E*TRADE review: Affordable and powerful platform for active trading
E*TRADE is an online trading platform with no account minimums and low investment fees. It offers a variety of commission-free funds as well as advanced trades including futures and options. It can be ideal for both beginner and intermediate investors, passive and active investing.
- Frequent traders
- No minimums
- Managed portfolios
E*TRADE is a popular investment platform that caters to both beginner investors and advanced traders. With low fees and more investment choices than many other online brokers, it’s easy to see why many investors choose E*TRADE. For those who want to invest passively, E*TRADE also has a highly-rated and reasonably-priced robo-advisor called Core Portfolios.
In this review, we’ll dive into what types of accounts and investments you can choose with this platform, the fees you can expect, how E*TRADE compares to other online brokerages, and more.
What is E*TRADE?
E*TRADE was founded in 1982 as a platform for retail investors to trade stocks. It was the first online brokerage and today includes a robust web platform and mobile app.
In 2020, E*TRADE was acquired by Morgan Stanley. Much of Morgan Stanley Wealth Management’s automated investing features were absorbed and integrated into E*TRADE’s existing robo-advisory platform. Today, the company is called E*TRADE from Morgan Stanley. As of 2022, the company controls over $3.3 trillion in assets and provides everything from wealth management to self-directed trading tools.
Pros & Cons
- Low fees — $0 commission fees on a variety of stocks, ETFs, and mutual funds and minimal fees on everything else.
- Low minimums — You don't need to meet a high deposit or balance requirement to use this platform.
- Fee-free funds — 100+ commission-free ETFs and 4,400+ no-transaction-fee mutual funds.
- Hybrid investment options — Excellent platform to mix both self-directed investing with managed options.
- High management fees — Annual advisory fees for managed portfolios range from between 0.30% and 0.90% depending on the type of portfolio you have and your balance. These are higher than many similar brokerages.
- No fractional shares — Unlike many competing trading platforms, E*TRADE does not allow you to buy pieces of shares.
E*TRADE account types
E*TRADE isn’t just an online broker. It also features retirement accounts and banking services. Here’s a summary of the account types you can choose from.
Choose from a variety of commission-free assets including a mix of beginner-level and more advanced strategies.
Asset types include:
- Mutual funds
- Exchange-traded funds (ETFs)
E*TRADE offers over 100 commission-free ETFs and access to every other ETF available for purchase with low trading fees. They also have a total of more than 8,000 mutual funds with 4,400+ of them being no-load, no-transaction-fee mutual funds. You can schedule automatic investments of $25 or more to continually grow your portfolio.
Futures trading and options contracts are somewhat unique for this type of platform. Many online brokers do not allow you to trade futures and there are some that don’t permit options trades either. But in terms of what’s not available, E*TRADE does not offer FOREX (foreign exchange) trading, which is common for online brokerages, or fractional shares for purchase, which is uncommon for online brokerages.
Market research is available for all types of assets to help you get trading ideas and identify investment opportunities you might not have considered.
E*TRADE offers six different types of IRAs:
- Traditional IRA
- Rollover IRA
- Roth IRA
- E*TRADE Complete IRA
- Beneficiary IRA
- IRA for Minors
Whether you’re looking for your first IRA or to convert an existing retirement account, you have options.
Through Morgan Stanley Private Bank, E*TRADE users can open the following bank accounts:
Checking — A basic checking account with no fees or minimums.
Max-Rate Checking — An interest-bearing checking account currently earning an APY of 0.05% on all balances, with no minimum opening deposit. Charges a $15 (waivable) monthly fee if you don’t maintain a minimum balance of at least $5,000.
Premium Savings Account — A high-yield savings account currently earning up to 3.25% APY. No minimum deposit is required.
Line of Credit — A revolving line of credit with no maintenance fees that allows you to borrow against your investments. Requires a brokerage balance of at least $50,000 and has an APR of between 4.923% and 7.965%, depending on your credit line.
Read more: Personal loan vs. line of credit: Which is right for you?
Features and benefits
In addition to a wide variety of account types and investments, the E*TRADE platform itself sets this online broker further apart from others.
There are two different E*TRADE platforms: Power E*TRADE and the original E*TRADE platform. Each platform has an accompanying mobile app.
E*TRADE is a basic web platform that’s easy to use and better for new investors. The Power E*TRADE platform is better for more advanced traders and experienced investors (especially futures traders and active options traders). It includes more in-depth research offerings and market commentary, extensive charting resources, interactive charts, and tools to calculate your risk.
