E-Trade’s Review 2020 – The Ultimate Broker For Non Professionals

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Table of Contents

A pioneer of online trading, E-Trade registered its first online trade in 1983. Fast forward fifteen years and E-Trade becomes a publicly listed company.

Nowadays, it operates spare to invest.over thirty branches across the United States, evolving into one of the leading online financial services firms in the world.  

e-trade's-logo-square

On E-Trade's Secure Website

Account Options

No Minimum Deposit

PROS

CONS

Overview

E-Trade is a complete broker and financial advisor for U.S. residents. It pioneered online trading decades ago and continues to outperform its competition by always being a step ahead.

Trading U.S. stocks with zero commissions was something unthinkable early last year. Yet, by reorganizing the business and shifting the priorities to other areas (e.g., retirement planning assistance), E-Trade managed to balance its operations swiftly.

Both desktop and mobile trading platforms benefit from in-house assistance and learning tutorials. The knowledge center covers most of the services offered to investors and welcomes newbies to the world of investing in financial markets.

The abundance of markets reachable with the flagship account (Brokerage Account) makes E-Trade excelling in offering diversification benefits to its investors.

From individual traders to small companies, future retirees and self-employed, E-Trade has something to offer to everyone interested in putting their funds to work. Investing has never been more transparent and diversified as it is when trading with E-Trade.

E-Trade Pros & Cons

The online trading industry faces stiff competition recently. Last year major players announced a slash in commissions and fees to unprecedented levels.

Pros

Cons

Fees

Competitors like Robin Hood came up with innovative ways to attract millennials to the investing world, building pressure on other U.S. trading houses. E-Trade, like many other investment houses, quickly reacted by offering the bulk of its brokerage account investment options free of charge or at a little cost. It dropped the previous $6.95 trade commission to 0 for stocks trading and slashed its options trading fees.

ProductFees
Option trades$0
Stock tradesOld fee = $6.95; New fee = $0
ETFs$0

Managed Accounts

One of the major strengths of E-Trade comes from its managed accounts offered to its investors. Its financial advisory services addresses traders of all types and different backgrounds, with little or no barriers to entry – $500 minimum to invest.

It has the tools, education and guidance to help anyone achieving his or her investment goals. (it’s definitely can be an advantage – but it should combined with the paragraph about managed account).

Broker Insurance

The broker insurance eliminates all concerns regarding the funds safety. Operating under the SEC Customer Protection Rule, E-Trade’s customer securities are kept segregated from E-Trade’s own assets.

On top of that, being a member of SIPC (Securities Investor Protection Corporation) E-Trade protects securities of up to half a million dollars. Finally, still on the assets safety side, E-Trade offers additional brokerage insurance purchased from London insurers that enables it to cover an additional $600 million on top of the SIPC protected funds.

Futures Trading Options

A big plus when trading with E-Trade comes from its Futures trading arm. It gives access to various markets that makes it easier for investors to diversify their portfolio.

From various equity indexes (e.g., Micro E-mini S&P500, E-mini Russel) to interest rates (e.g., 30-year T-bond, Ultra T-bond), from metals (e.g., gold, silver, platinum, palladium) to energy (e.g., natural gas, heating oil), and ending with grains, softs, livestock, F.X. and even Bitcoin – there’s something for every type of investor.

Also important – no minimum funding requirement for futures!

Full Cover of US Market

All markets available to trade in the U.S. appear on the E-Trade platform. The options trading arm deserves special attention. Despite charging a fee for both futures options and equity and index options, E-Trade has among the lowest options contract fees in the market.

The retirement planning assistance programs deserve a special mention here, as few other brokers have such an extended offering for a growing investors segment.

Knowledge Center

The trading platforms could benefit from a more in-depth description and tutorials. Also, E-Trade focus as an investment specialist makes it difficult for a regular trader aiming to open a brokerage account to grab the full range of the products offered.

Commissions And Fees Exceptions

The commissions and fees scheme, while transparent enough, has many exceptions. To take note of them, one needs to go at the bottom of each page and carefully read the exceptions. Bottom line, a bit more transparency won’t hurt. 

While having so many available products to invest in is an advantage, they could be explained in more detail. The knowledge center covers most of them, but in some cases, extra explanations would make it easier for investors to pick the right product (e.g., options trading).

Poor Promotions, Only For US Residents

Promotions come and go without consistency and with high minimum requirements for eligibility.

Last but not least, E-Trade doesn’t accept non-US residents.

E-Trade’s Account Types

Rated by Kiplinger, the best online brokers of 2019, E-Trade’s offers a wide range of investment products for both the active and passive investors.

Brokerage Account

On active investing, the Brokerage Account is E-Trade’s investing and trading account. Traders have access to bonds, options, mutual funds, and can also buy or sell U.S. equities.

What’s interesting is that E-Trade charges zero commissions for trading US-listed stocks, ETFs, and some options, albeit some exclusions may apply. For instance, the standard options contract fee is $0.65 per contract, but it declines to $0.50 if the number of transactions exceeds thirty per quarter.

