Morgan Stanley's E*TRADE brokerage account offers a compelling suite of features for investors of all levels. Newcomers will appreciate the platform's intuitive design, a key factor in earning its top ranking for user-friendliness among beginner-friendly online brokers.
Seasoned investors, on the other hand, will find value in ETRADE's advanced tools, such as live Bloomberg TV streaming, in-depth market news, and sophisticated analytical resources. The Power ETRADE platform is particularly noteworthy, offering robust charting capabilities and impressive technical pattern recognition technology.
I will provide you with an honest ETRADE review to be a comprehensive guide for you.
Why choose E*TRADE
E*TRADE, a reputable US stockbroker regulated by both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), presents a compelling option for investors, particularly those starting their journey.
The platform stands out with its competitive fee structure, offering commission-free trades on stocks and ETFs. Furthermore, its highly-regarded mobile trading platform provides a seamless experience, complemented by a wealth of research tools, including trading idea generators and strategy builders.
However, it's important to note that E*TRADE's offerings are currently limited to US markets, excluding forex trading. Additionally, funding options are somewhat restricted, as the broker does not accept bank cards or electronic wallets for deposits or withdrawals.
Despite these limitations, BrokerChooser awards E*TRADE a strong rating of 4.5 out of 5. This assessment stems from a rigorous evaluation process, encompassing over 600 criteria and real-world testing through the opening of a live account.
Pros
- Low trading fees (free stock and ETF trading)
- User-friendly mobile trading platform
- Great research tools
- Pays interest on uninvested cash
Cons
- Only US markets, no forex
- Only bank transfer
E*TRADE Commissions and Fees
E*TRADE's fee structure generally aligns with industry averages for online brokers. The platform offers commission-free trading of stocks and exchange-traded funds (ETFs), a standard practice in today's market. While their options contract fee of $0.65 ($0.50 for active traders exceeding 30 quarterly trades) is reasonable, it's worth noting that more competitive rates exist.
Mutual fund investors will find E*TRADE's selection particularly attractive, with access to over 6,000 no-load, no-transaction fee funds.
The platform's margin rates, averaging 7.79%, are tiered based on account balance. While this range, spanning from 14.20% for balances under $10,000 to 12.20% for balances up to $500,000, might suit some, cost-sensitive margin traders may find better deals at Interactive Brokers or Zacks Trade.
It's important to acknowledge that E*TRADE engages in payment for order flow, a practice that could potentially disadvantage active day traders. However, the company emphasizes its dedication to providing optimal trade execution for all clients.
E*TRADE's fees for infrequent services are generally on par with competitors, such as a $25 charge for outgoing wire transfers. However, the $75 fee for full account transfers out sits above the industry average and warrants consideration.
E*TRADE Trading Platforms And Tools
The browser-based Power E*TRADE platform offers a seamless and intuitive experience, complemented by a robust suite of tools that cater to both novice and seasoned investors. Its familiar and comfortable layout feels like a welcome retreat for even the most seasoned trader.
Charting: E*TRADE demonstrates its commitment to continuous improvement with the platform's charting capabilities, which have seen notable enhancements this year. The addition of new chart types, indicators, colors, and drawing tools elevates the user experience.
With over a hundred indicators and dozens of drawing tools, Power E*TRADE provides a comprehensive charting toolkit comparable to other trading-focused platforms. While some competitors boast even larger arsenals, the available 37 drawing tools offer ample flexibility and customization.
For those seeking a more automated approach to chart analysis, Recognia's chart pattern recognition feature is a true standout. This powerful tool swiftly identifies and highlights noteworthy chart patterns, simplifying the process of spotting potential trading opportunities. Traders can then act on these insights directly within the platform, streamlining the workflow.
However, one peculiar feature, the ability to "invert" a chart, might raise an eyebrow. While intriguing, this function, which essentially flips the chart upside down, could lead to confusion if not used cautiously.
