately $13 billion. E*Trade’s decision to sell was in part a response to the pressure from lowering its commission fee structure – driven by new entrants like Robinhood, Betterment, Acorns, and Stash – as well as pressure from the TD-Ameritrade / Charles Schwab merger.  Like Charles Schwab, Morgan Stanley is a much more established financial advisory firm with a venerable list of wealth management clients. Acquiring E*Trade helps Morgan Stanley become more technologically competitive in offering workplace financial products as well as self-directed tools for their clients.

Between the TD-Schwab merger and the Morgan Stanley acquisition of E*Trade, no standalone discount brokerage firm remains. The pressure from new FinTech entrants on the discount model highlights how technology benefits consumers. This pressure will continue as these FinTechs increasingly focus on providing more high value advisory services, further eating in to the margins that firms like Schwab, Morgan Stanley, and Merrill Lynch have enjoyed for years.

Who E*Trade is best for

E*Trade is best for you if you consider yourself one of the following:

  • Active traders
  • Beginner investors
  • Low minimums
  • Options traders
  • Retirement planning assistance

E*Trade is best for active traders and the mass affluent ie. investors with more than $100,000 in tradable assets.

E*Trade Compared

Fees
Commissions

$0

$0

Account minimum

$0

$0

Minimum initial deposit

$0

$5

General
Best for

Active traders and beginners

New investors

Highlight

Power E*Trade platform

Value-based investing

Promotion

None

$5 bonus

Rating
Fees
Commissions

$0

$0

Account minimum

$0

$0

Minimum initial deposit

$5

TS Select: $2,000

TS GO: $0

General
Best for

New investors

Active options and penny stock trading

Highlight

Value-based investing

Powerful tools for professionals

Promotion

$5 bonus

None

Rating
Fees

Commissions

$0

$0

$0

Account minimum

$0

$0

$0

Minimum initial deposit

$0

$5

TS Select: $2,000

TS GO: $0

General

Best for

Active traders and beginners

New investors

Active options and penny stock trading

Highlight

Power E*Trade platform

Value-based investing

Powerful tools for professionals

Promotion

None

$5 bonus

None

Intuitive Trading Platforms

E*Trade has three innovative trading platforms; E*Trade Web, Power E-Trade and E*Trade Pro. Let’s go through them one-by-one and discuss the features and capabilities of each.

All 3 are free for all customers, with no minimum balance or trade activity required.

E*Trade Power

Picture of Power E*Trade app running on laptop with promotional text on right.
With Power E*Trade, users have access to superb tools for creating in-detail trading strategies.

Power E*Trade is E*Trade’s innovative and detailed platform, and is a result of the broker’s acquisition of OptionsHouse a few years ago. E*Trade power allows you to create trading strategies and implement them with over 100 technical studies, 30 drawing tools, and streamlined trade-tickets.

You can also avail yourself of the intuitive Power E*Trade app suited to all kinds of traders. It compliments the Power E*Trade platform and is full of easy-to-use tools and features you can use on the go.

E*Trade Web: One of the Best

E*Trade is the broker’s original platform, and,they claim, still one of the best. This platform offers all the tools you’ll need to help you succeed, from researching investments and placing trades to tracking the markets and refining your skills.

  • Independent analyst research, charts, news and quotes
  • Learning and planning resources for retirement
  • Tools and screeners to spot emerging investing opportunities.

E-Trade Pro: Desktop Platform

E*Trade Pro is the broker’s desktop platform and it’s equally as innovative, with tools like Strategy Scanner and back-testing capabilities to help you devise a creative portfolio.

Mobile Platform

Two smartphones, each of them running one of the E-Trade's mobile platforms.
E-Trade’s mobile platforms are considered to be the most intuitive mobile trading apps.

E-Trade offer two free innovative and intuitive mobile apps, and they’re arguably the best available out of all the online brokers. Impressively, you can get the app on both Android and iOS phones.

With this, you can easily place trades and manage your account, get up-to-date quotes and news, including from Bloomberg TV. The app also has some cool advanced features like ETF and stock screens, and multi-leg trade options.

Free Commissions

As of October 2019, in line with competitor discount brokers including TD Ameritrade and Charles Schwab, E*Trade eliminated its $6.95 commission fee for online options, stock and ETF trades. The company’s options still come with a reduced contract charge of $.65. This fee is discounted for active traders, to $.50.

Interested in seeing how E*Trade compares to its competitors on this front? Take a look at our Charles Schwab vs E*Trade comparison where the two go head-to-head.

Investment Choices: You Shouldn’t Feel Like You’re Ordering Off a Children’s Menu

Screenshot of E*Trade website's Investment Choices page
E*Trade’s online platform provides a rich selection of investment choices.

E*Trade believe that building your portfolio shouldn’t feel like you’re ordering off the kids menu. They want to give the opportunity to explore, with a complete range of investment choices.

E*Trades breadth of investment choices will make traders and investors feel content with advanced options strategies and futures, investments in bonds, stocks and over 8,000 mutual funds, 4,400 of which have no transaction fees. These choices compare quite favorably to E*Trades competitors.

However, any mutual funds not on the brokers list of fee-free funds will incur a $20 charge per transaction.

  1.  Rollover IRA or ROTH IRA: Customers can also avail of a traditional, rollover IRA or Roth IRA, in addition to regular taxable accounts.
  2.  Business investment account: You can get an investment account for businesses or an investment club.
  3.  Custodial account: You can open a custodial account for a minor, and a Coverdell Education Savings Account (ESA).

