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ETrade Review

E*Trade Review

Description

Wondering whether E*Trade lives up to the promise of their ads? Our review will help you make an informed decision on the online discount brokerage.

E*Trade Review

Introduction

Founded in 1982, E*Trade is one of the best-known online brokerages – even outside of financial circles.

This is largely due to their marketing and advertorial campaigns. In fact, if you watch TV at all, the chances are pretty high that you've seen at least one of their ads. And if you watched the 2018 Superbowl, you've definitely seen their ‘This is Getting Old‘ ad.

E*Trade definitely has a penchant for humorous ads that target just about anybody with a job.

But the real question is – does their brand-recognition really make E*Trade one of the best online investment platforms on the market?

The truth of the matter: E*Trade's $6.95 stock trade commissions aren't the cheapest among discount brokerage firms. Fidelity and Charles Schwab, for example, only charge $4.95.

However, E*Trade most certainly does offer value for money.

If you're a novice, low-frequency trader, you'll certainly appreciate the wealth of information available. Not only does E*Trade have an Investing Basics set of research resources, but a very comprehensive Investment Knowledge Library. You'll also have live access to financial experts.

More experienced traders shouldn't feel left out, though. While the $6.95 trade commission might send you to one of E*Trade's competitors, it doesn't have to, especially as a high-frequency trader. The firm offers a volume discount, dropping their commission to the more standard $4.95 if you trade 30 or more times per quarter.

So if you've seen their ‘Bow Wow Wow‘ ad and wondered whether E*Trade really can give you a better life through investments, you've come to the right place.

Our E*Trade review will help you make an informed decision as to whether or not the online brokerage firm is right for you.

Quick Facts

  • Trade commission: $6.95 (up to 29 trades per quarter) or $4.95 volume discount (30+ trades per quarter)
  • Account minimum: $500, or $0 for an IRA
  • Promotion: Get up to 500 commission-free trades plus up to $600 cash credit with an opening deposit of $10,000 (see how it works)

E*Trade is Best For

E*Trade is best for the following types of investors and features:

  • Investors looking for stable, long-term investment opportunities and accounts
  • First-time and novice investors
  • Experienced, high-frequency traders
  • Extensive research and information libraries
  • Commission-free ETFs
  • Assistance with retirement planning

Pros

Their ads aren't the only thing to love about E*Trade. Here's a breakdown of the areas wherein the online brokerage really shines.

+Trading Platforms

E*Trade offers three different trading platforms, all of which are free to use and available to all clients with no additional account or trading activity minimums.

E*Trade Web is their most standard platform. Here you'll find real-time quotes (at no extra cost), live market commentary and market data streaming, research stock screeners by professional analysts, and more.

Using the E*Trade Web platform dashboard, customers are able to create watch lists, monitor their accounts, access market data with real-time updates, and make trades. You'll also be able to use complex options strategies. E*Trade Web uses interactive charts to display data, and you can even receive expert tax advice through the platform.

More active traders will better appreciate Power E*Trade. Power E*Trade is the result of the firm having acquired OptionsHouse (or, more accurately, their parent company Aperture New Holdings Inc.) in 2016 for $175 million.

In addition to the tools already available with E*Trade Web, the Power E*Trade platform boasts more than 100 technical studies, streamlined trading tickets, trading ladders, over 30 drawing tools, and customizable options chain views.

E*Trade Pro, the third available platform, is more closely related to E*Trade Web, but – similar to Power E*Trade – is designed with truly active traders in mind. In fact, as soon as you surpass the 30 trades-per-quarter mark and qualify for that volume discount, you'll be automatically upgraded from E*Trade Web to E*Trade Pro.

However, as it's a downloadable desktop platform (which can also be accessed online), low-frequency traders can also opt to use it.

There isn't much difference between E*Trade Pro and Power E*Trade, to be honest. Most notably, E*Trade Pro gives customers back-testing capabilities and access to idea-generating tools, such as Strategy Scanner.

Some users report that E*Trade Pro is more complex, but there are some great tutorials available online. You can also go through the demos and other educational material available in E*Trade's online Investment Knowledge Library to learn more about all three platforms.

+Mobile Apps

If you've seen any of E*Trade's ads, you've probably noticed that most of them feature someone using E*Trade from their phone.

What the company is showing off here are the E*Trade Mobile and Power E*Trade apps, which are both available to download for iOS and Android.

The first of these is also available for Apple Watches and is essentially a mobile version of the E*Trade Web platform. You'll be able to access the same type of data and tools while on-the-go, as well as stream investing news channels like Bloomberg TV.

Power E*Trade is, of course, a condensed, mobile version of the platform by the same name. As with the E*Trade Mobile App, you'll be able to access most of the same tools and resources as with the web version, including the news. You'll also be able to use the futures ladder feature to enter futures orders directly.

+Breadth of Available Services

E*Trade functions as an all-services platform, offering a wide breadth of investment choices.

Not only can you trade in stocks and more than 250 commission-free exchange-traded funds (ETFs), but you'll have a selection of advanced options strategies, futures, over 4,400 no-transaction-fee mutual funds, and bonds and certificates of deposit (CDs) to choose from.

