E*TRADE Rating: 
- Stocks & ETFs: $0
- Options: $0.65 per contract
- Mutual Funds: $19.99
Overview of E*Trade
With its recent acquisition by Morgan Stanley, E*Trade has made some important changes—some good and some not so good. Here’s the rundown on this popular brokerage firm:
E*Trade Pros
Great software: Multiple trading platforms with pro-level features.
Good pricing: Several asset classes available without commissions.
Wide variety of tax structures: Trading is available with deferral of taxes.
E*Trade Cons
Customer support: Since the acquisition by Morgan Stanley, some service avenues have been scaled back.
Narrow range of investments: Some asset classes remain unavailable.
Lack of investment advice: Full-service advisory accounts are no longer offered.
E*Trade Investment Lineups
E*Trade currently offers robo and self-directed accounts. The company’s full-service investment-advisory accounts have been eliminated, although this traditional channel is available through E*Trade’s parent company Morgan Stanley. The robo service trades a small list of bond and stock ETFs with low expense ratios.
Self-managed accounts have a much larger list of ETFs (everyone on the American exchanges) plus option contracts, stocks, fixed-income securities, futures, mutual funds, and closed-end funds. Some asset classes are missing on this list; the notable absences include cryptocurrencies and foreign stocks. It is possible to trade over-the-counter (OTC) stocks.
E*Trade has many tax structures for its investment accounts. There are several retirement accounts in addition to the usual lineup of individual and joint accounts. The investment firm also has Coverdell and custodial accounts.
E*Trade Commissions and Account Minimum
The cost of opening an investment account with E*Trade in either automated or self-managed mode is nil. A robo account does have a $500 deposit minimum plus a yearly management fee of 0.30%. Self-directed accounts have no minimums and no recurring fees of any kind.
While these numbers are quite impressive, the pricing schedule gets even better when it comes to equity commissions. These are $0 when placed online. If it’s an OTC stock, there’s a $6.95 surcharge. Placing a trade over the phone tacks on $25 to any trade.
Options and futures have per-contract fees. The latter is $1.50, while the former is $0.65 (active option traders pay just $0.50).
E*Trade has eliminated its transaction fee on mutual funds. Now, every mutual fund is free of any fees, at least from E*Trade. Recently, the brokerage house went a step further and removed its short-term redemption fee on mutual fund sales, so these can now be traded without concern about hold times (the funds themselves may have short-term trading fees).
Customer Service
Another change at E*Trade is the removal from the website of a human-chat widget, which we will miss because we had many good experiences with it. In its place is a robo-chat tool that does a decent, albeit not spectacular, job of answering questions and providing guidance. Occasionally, it is possible to bring on board a human agent by typing the word ‘human’ in the chat box.
Phone service is still available, and it is up and running 24/7, although certain times of the week have long hold times. During our testing of this channel, we have received the quickest service during weekday mornings before 8:00 am, Eastern Standard Time.
The website has many self-help features, and these can be used to meet a wide variety of needs. For example, there is a document upload tool that circumvents the need to mail in documents. Other tasks that can be completed in the customer-service section include wire requests, updating beneficiaries, linking accounts, subscribing to market data, and taking an IRA distribution.
A final change at E*Trade that is rather disappointing is the closure of all of its branch locations.
Computer Software
Managing an account, researching potential investments, and placing trades are all quite simple thanks to E*Trade’s very good website. It has security screeners that make finding stocks and funds very easy. Charts have many tools, and the order ticket has advanced order types, including trailing and stop limit on quote.
Trading, but not research, goes to an even higher level with Power. This is E*Trade’s browser platform that provides an advanced feel. The program occupies its own tab within the browsing window and delivers tons of great trading resources. Charts, for example, have 19 plot styles, some of which are customizable. The order ticket has integrated option spreads and easy-to-read P/L diagrams with breakeven and maximum gain and loss numbers.
The trading experience goes yet another step higher with Pro. This is E*Trade’s flagship desktop software. It really does live up to its name with all sorts of high-level features. During our test drive of the program, we really liked the quick-entry trade ticket. It has big red and green buttons that can be used to enter a trade on either the long or short side of an entered ticker symbol. The regular trade ticket has really advanced order types that can be used to establish conditional orders, such as one cancels all.
Pro has one small downside: a $1,000 account balance is required to use it.
Mobile App
Then there is the mobile app. Actually, there are two of them. One of them we will call the main app, and the other is explicitly the Power app. As its name suggests, this one is designed for powerful trading. It is the only app that can be used to trade futures contracts.
Power delivers Buzz Scores on popular stocks. A Buzz Score is a social-sentiment score that looks at various metrics like the social-media volume of a stock and unusual changes in it. News articles, Level II quotes, time & sales data, a futures ladder, simulated trading, and mobile check deposit are a few of the other tools that can be found on this app.