It takes about ten minutes to open a brokerage account, with one caveat – you must be a U.S. resident to access E-trade’s services.

When trading bonds with a brokerage account, E-Trade charges $1/bond for online secondary market trades for a minimum of $10 and a maximum of $250. Also, for trading futures, a $1.5 per contract, per side, plus fees, applies. As for trading mutual funds with E-Trade, prices vary depending on the fund.

The active trader gets all the support needed to make the trading journey as smooth as possible. In-depth tutorials, articles, or videos help to learn the industry’s secrets.

From time to time, E-Trade runs promotions for its brokerage account, the company’s flagship account, offering a substantial bonus on deposits exceeding a certain threshold.

To fund an account, it takes up to three business days to transfer money electronically, but other options are available, too (e.g., check, wire transfer). Additionally, an individual may choose to move an account from another firm.

Retirement Accounts

E-Trade doesn’t ignore retirement planning and offers plenty of options for securing finances on retirement. Its page simulates how much savers may have at retirement based on variables like the current age, savings rate, and risk adversity.

Retirement accounts offered:

Account TypeBenefits
Rollover IRAHave all your retirement assets under the same roof
Roth IRATax-free and no penalties on distributions when meeting certain conditions
Traditional IRATax-deferred until withdrawing on retirement
Beneficiary IRATax-deferred inherited retirement assets
E-Trade Complete IRAFlexible access to cash for investors aged plus 59 and a half
IRA for MinorsAdult managed account for minors under 18 years of age

Managed Portfolios

E-Trade’s Capital Management’s personalized investments start with the smallest possible contribution to Core Portfolios. Invest with as little as $500, get access to a monitored, diversified portfolio for 0.3% annual advisory fee.

Blend Portfolios addresses those with $25000 savings or more that want to invest in ETFs and mutual funds and would like the help of a professional, against up to 0.9% annual advisory fee.

The Dedicated Portfolio option targets investors with over $150000 in funds to invest. Depending on the individual risk appetite and goals, this is a well-diversified portfolio of ETFs, mutual funds, stocks – built and managed by a professional.

For those interested in investment-grade bonds, the Fixed Income Portfolio has a dedicated financial consultant that builds the portfolio, and then a third-party manager takes care of it. All yours if you have a minimum of $250,000 spare to invest.

Small Business Retirement Accounts

Excellent for small businesses interested in offering retirement benefits to their employees. E-Trade’s offering includes:

  • Individual and Roth individual 401(k) – Excellent for self-employed people
  • Simple IRA – For businesses with less than 100 employees
  • SEP IRA – 0% to 25% annual contributions of earned income for small businesses and self-employed
  • Profit-Sharing Plan – Help employees save for retirement by sharing the company’s profits
  • Investing-Only Account – More investment options without a change of custodians
Account TypeBenefits
Individual and Roth individual 401(k)Excellent for self-employed people
Simple IRAFor businesses with less than 100 employees
SEP IRA0% to 25% annual contributions of earned income for small businesses and self-employed
Profit-Sharing PlanHelp employees save for retirement by sharing the company’s profits
Investing-Only AccountMore investment options without a change of custodians

Bank

Last but not least, E-Trade offers bank accounts to its investors. From savings accounts to lines of credit, or checking accounts, investors can choose what suits best their interests.

Trading Platform

The in-house built trading platform, Power E-Trade, is intuitive and easy-to-use. Its features cover everything an investor wishes for, and more:

  • Paper trading – Practice on paper, without committing real money – the equivalent of a traditional demo account
  • Live action
  • Spectral analysis – Excellent for understanding the risk and reward of an option trade
  • Snapshot analysis
  • Interactive charts
  • Technical pattern recognition – 100-plus technical studies and 30-plus drawing tools

The E-Trade web platform comes to complement the Power E-Trade solution, leaving nothing to chance when it comes to accessing the trading account. One of the brilliant features of the Power E-Trade platform is that it automatically insert in charts technical analysis pattern. Moreover, it explains the patterns, suggesting how to trade them – basically a live educational tutorial using active charts.

The Power E-Trade app for both iOS and Android is an innovative mobile platform equipped with everything needed for trading on the go.

On top of that, another mobile platform called E-Trade Mobile App is ideal for investors seeking a mobile-only experience.
Both offer streaming quotes, earnings, dividend info, gains, third party research, and much more.

Margin Trading and Execution at E-Trade

Margin trading gives investors the opportunity of “doubling down” on a stock, for example. E-Trade lends investors money to buy stock and earns an interest on the amount.

As always with margin, the potential reward amplifies if the stock moves up, but so does the risk, if the stock moves down. As an investor, you could lose more than the initial investment.

To make sure everything is understood from the beginning, E-Trade has a transparent way of explaining margin trading. Investors may use E-Trade’s Margin Analyzer Tool or Margin Calculator Tool for building different scenarios and calibrating the potential of their investments. E-Trade’s knowledge section covers margin trading in-depth.