Here are some of the tools included in the Power E*TRADE platform:
Technical Pattern Recognition: Shows lines of support and resistance so you can understand how a stock has historically performed.
Earnings Move Analyzer: Predicts stock movement.
Risk/Reward Probabilities: Forecasts the most money you stand to lose or gain from executing an options contract.
Custom & Preset Scans: Lets you screen for stocks your way.
Exit Plan: Allows you to set profit targets and stop losses when placing an order to protect yourself.
Paper Trading: Gives you the opportunity to practice trading without investing your own money.
No minimum initial investment
There is no minimum investment required to open an E*TRADE brokerage account. You can even open an account and start looking around without funding it, but you won’t be able to start trading until your first deposit has cleared. You can transfer money by wire, ACH transfer, or check.
E*TRADE mobile apps
The E*TRADE mobile app offers all the functionality of the web-based trading platform with a simpler interface that’s better for trading on the go. The more advanced Power E*TRADE platform is also accessible either online or in an app with the same trading capabilities. Both platforms are available on Google Play and the App Store.
E*TRADE’s customer support is available 24/7 via live chat and available by phone at 1 (800) 387-2331. E*TRADE also has more than 30 local branches in various cities around the country.
E*TRADE brokerage accounts are protected by the Securities Investors Protection Corporation (SIPC) for up to $500,000 in cash and securities, including up to $250,000 in cash. Bank account deposits are FDIC-insured up to $250,000 per account, per depositor.
E*TRADE also offers $0 liability against unauthorized use of your account, as well as complete payment protection, smart alerts by text or email, and an optional digital security ID.
If you’re interested in hands-off investing rather than active trading, a curated portfolio might be a better fit for you. E*TRADE gives you a few options for portfolio management including a robo-advisor and fully-managed portfolios through E*TRADE Capital Management.
Core Portfolios is E*TRADE’s robo-advisor, an automated investment management tool. To start, you answer questions about your investing style and comfort level with risk (A.K.A. risk tolerance), then the robo-advisor recommends a diversified portfolio for you out of a mix of U.S. international stocks, ETFs, and bonds.
You can also customize your recommended portfolio with additional investment strategies. Options include:
- Socially Responsible – Includes ETFs that focus on companies with favorable environmental, social, and governance practices.
- Smart Beta – Designed to outperform the market by favoring equities that present lower risk and greater potential for returns.
You can also choose a tax-sensitive ETF portfolio to lower your tax burden and save money. All taxable portfolios also offer tax loss harvesting.
One of the major advantages of Core Portfolios is that while you are given a recommended portfolio allocation, you have the option to make changes. For example, if the recommendation calls for 90% stocks, you can choose the lower it to 75% if that works better for you. This level of control is ideal for investors who want more say in how they invest but a hands-off approach after getting their portfolio set up.
This robo-advisor requires a minimum investment of $500 and comes with an advisory fee of 0.30% per year.
E*TRADE offers two managed portfolio options for account balances of at least $25,000.
You’ll work directly with a financial consultant to create a customized portfolio based on your investment goals, tax situation and strategy preferences. It contains either ETFs or mutual funds, or both. After it’s built, this portfolio is completely managed for you but you can access it at any time or ask questions.
The annual advisory fee starts at 0.90% for portfolios up to $100,000, stair-stepping down to 0.65% on accounts of $1 million or more. There are no transaction fees or commissions.
Fixed income portfolios
You’ll work with a financial consultant to create a personalized bond portfolio. Portfolios can be designed for both taxable and tax-free accounts and laddered to reduce your risk and automatically reinvest the returns. Each portfolio is made up of either investment-grade corporate bonds or municipal and U.S. government bonds.
You’ll need a minimum of $250,000 to open an account and fees for Laddered Portfolios range from 0.35% to 0.45%. You’ll pay 0.45% per year on the first $1 million, 0.40% on the next $2 million, and 0.35% on anything over $3 million.
Fees and pricing
E*TRADE’s fee structure is as follows:
Stocks: $0 per trade, plus $0.65 per option contract.
ETFs: $0 per trade.
Options: $0.65 per contract.
Bonds: $0 for U.S. Treasury purchases and trades, $1 per bond for online secondary trades with a $10 minimum and a $250 maximum. Additional $20 commission for broker-assisted trades.