The main app delivers mutual-fund trading, which Power, in both mobile and computer formats, lacks. The main app also has a watchlist, Bloomberg TV, market news with red and green tiles for easy viewing, an economic calendar, and a security screener for stocks, ETFs, and mutual funds. Charting is possible in horizontal mode with several useful tools.
Margin
Besides cash trading, E*Trade offers margin trading, at least for self-directed accounts. It’s really easy to upgrade a cash account on the website, which has a margin calculator, too (Pro also has a margin calculator).
Margin rates are competitive but not great. They range from 14.2%
for debit balances below $10k to 12.2% for balances above $250k.
Find a Financial Advisor
If you are looking for a professional financial advisor in your area, you can
find top Financial Advisors on the Wiser Advisor website.
Visit Wiser Advisor
Cash Management
Borrowing money to buy securities is only the beginning of E*Trade’s cash service. Through Morgan Stanley Private Bank, there are many bank products that can be linked to a robo or self-managed account. These start with a simple checking account and grow to a savings account and a premium checking account called the Max-Rate account. FDIC insurance is available on these accounts, and the premium checking account comes with a lot of great perks, including unlimited ATM fee refunds, although there is a $15 monthly fee (avoidable with a monthly balance of $5,000). Both checking accounts come with free bill pay and a debit card.
A line of credit is another bank service that Morgan Stanley provides. With this account, it’s possible to borrow cash using securities in an investment account as collateral.
A deposit account opened with Morgan Stanley will be automatically linked to the E*Trade investment account. Transfers are quick and easy.
Additional Services
Individual Retirement Accounts: At E*Trade, investors will find a large assortment of IRA
types, including small business accounts and an IRA for minors. There are some annoying IRA fees.
Robinhood
with no fees and 1% contribution match, is the better option.
Extended Hours: On top of the regular day session, E*Trade customers get to trade in pre-market and after-hours periods. In total, this is 13 hours (7 am until 8 pm, EST). Futures contracts trade 24/6. E*Trade also offers overnight trading in a short list of exchange-traded funds.
IPO Access: Available on the website (look under the ‘Trading’ tab).
Stock-Lending Income Program: E*Trade clients with $200,000+ cash accounts can make money by lending out their stock shares
(look under the ‘What We Offer’ tab).
Fractional-share Trading: Not available.
Webull has it.
Dividend Reinvestment Plan: Available (look under the ‘Accounts’ tab to enroll an entire account).
Recurring Mutual Fund Purchases: Possible to set up on almost every mutual fund that E*Trade offers.
Recommendations
Long-Term Investors and Retirement Savers: With self-employed 401k plans, lifecycle mutual
funds, and a long list of IRAs, E*Trade seems like a decent choice. However, it doesn’t offer
annuities or financial-planning services, so a relationship with
Charles Schwab would be better.
Beginners: E*Trade’s automated-investing service would be a good start.
Mutual Funds: E*Trade is a very good brokerage firm for mutual funds. It has an effective
screener and pre-screened funds called All-Star funds.
Firstrade, however, offers 11,000+
mutual funds free of charge.
Active Stock and ETF Trading: Definitely E*Trade Pro and Power.
Small Accounts: Although $500 isn’t too much, other investment firms have smaller requirements
for their robo accounts.
Webull, for example, only requires $100. Self-directed traders will be in good hands at E*Trade with no minimums and no on-going fees.
E*Trade Review Summary
Although there are some obvious weaknesses and upsetting changes, E*Trade does a very good job overall, especially for active stock and options traders.
Open E*Trade Account
No commissions on stocks and ETFs.
Open Etrade Account
E*Trade Commissions
| Investments | Price |
|---|
| Stocks and ETFs | $0 |
| Stocks and ETFs broker assisted | add $25 |
| Options | $0.65 per contract (0-30 trades/quarter) or $0.50 (30+ trades/quarter) |
| Mutual funds | $0 |
| Futures contracts | $1.50 per contract, per side + fees |
| Fixed Income | markup or markdown and any transaction fee will be included in the price quoted |
| Bonds | $1 per bond (minimum $10, maximum $250) for online secondary market trades. Includes Agency bonds, Corporate bonds, Municipal bonds, Brokered CDs, Pass-thrus, CMOs, Asset Backed Securities. |
E*Trade Account Fees
| Fee | Amount |
|---|
| IRA Setup Fee | $0 |
| Annual IRA Fee | $0 |
| IRA Closing Fee | $50 |
| Full Account Transfer Out | $60 |
| Partial Account Transfer Out | $25 |
| Outgoing Wire Fees (Domestic) | $25 |
| Outgoing Wire Fees (International) | $25 |