2022: E*Trade TOS versus Interactive Brokers IBKR brokerage firm comparison: fees, commissions, benefits, differences, pros and cons. Which broker to choose?

E*Trade vs. Interactive Brokers Introduction

E*Trade and Interactive Brokers have been advertising heavily lately, so if you’ve been watching TV, you probably have heard of these two brokerage firms. With our comparison, you’ll be able to choose the right one for your investment needs.

Comparison Table

Etrade Review Interactive Brokers Review
Rating Etrade brokerage firm rating Interactive Brokers rating
Stocks $0 $0
Options (per contract) $0.65 $0.65
Mutual Funds $19.99 $14.95
Initial Funding Requirement $500 $0
Inactivity Fee $0 $0
IRA Annual Fee $0 $30
Full Account Transfer $75 $0
Partial Account Transfer $25 $0
Account Closing Fee $0 $0
Trading Experience & Technology brokerage ratings brokerage ratings
Mobile brokerage ratings brokerage ratings
Research Amenities brokerage ratings brokerage ratings
Portfolio & Analysis Reports brokerage ratings brokerage ratings
Customer Service and Education brokerage ratings brokerage ratings
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Available Assets and Accounts

E*Trade customers get to buy and sell bonds, stocks, futures, options, and funds (including mutual, exchange-traded, and closed-end funds) that are listed on U.S. exchanges. The over-the-counter marketplace is available, too.

Interactive Brokers offers everything E*Trade does and then adds forex, warrants, contracts for difference, structured products, cryptocurrencies, and precious metals. Oh, and did we mention foreign exchanges? Oh, yes, those are available, too, which brings on board thousands of other assets from around the world.

The available assets at both brokerage houses can be traded in a wide variety of account types. Besides individual and joint accounts, E*Trade has education accounts, custodial accounts, self-employed 401k plans, and small business accounts. Interactive Brokers has a lot of the same account types (minus the 401k) but adds trusts and a very long list of institutional accounts.

Although E*Trade doesn’t quite have the same investment lineup that Interactive Brokers has, it does have something that its rival doesn’t: investment advice. E*Trade has both robo and human advisors in a variety of packages. The automated service costs 0.30% per year.

Interactive Brokers wins this category for self-directed trading, while E*Trade wins for investment management.


Websites

E*Trade’s website is nicely designed, although it’s somewhat different since it was taken over by Morgan Stanley. 3-D buttons have been replaced by purple 2-D buttons, although parts of the old design remain in some places.


Etrade vs Interactive Brokers


With either design, the website is easy to navigate and has lots of tools. The top menu is a good place to begin. The dashboard is called “Complete View” and will be found under the Accounts tab. Here, there is a launch pad that has two really useful tools. One is Bloomberg TV, and the other is Power E*Trade, the broker’s browser platform.

Although the website itself has its own trading tools, Power has better charting and a more advanced trade ticket. Examples of order types include hidden and trailing stop limit ($). There’s also a Quick Trade ticket.

Interactive Brokers’ website doesn’t have a browser-based platform, although the site itself has some pretty good trading tools. The site’s charting software is borrowed from TradingView, which means there are some really useful gadgets, like drawing tools and technical studies (charts on E*Trade’s website and browser platform have similar tools).


Interactive Brokers or Etrade


IB’s order ticket is easy to use. Convenient trade buttons appear on an asset’s profile. Any one of them will produce the same trade ticket. It integrates bracket orders (take profit and stop loss), which are really useful for exiting a trade.

We give the victory in this category to E*Trade, primarily because it offers both website and platform trading.


Desktop Software

Although Interactive Brokers failed to deliver a browser platform, it doesn’t fail here. It has a very good desktop program in Trader Workstation. There are many high-level tools on the platform. These include integrated option spreads, full-screen charting, and an order ticket with many selections. Trader Workstation does not have any fees or trading minimums, and even guests can download the software and try it out.