Technical Details

Account TypeBenefits
Trading instruments
  • Stocks
  • Bonds
  • Mutual funds
  • Futures
  • Options
  • ETFs
Trading platforms
  • Power E-Trade
  • E-Trade web trading
  • Power E-Trade app
  • E-Trade mobile app
Minimum deposit
  • No
Inactivity fee
  • No
Commission-free ETFs
  • Yes
Commission-free stock trading
  • Yes
Commission-free mutual funds
  • 4400 mutual funds
Transfer fees
  • Full transfer = $75
  • Partial transfer = $25
Customer support
  • 24/7 chat
  • Email
  • Phone

Application Process

Visit the E-Trade’s homepage and click “Open an account.”

1_E-Trade's_homepage

Choose your account type and continue.

2_E-Trade's_account type

3_E-Trade's_Personal information

Next, provide your personal information such as your names, phone number and type.

4_E-Trade's_More about yourself

On the next page, include your date of birth, marital status, income, and more.

5_E-Trade's_Create investment profile

6_E-Trade's_Customize your account

Next, create your investment profile, and then read through properly before customizing your account with additional features.

7_E-Trade's_Submit application

Finally, read through the company’s agreement, disclosures, and terms and if you agree with all you’ve read, click “Submit application.”

3 Great Alternative Brokers to E-Trade's

Here are our 3 choices of brokers which can use as a great alternative to E-Trade’s: 

Interactive Brokers offers services for both retail and institutional investors. It stands out from the pack as a broker that is best for gaining access to the worldwide markets. Interactive 

IB offers a complete brokerage service. It not only caters to individual clients, but prop traders, family offices, hedge funds, money managers, and small businesses. This makes Interactive suitable for global traders. The company recently aggressive campaigning to encourage retailer traders, who can benefit from the experience, background, and resources the company gained through big business dealings.

While it may not be the cheapest broker around, the access to global financial markets, competitive pricing, and premium technology make Interactive an interesting proposition. So, if you’re in need of a professional, regulated, global broker, who brings together institutional clients and retail traders for mutual benefit. Interactive is a solid choice. 

Webull belongs to the new generation of brokerage houses ready to fight with the traditional houses for retail clients. It defies the unwritten laws that governed Wall Street investing for decades and slashed commissioning to zero.

Of course that the broker must have some other revenue stream, and it does. But its main tactic is volume. More precisely, by attracting as many small retail traders as possible and charging them smaller fees, the volume increases, and so it can compete successfully with big brokerage houses.

The coronavirus pandemic offers the perfect example for understanding brokers like Webull. When the government offered $600 weekly checks, people viewed the money as free-money and put it at work. A huge number of retail trading accounts were opened, but guess which brokers benefited from the new generation of traders? The traditional investment houses, with large minimum deposits, or brokers like Webull that accepts any deposit whatsoever? The retail phenomenon grew so large that it was often cited in financial media as the root cause that keeps the stock market advancing in times of a pandemic.

Many traditional investment houses that run large institutional businesses were taken by surprise by brokers like Webull, Acorns, or Robinhood. As competition intensified, they lowered their commissioning too, but not enough to compete with a company like Webull.

For instance, Webull charges no commission for trading options and no contract fees. In contrast, Merril Edge, one of its traditional competitors, charges $6.95 as options commission and $0.75 as contract fees. Speaking of contract fees, they are a common feature for the traditional industry, as names like Fidelity, Schwab, or TD Ameritrade still charge them, albeit after lowering the rates so to become more competitive.

Robo-advisory services increased in popularity in the last years. As digitalization takes over our lives, it conquered financial markets too.

Acorns services seem simple and intuitive. Compared with the traditional investing competitors, accessibility is the number one reason why investors choose to use Acorns instead of a traditional brokerage house. And yes, Acorns is a broker, as it intermediates the access to financial markets, albeit it does so for a ridiculously small fee due to extremely low operational costs. One cannot compare the costs of, say, Schwab, one of the largest brokerages in the United States, with Acorns. Hence, the difference in the costs is seen in the fees paid for accessing the market.

Besides accessibility given by the low entry costs, Acorns shines at the simplicity of its products. After all, there are only five portfolios to choose from, based on how much risk the investors are willing to take. By offering much more products to choose from (e.g. options trading, mutual funds), the traditional investment industry makes it difficult for individual investors to pick the right strategy for their portfolio.

Therefore, a robo-advisor like Acorns does not need to invest in trading education as it is its job to calibrate the portfolios and to allocate the investments accordingly – not the job of each individual client. This brings us to the biggest advantage of a robo-advisory firm in comparison with traditional investment services – there is no need to do anything, but send money in every day, week, or month. This is what attracts people scared of dealing with classic brokerage houses either due to lack of knowledge or to high costs.

E-Trade Is Best For…

E-trade suits best both active and passive investors. Active traders welcome the commission-free environment on most stocks trading, ETFs, and mutual funds, but also the low commissions on futures and options trading.

Passive investors like the various managed portfolios and their diversification, making the advisory arm of E-Trade one of its core strengths.

E-Trade also excels in retirement planning assistance and is ideal for beginner investors, especially in the stock market.