Options trading: Power ETRADE shines in the realm of options trading, offering a balanced blend of user-friendliness and advanced functionality that appeals to both casual and active traders. Beginners can jumpstart their options journey with StrategySeek, while experienced traders will appreciate the platform's robust tools for position management, including custom grouping, real-time streaming Greeks, and risk analysis.
While some platforms, like tastytrade, may offer more in-depth analytics, Power ETRADE strikes a balance between comprehensive data and actionable insights, avoiding information overload.
Futures trading: Futures traders are equally well-served by Power E*TRADE's intuitive design and comprehensive tools. The platform facilitates efficient trade management, allowing for simultaneous operation of multiple futures ladders, streamlined order entry through the Quick Trade widget, and effortless position monitoring.
E*TRADE Platform and Technology
Account Types
E*TRADE offers a comprehensive selection of account options to meet diverse financial needs. In addition to standard taxable brokerage accounts and tax-advantaged IRAs, they provide specialized accounts such as Coverdell ESAs and custodial accounts. For retirement planning, their offerings cater to both young adults with earned income through IRAs for minors and seasoned investors over 59 ½ with the feature-rich Complete IRA.
E*TRADE also caters to the needs of business owners by providing a variety of retirement plan options, including solo 401(k)s, SIMPLE IRAs, and SEP IRAs. Furthermore, their interest-bearing savings and checking cash management accounts are likely to become increasingly appealing during periods of rising interest rates.
Power E*TRADE Trading Platform
ETRADE's Power ETRADE platform is designed for both seasoned and developing investors, offering a user-friendly interface with advanced features. The platform seamlessly integrates a live Bloomberg TV feed, providing real-time market insights. For technically-minded traders, Power E*TRADE offers an impressive suite of over 145 charting tools, rivaling the industry's leading trading platforms. The platform also simplifies options trading by making strategies and risk probabilities readily accessible and understandable.
Furthermore, aspiring investors can benefit from the platform's paper trading feature, allowing them to refine their skills and strategies in a risk-free environment. Power E*TRADE also provides a comprehensive set of tools including watchlists, alerts, screeners, Level II quotes, and extended hours trading to support informed decision-making.
Power E*TRADE features include:
- Real-Time Market Data: Stay informed with streaming quotes, news, charts, and comprehensive market details.
- Advanced Charting: Leverage dynamic charting tools to visualize market trends and identify potential opportunities.
- Risk Management: Analyze potential profits and losses with built-in risk-reward analysis tools.
- Simplified Trading: Execute trades for stocks, ETFs, options (both simple and complex), and futures seamlessly through a single trade ticket.
- Technical Analysis: Utilize over 100 technical studies and preset scans to uncover potential trading opportunities.
- Intuitive Options Trading: Explore and execute simple and complex options trading strategies with ease.
- Clear Options Insights: Understand options strategies and risk metrics through jargon-free explanations.
- Automated Chart Analysis: Benefit from charts that automatically generate support and resistance lines, simplifying technical analysis.
- Opportunity Identification: Identify unusual market activity, price movements, and technical indicators quickly using preset scans.
Order Types
ETRADE caters to the needs of sophisticated traders by providing access to a comprehensive range of order types through their desktop and mobile platforms. This includes advanced options like conditional and durational orders, granting users greater control over their trading strategies. Additionally, ETRADE supports options trading orders from Level 1 to Level 4, accommodating various levels of complexity and risk management preferences.
E*TRADE order types include:
- Short
- Day
- Stop limit
- One cancels the other (OCO)
- Limit on open/close
- Market on open/close
- Trailing stop
- Good til cancelled (GTC)
E*TRADE Managed Portfolios
E*TRADE provides a range of managed portfolio services, akin to robo-advisor and financial advisory products, to suit hands-off investors. They offer four tiers of managed portfolio types, each tailored to different investor needs and featuring escalating minimum balance requirements.
