thinkorswim vs. E*Trade Introduction
If you want to find the best possible trading software at the lowest possible prices, you really have
to consider E*Trade and thinkorswim from Charles Schwab. Our research will guide you to the right
place.
First, We’ll Look at Assets and Accounts
E*Trade customers have access to a good range of investment products. They include:
- Stocks
- OTC and penny stocks
- Bonds
- Mutual funds
- Exchange traded funds
- Closed end funds
- Futures contracts
- American Depository Receipts
- Real Estate Investment Trusts
On the thinkorswim platform at Charles Schwab, the same list of asset classes is available, except for bonds and mutual funds, which have to be traded on the Charles Schwab website. Forex can also be traded on thinkorswim.
Besides these self-directed opportunities, E*Trade also offers portfolio management through its automated-investing service. Called Core Portfolios, the program trades ETF’s with low expense ratios. There is a cost for this service (0.30%), although the management fee is pretty low by industry standards.
thinkorswim is a self-directed trading platform. As such, there is no investment-advisory service available.
There are many account structures for taxable and tax-deferred investing at both E*Trade and thinkorswim. Expect to find individual and joint taxable accounts, Coverdell Education Savings Accounts, self-employed 401k plans, custodial accounts, retirement accounts, and more.
Overall, we think these two are pretty even in the opening category.
Second, It’s Customer Service
On thinkorswim in desktop version (which we’ll look at shortly), there is a Support link in the upper-right corner. Here, it’s possible to send a message to Charles Schwab’s thinkorswim help desk. It is open during the weekday.
Charles Schwab provides general customer support over the phone 24 hours a day, 7 days a week. The broker’s website also has a messaging section for issues that aren’t urgent or that need documents attached.
Ted is Charles Schwab’s virtual help bot. He can answer some, but not all, questions. Human agents are standing by (just type ‘human’ in Ted’s message window).
E*Trade’s website also has an Artificial Intelligence. This one doesn’t have a name, and during our test drive of it, it was not quite as effective as Ted. Even worse, human agents usually aren’t available.
E*Trade does offer customer support over the phone around the clock, which is a good thing because there’s no internal messaging on its website.
thinkorswim users can visit any one of Charles Schwab’s 300+ branch locations. E*Trade has just a handful still open.
Charles Schwab/thinkorswim is clearly the outperformer in the second category.
Third, We’ll Inspect Web Trading
thinkorswim can be used on the Charles Schwab website, where it functions as a browser platform. In this mode, it has just a few tools. These include watchlists, simulated trading, time & sales data, and a stock screener.
Charts on the web-based version of thinkorswim deliver a few drawing tools and about 50 technical studies. These indicators can be adjusted by parameters and by color. The order ticket on thinkorswim has lots of advanced trade types. Plus, there’s an Active Trader ticket that functions as a price ladder. Simply click on a price on the ladder to enter a market or stop order at that value. There are also big buttons at the top to quickly enter a market order.
Over at E*Trade, we found another browser-based trading platform. Called Power, this one has a lot of similar bells and whistles. There is advanced charting with lots of features. The order ticket is very sophisticated with lots of trade types and duration choices.
Then there is the Quick Trade vertical order form. This one has big buttons for quick market orders. There is an auto send tick box to get rid of the confirmation window.
Both Power and thinkorswim have practice modes, which we highly recommend.
Because thinkorswim is rather simple in its web form, we give the victory here to E*Trade.
Fourth Is Mobile Apps
E*Trade has a Power app with some really powerful trading tools. During our snooping, we found an order ticket with multi-leg trading capability and conditional orders; these include OCO orders and quote triggers.
Charting on Power starts in very simple mode on an asset’s default profile page, but it increases to a high level on the Chart tab. There are technical studies, logarithmic scale, and multiple graph styles.