Interactive Brokers vs Etrade


E*Trade customers must have at least $1,000 in account equity to download and use E*Trade Pro. This is the broker’s excellent desktop software. It does live up to its name with many professional-level features. Like Trader Workstation, it has some really advanced tools, including full-screen charting, sophisticated options tools, and live streaming of Bloomberg TV.


Etrade vs IBKR


One thing Pro doesn’t have is a simulated-trading mode. Trader Workstation has it, and as already mentioned, an Interactive Brokers account is not required to use it. For this reason, we give the victory in this category to Interactive Brokers.


Margin

Interactive Brokers has two margin schedules: one for IBKR Pro clients and another for IBKR Lite customers. On the high end, the rate is 4.83%, and on the low end, it is 3.83%. These numbers are for accounts denominated in U.S. currency. Because Interactive Brokers is a global-focused company, it offers accounts denominated in other currencies, and these accounts will have different rates.

E*Trade offers only accounts denominated in U.S. dollars. The broker’s margin schedule ranges from 10.45% to 8.45%.

Both brokerage firms also deliver margin details on specific assets on their websites and desktop platforms. An existing cash account can be upgraded to margin status on either broker’s website.

Portfolio margin is available at both E*Trade and Interactive Brokers. The latter firm requires $110,000 in net liquidation value, while the former requires $100,000.

Interactive Brokers wins this category primarily due to its very low rates.


Day Trading and Swing Trading

Routing Fees and Rebates: Available only inside an Interactive Brokers account.

Shorting: Both broker-dealers in this faceoff permit short positions. E*Trade Pro has discrete sell short and buy to cover buttons. Interactive Brokers’ software has only sell and buy buttons.


IBKR vs Etrade


Leverage: Both E*Trade and Interactive Brokers have a 25% initial margin requirement for day traders on long positions.

Extended Hours: E*Trade and Interactive Brokers both have pre-market and after-hours trading. Only E*Trade has overnight trading in a selection of ETFs.

Level II Quotes: There is a MarketDepth tool on E*Trade Pro that has Level II quotes. There is no charge for the data. Interactive Brokers has the same quotes but charges for them.

Direct-access Routing: We counted over 20 destinations on Trader Workstation for U.S. exchanges. Numbers vary for foreign exchanges. E*Trade Pro has 6 routing options.

Overall, it looks pretty even here.


Other Services

Fractional-Share Trading: Interactive Brokers has it for stocks and ETFs. E*Trade does not.

DRIP Service: Stocks and ETFs can be enrolled for auto dividend reinvesting at E*Trade. Interactive Brokers offers the service for stocks only.

Banking Tools: E*Trade operates an FDIC-insured bank with checking and savings accounts, some of which have neither fees nor minimums. Checking accounts have debit cards. Interactive Brokers only has a debit card that attaches to an existing brokerage account.

Individual Retirement Accounts: IRAs can be opened at both firms in this competition. E*Trade has more IRA types, although it does have a few $25 IRA fees that Interactive Brokers doesn’t have.

Initial Public Offerings: E*Trade has an IPO center on its website (look under the Trading tab in the top menu). Interactive Brokers customers located in the United States have no IPO service.

Recurring Purchases of Mutual Funds: E*Trade investors can set up autopilot purchases of mutual funds. Interactive Brokers offers no such service.

E*Trade is the overall winner in the last category.


Now, Our Recommendations

Mutual Fund Trading: E*Trade has much better mutual fund resources, including a very good fund screener.

Beginners: A robo account with E*Trade. Easy choice.

Stock & ETF Trading: Interactive Brokers, primarily for its fractional-share service.

Small Accounts: E*Trade’s robo service has a $500 minimum. Neither broker has any fees or minimums for self-directed accounts. Because of a few $25 fees on IRAs at E*Trade, we recommend Interactive Brokers for small IRAs.

Long-Term Investors & Retirement Savers: With human advisors, solo 401k plans, and branch locations, E*Trade is our pick.


IBKR vs E*Trade: Final Judgment

Interactive Brokers (read review) and E*Trade (read review) are pretty close overall. Nevertheless, there are really important differences between these two in specific categories, so do your homework before choosing one.

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Updated on 7/15/2022.

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