For investors seeking a low-cost entry point, E*TRADE Core Portfolios requires a minimum balance of $500 and charges a competitive annual fee of 0.30% of assets under management. While slightly higher than platforms like Betterment and Wealthfront, Core Portfolios offers a distinct advantage: access to live financial consultants for personalized guidance. Users complete a short questionnaire to determine their financial goals and risk tolerance, which then informs the platform's creation of a customized ETF portfolio.
For those seeking more personalized support and have larger portfolios, ETRADE Blend Portfolios and ETRADE Dedicated Portfolios provide similar tailored ETF portfolios with higher minimum balance requirements. These tiers offer increased access to dedicated financial advisors in exchange for higher annual fees.
Customer Service and Satisfaction
E*TRADE offers a variety of customer support channels, including phone, chat, email, and in-person branch assistance. Phone support is available 24/7, and during testing, representatives consistently provided accurate and thorough information.
A significant advantage for E*TRADE customers is the availability of financial consultants. Most consultants are highly qualified investment professionals, holding the required Series 7 and Series 63 licenses, with some possessing additional certifications. This presents a valuable resource for investors seeking personalized financial guidance.
For those who prefer in-person interactions, E*TRADE operates 29 branch offices, primarily located in major metropolitan areas across the country. Branches are open during standard business hours, with evening and Saturday appointments available for scheduling flexibility.
However, it's worth noting that E*TRADE's customer satisfaction ratings are mixed. Trustpilot reports a 1.3 out of 5.0 rating based on 241 reviews, suggesting potential areas for improvement in their customer service experience.
How This Broker Makes Money From You and For You
The brokerage industry's shift towards lower fees has led to less transparent revenue models. While fees and commissions still contribute to revenue, other sources play a significant role. Here's a closer look at how E*TRADE generates revenue:
- Payment for Order Flow (PFOF): Like many brokers, ETRADE engages in PFOF, receiving compensation from market makers for directing trade orders to their platforms. While ETRADE's PFOF rates are relatively modest at $0.0014 per share for equities and $0.39 for options, some competitors have chosen to forgo this practice entirely for equities.
- Stock Loan Programs: ETRADE participates in stock loan programs, lending shares from long-term investors to traders and hedge funds engaged in short selling. While investors cannot select specific stocks for lending, ETRADE shares a portion of the revenue generated from these activities with participating shareholders.
- Margin Interest: ETRADE offers margin trading, allowing investors to borrow funds for trading activities. The interest charged on these borrowed funds serves as a source of revenue for ETRADE. As of March 28, 2024, margin interest rates range from 14.20% for balances under $10,000 to 12.20% for balances of $250,000 and above.
E*TRADE Brokerage Account: Bottom Line
E*TRADE has maintained its position as a leading online brokerage for decades, continuously evolving to enhance its offerings and user experience. Their commitment to improvement is evident in their redesigned mobile apps, which prioritize a cleaner, more intuitive interface without sacrificing essential trading tools, analytical resources, and research capabilities.
While no platform is flawless, E*TRADE's minor drawbacks include minimal interest earned on uninvested cash and the lack of direct forex or cryptocurrency trading options. Investors seeking these specific offerings would need to explore alternative platforms.
However, these limitations do little to detract from E*TRADE's overall excellence. It remains a powerful and comprehensive platform catering to a wide range of investors, consistently delivering a high-quality investing experience.
Who Owns E*TRADE?
E*TRADE was acquired by Morgan Stanley in 2020 for $13 billion. However, it continues to operate under its well-established brand as a subsidiary of Morgan Stanley.
What Is E*TRADE?
ETRADE is a pioneering online brokerage firm, offering a comprehensive trading experience through its desktop, web, and mobile platforms. Users can trade a wide range of assets, including stocks, ETFs, mutual funds, and options.
Beyond trading capabilities, ETRADE provides access to market news, research reports, and a variety of trading tools to support informed investment decisions. As one of the earliest online trading platforms, E*TRADE has a long history of innovation in the industry.