E*Trade’s Knowledge: Don’t Put All Your Eggs Into One Basket

E*Trade’s educational section is outstanding and will assist everyone from beginners to more experienced traders get where they need to go. Knowledge, they believe, is the key to confident decision making.

E*Trade will help you learn the trade with a guided overview on major topics, including detailed articles, “how to” videos and a comprehensive educational library. You can also watch webinars on a collection of topics including technical analysis, options trading, how to diversify your portfolio and asset allocation.

If you’re interested in learning more, the broker offers online investing courses that cover every topic you need, including Stocks 101 and How to Build an Emergency fund.

E*Trade experts will offer you advice on how to make the best decisions when investing in companies, if you’re ever unsure, or simply want to create a winning plan from the start.

E*Trade also have a robo-advisor service to manage your portfolio for you if you don’t have the time or energy to invest in learning how to do it best yourself right now. This will cost you an annual advisory fee of .30%, and you will need a minimum investment of $5,000.

What is Diversification and Asset Allocation?

E*Trade believe that every investor should start with two key ideas.

They define diversification as not putting all your eggs into one basket. This includes making sure that your portfolio has various investment types to help reduce losses of one type. For example, stocks may plunge while other investments like commodities or bonds hold steady, or even increase.

You can achieve diversification through asset allocation. This means that you need to figure out how your funds will be shared across different investment types, such as bonds, stocks, and cash. This may reduce risk, but to earn a return you’ll need to find a balance. The key to increased returns, they advise, is to take on greater risk.

Where E*Trade Falls Short

Website Usability

E*Trade’s features are innovative and comprehensive and they cater to both beginners and the more experienced investors. However, they fall short on transparency because it can be difficult to locate certain information on E*Trades website. Finding information including the company’s required account minimum or guidance on closing an account can be tricky and frustrating.

That said, E*Trade does provide a 24/7 customer support team that is easily contacted with an average waiting time of about 1 minute.

Comparison of Brokerages

Table with E*Trade Merrill Edge and TD Ameritrade overall rating comparison.
E*Trade ranks high with its 9.5 overall rating.

Comparison of E*Trade, Charles Schwab, and Merrill Edge:

  • Overall rating: E*TRADE: 9/10, Charles Schwab 9.5/10, Merrill Edge 9/10
  • Account min: Merrill Edge $0, Charles Schwab: $0, E*TRADE, $0
  • Fees: Merrill Edge $2.95, Charles Schwab $0 , E*TRADE Commission free for ETF and stock trades. Options are around $0.50-$0.65 p/contract, depending on trading volume.
  • Highlight: Merrill Edge Award-winning research, Charles Schwab Best online broker for stock traders, E*TRADE Power E*TRADE platform

What Does This All Mean?

E*Trade comes out on top when it comes to their innovative and intuitive trading platforms and mobile app. Their features, tools and education are outstanding and suited to both beginners and more experienced levels.

The company’s recent acquisition of Gaddafi will help add more financial security and student loan tools to their lists of products, widening their customer base and potentially securing their future as a competitive online broker. Likewise, the Morgan Stanley acquisition will offer clients looking for more full-service offerings increased options.

E*trade has a powerful business managing finances and stock plan accounts for corporate clients, and their move will create more financial security and student loan tools to the range of products that E*Trade can now offer their corporate clients.

That said, if you’re looking for education and insights, then Merrill Edge and Fidelity also offer outstanding resources. If you’re interested in mobile-trading, then take a look at upstart and industry influencer, Robinhood.

E*Trade FAQs:

Is E*Trade Good for Beginners?

Yes – E*Trade’s low fees, educational materials, and $0 account minimum make it a good choice for beginners. E*Trade’s platforms are also quite intuitive and easy to use.

How Much Does E*Trade Charge per Trade?

E*Trade does not charge any commissions for ETFs and stocks. However, option trades incur a fee of $0.50 – $0.65 per contract, and some mutual funds might incur $19.99 per trade.

Which is Better: E*Trade or Charles Schwab?

Both E*Trade and Charles Schwab are great brokers, but they have different strengths. E*Trade offers a robo advisor that is much more accessible, and generally has lower fees associated with mutual funds. E*Trade also boasts a slightly more impressive offering of mutual funds when compared to Charles Schwab.

On the other hand, Charles Schwab has a faster execution rate, but E*Trade’s platform is slightly easier to use. On the whole, the two brokerages are quite similar.

Is E*Trade a Good Broker?

Yes – E*Trade is a good, reputable brokerage that has a wide array of investment offerings, fantastic customer support, and well-produced educational content.

Can I Buy Disney Stock on E*Trade?

Yes, you can buy Disney stock through E*Trade.

Does E*Trade Require a Minimum Balance?

There are no minimum account balances associated with E*Trade.

How Much Money Do I Need to Open an E*Trade Account?

You do not need any money to open an E*Trade account. The minimum deposit is $0 – however, you will need to invest at least $2,000 to be able to open a margin account.

Does E*Trade Charge to Withdraw Money?

E*Trade does not charge any fees to withdraw money if you use an ACH transfer. If you use a wire transfer, you will be subject to a $25 fee.

Compare E*Trade

Find out how E*Trade stacks up against the competition.

All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.

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