The thinkorswim app has even better charting with several hundred technical studies. The trade ticket is also on a higher level with all sorts of features. Examples include:
- Tax-lot choices
- Many pro-level trade choices, like OCO and 1st triggers sequential
- Price slider toggle switch
- Order submission only at certain market conditions
Both apps offer simulated trading.
thinkorswim captures the victory here.
Fifth, E*Trade Pro vs Thinkorswim
Power E*Trade becomes E*Trade Pro when we get to the desktop environment. The software continues E*Trade’s emphasis on advanced trading. For example, we found these useful features:
- Multi-leg orders
- Time & sales data
- Full-screen charting with many tools
- Margin calculator
- Profit-loss diagrams
- Account switching (look for the drop-down menu at the top)
- Live streaming of Bloomberg TV
thinkorswim makes its final appearance in desktop mode. It, too, continues its emphasis on high-level trading with video news (from CNBC). There are very good security screeners on thinkorswim that can scan by a variety of parameters. Charting is extremely advanced, and so is order entry. This time, there are big buttons for quick market orders.
In the bottom-left corner, there is an icon of a plus sign. Clicking on this brings up a menu with all sorts of gadgets that can be added to the workspace, such as a calculator.
thinkorswim takes another victory.
Website Links
Thinkorswim: Satisfaction guarantee and $0-fee trades at Charles Schwab.
E*Trade:
No commissions on stocks and ETFs.
Next Is Margin Trading
Margin accounts are offered by both E*Trade and Charles Schwab. IRAs can be margin-enabled at both brokerage firms.
Right now, E*Trade clients pay anywhere between 13.7% and 11.7% for borrowed money. thinkorswim users have a slightly higher schedule: 13.075% to 11.325%.
E*Trade wins for lower rates.
The Seventh Category Is Day Trading
Extended-hours Trading: Some ETF’s can be traded all hours of the day and night on thinkorswim and on E*Trade’s platforms (during the week only). For stocks and other ETF’s, there are pre-market and after-hours periods at both firms. Many futures contracts trade 24/6.
Level II Quotes: Available at both firms (E*Trade requires an account balance of $1,000 or more).
Shorting: Bearish positions can be established at either firm. E*Trade requires a signup to trade HTB (hard-to-borrow) stocks.
Direct Access to Venues: Possible at either broker-dealer.
thinkorswim wins here.
Finally, It’s Additional Services
Initial Public Offerings: IPOs are on tap at both brokerage houses.
Dividend Reinvestment Plan: Also possible at either firm.
Banking Tools: Checks, debit cards, and FDIC insurance are available at both investment houses.
Fractional Shares: It is not possible to buy stocks or ETF’s using whole dollars at either brokerage firm.
Individual Retirement Accounts: Power, Pro, and thinkorswim users can all trade inside of IRAs. Both firms offer lots of IRA types. E*Trade does charge $25 for early distributions (before age 59½).
Periodic Mutual Fund Investing: Available at both firms.
Small advantage to Charles Schwab and thinkorswim.
Recommendations
Beginning Investors: A robo account with E*Trade.
Mutual Fund Trading: Both firms are really good for mutual funds.
Small Accounts: Neither broker-dealer has any fees or minimums for self-directed taxable accounts. Because E*Trade has a few minimums and fees in other situations, we defend thinkorswim/Charles Schwab.
Stock & ETF Trading: We would go with thinkorswim.
Retirement Planning & Long-Term Investing: Both firms have lots of tax-deferred accounts and retirement resources on their websites.
Website Links
Charles Schwab/Thinkorswim: Get Thinkorswim and $0-fee trades at Charles Schwab.
E*Trade:
No commissions on stocks and ETFs.
E*Trade vs Thinkorswim: Recommendation
thinkorswim from Charles Schwab does have a slight overall advantage. Nevertheless, E*Trade itself
does very well and is the only firm here that provides investment management.
Open Thinkorswim Account
Open Thinkorswim Account
Open E*Trade Account
Open Etrade Account
Continue Reading