Mutual funds: $0 for no-load, no-transaction-fee funds (with $49.99 early redemption fee) and $19.99 per trade for transaction-fee funds.
Futures: $1.50 per contract, per side + fees. Crypto futures are $2.50 per contract, per side + fees.
Margin rates: Between 10.70% and 12.70%, depending on your balance.
Retirement accounts: $0 monthly/annual fees ($25 charge for early withdrawals on IRAs made before age 59 ½)
See detailed information about E*TRADE’s fees on their website.
Who is E*TRADE best for?
E*TRADE is an excellent choice for many types of investors and trading strategies. Here are some people and investments that E*TRADE is best for.
E*TRADE works especially well for hands-on investors. Helpful market commentary and research tools mean you’ll have everything you need to make informed decisions and execute trades quickly, and the powerful platforms are day trading-friendly.
Power E*TRADE is one of the most comprehensive trading platforms out there and its clean interface is perfect for trading frequently without frustration. Whether you just trade stocks or take advantage of more advanced features, you’ll be able to do it easily with E*TRADE.
Most investors will not have any trouble learning to use E*TRADE brokerage accounts and other offerings. Plus, the brokerage features so much research and educational material that anyone can learn about trading strategies and get investing tips without even leaving the app.
And with tools like paper trading, investors can practice with lower stakes if they’re not yet ready for “the real thing.”
Read more: 7 easy ways to start investing with little money
Fund and ETF traders
With more than 100 commission-free ETFs and 4,400 no-fee mutual funds, investing in funds through E*TRADE is affordable and convenient.
The Power E*TRADE platform is particularly great for options trading. In fact, it’s generally regarded as one of the top options platforms in the industry. Though you can make options trades at a lower cost or even free with another broker, E*TRADE’s tools and research — especially the Power E*TRADE platform — are worth paying for if you want to take more calculated risks.
Who is E*TRADE not ideal for?
E*TRADE is a good fit for a lot of people, but it’s not the best choice for everyone. Here are some groups that should probably keep looking around before choosing this broker.
People looking for investment management
Although this platform does offer managed portfolios, E*TRADES management fees are higher than what other online brokers charge for similar services. The robo-advisor is also a little pricier than others at 0.30% (many platforms charge 0.25% or less) and requires a minimum deposit of $500 while many require none.
If you just want to buy and hold some investments, you’ll miss out on a lot of the best features of E*TRADE. This trading platform isn’t a bad option for long-term investors looking for a more hands-off approach by any means, but it’s definitely better for active traders.
Fractional share investors
E*TRADE does not offer fractional shares of stocks. If the ability to diversify your portfolio with more shares using less capital is important to you, E*TRADE probably won’t be a good primary account for you. But don’t worry, many other trading platforms allow fractional investing.
Read more: Best ways to invest $1,000 right now
E*TRADE vs. competitors
If you like some aspects of E*TRADE but you’re not convinced it’s the right brokerage for you, check out these similar companies.
Wealthfront is a robo-advisor that uses a highly goal-oriented approach to create a custom portfolio of ETFs, stocks, and crypto for you. It asks you a series of big-picture questions about your goals and financial priorities to set you up with a portfolio. Overall, creating a portfolio feels a little more collaborative but just as easy.
If you like the robo-advisor aspect of E*TRADE, Wealthfront could be a good alternative. It has very slightly lower fees than E*TRADE at an annual advisory fee of 0.25% compared to 0.30% and the same investment minimum of $500. But compared to E*TRADE, it offers more customizability and control over your investment choices. It also helps you understand why your portfolio contains the investments it does so you don’t feel like you’re completely in the dark.
Webull is a trading platform that lets investors trade stocks, ETFs, options, crypto, and more for free. This includes fractional shares. Like E*TRADE, Webull is best for active trading and offers a variety of charting and tracking tools.
In general, Webull is better for investors with more experience. You’ll get the most out of it if you’re already comfortable trading, and it’s especially great for trading options (which is free for Webull but $0.65 a contract for E*TRADE). But for educational resources and support at a beginner level, E*TRADE wins out. Webull can be complicated to use and may be overwhelming if you don’t know where to start.
E*TRADE has something for everyone. Whether you’re just starting out or have been investing for a while, looking for something hands-off or hands-on, E*TRADE can offer tools and resources to help you achieve that.
Although its fees for some things can be higher than comparable brokerages, you’re paying for variety and depth with E*TRADE that you just can’t get very many places.