The company's analysts also offer their regularly updated All-Star Funds Report, a list of around 150 highlighted mutual funds. Here, you'll find their top recommendations for no-load mutual funds and ETFs.

As E*Trade says, portfolio diversification “shouldn't be like ordering off the kids' menu.” Thanks to their wide selection of investment choices, the platform makes it more like ordering off the menu at Hungarian restaurant Mofaguru, which holds the Guinness World Record for the Largest Menu.

+Beginner-Friendly Educational Resources

With their easily navigable website and trading platforms, E*Trade is a fantastic starting point for first-time investors.

But where the firm really pulls through for beginners is in their wealth of easy-to-access information. They host regular webinars that anyone (even non-customers) can sit in on and learn about financial and investment essentials. You can also access and replay previous webinars at any time.

These webinars (or “online events” as E*Trade calls them) cover topics such as Getting Started with Options, Maximizing Retirement Savings, and Technical Analysis: Support and Resistance. All of them are hosted by Senior Strategists employed by E*Trade.

E*Trade also offers comprehensive investing courses through Morningstar, an independent investment research company. There are over 170 different courses, each of which take roughly 10 minutes to complete. These are spread through four curricula: Stocks, Funds, Bonds, and Portfolio.

+Personalized Investment Opportunities

Thematic Investing, one of the Investing Knowledge Library's sections on E*Trade's website, helps traders to discover investment opportunities that best align with their personal values and interests. Conscientious investors can search among the following broad themes (more may be included in future):

Cons

There isn't much to fault E*Trade on. However, there are three areas where we feel the company falls a little short in comparison to some of their biggest competitors.

-High Trade Commissions

As mentioned in our introduction, E*Trade charges a higher trade commission than other online discount brokerages. At $6.95 a trade, the company makes trading a little more expensive than what Ally Invest, Charles Schwab, and Fidelity (for example) cost at only $4.95 per trade.

However, do remember that once you reach 30+ trades per quarter, E*Trade does drop their commission to match these competitors.

But there are also other fees to consider. The Max Rate Checking Account – one of E*Trade's online banking offerings, which also pays interest – comes with a $15 monthly fee. However, E*Trade sweetens the deal by waiving this fee if you:

  • Perform a minimum of 30 trades each quarter;
  • Make at least one direct deposit of $200 or more each month; and/or
  • Have a combined total balance of $50,000 or more across all your E*Trade accounts

You'll also get unlimited ATM fee refunds for drawing money out of your Max Rate Checking Account.

Options contracts incur a cost of $0.75 per trade over and above the $6.95 trading fee. Again, E*Trade does offer a volume discount. Once you qualify for the $4.95 trade fee, the options contract fee drops to $0.50 each.

Future contracts, on the other hand, cost $1.50 each – regardless of frequency. Online secondary bonds trades also remain $1 each.

You can take a look at a more detailed breakdown of E*Trade's total pricing structure here.

-Account Minimums

For beginners with fewer funds to get started, E*Trade's minimum opening account of $500 may be a bit of a stumbling block.

This isn't really a big point of contention for us. However, considering there are a number of online discount brokerages who are in direct competition with E*Trade and have no account minimums at all, it's still something worth bearing in mind.

-Website Usability

Considering E*Trade's website and platforms are generally very easy to use, it's a little surprising that this would be a point of contention at all.

However, it's perhaps precisely because the site is otherwise incredibly intuitive that the difficulty arises in the first place. Some user-testers report having difficulty trying to find certain areas of information on the website.

For example, these users report finding it less than ideally easy to discover what the account minimums are for trading. It only took us about 30 seconds to find it in the FAQ section, but that was only after we realized the information wasn't displayed under account information in the “Account Types” tab. Ideally, that's where we'd like to see what minimums are required to fund an account.

Another example: the user-testers found it frustratingly difficult to find information on how to close an E*Trade account. In following up, we tried it ourselves. Thinking to learn from our experience hunting for the account minimums, we went straight for the FAQs once more.

After about half an hour following every conceivable (and even a few highly improbable) links on the site, we gave up the search. We had to head to Google to find the page on E*Trade's site explaining how to close an account.

Is E*Trade Right For You?

E*Trade can be a relatively expensive venture for first-time investors, and especially low-frequency traders. But as the saying goes, “you get what you pay for” – and with E*Trade, you get quite a lot.

The brokerage is therefore rather attractive for all kinds of investors, especially high-frequency traders. Their biggest drawbacks are largely compensated for, and the vast amount of research resources and tools they make available even to non-customers certainly makes them worth the cost.

This is especially true when you consider the fact that E*Trade borders on crossing the line from being a mere brokerage to a full-service financial institution.

But of course, no one except you can decide whether or not E*Trade or any other brokerage is the right company. You need to weigh the pros and cons for yourself in light of your personal financial situation and goals.

Still, we do give E*Trade two thumbs-up.

Conclusion

While we strongly support the line of thought that starting to invest sooner rather than later is your best option, we also want readers to make informed, rational decisions.

In considering everything we've laid out for you in our E*Trade review, we recommend spending some time going through their Investing Basics and Investment Knowledge Library. Search through their history of webinars too, as these will give you an even better idea of the investing experience you can expect to have as an E*Trade customer.

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