What is Etrade and how does it work?
Etrade is one of the best trading platforms currently available and is owned by banking giant Morgan Stanley. Similar to other online platforms, Etrade is known for offering commission free investing of US stocks, ETFs, and mutual funds on both mobile and desktop based platforms. The platform does offer some other unique features that make it stand out including an in house robo advisor and banking options through Morgan Stanley.
A Quick Summary
Standard brokerage account
Roth, Traditional, and Rollover IRAs
Custodial account
Coverdell ESA account
CostSee cost section for details
Account Types
Etrade currently offers the following account types if you are an individual or retail trader:
Standard brokerage account: A brokerage account simply allows you to deposit funds and start investing.
Traditional IRA: IRAs are individual retirement accounts. A traditional IRA allows you to contribute pre-tax dollars to the account to save for retirement. In general, the amounts in your traditional IRA, as well as earnings and gains are not taxed until you take a withdrawal.
Roth IRA: A roth IRA is just the opposite of a traditional IRA. You pay taxes up front on the money you contribute to this account, but when you make a withdrawal you don't pay taxes.
401k Rollover IRA: A rollover IRA allows you to transfer funds from an old employer sponsored plan to an IRA.
Custodial account: A custodial account is a brokerage account for a minor typically managed by a parent until the child comes of legal age.
Coverdell ESA account: A Coverdell ESA account is designed to help save for a child's education and offers tax free withdrawals when funds are used for qualifying educational expenses.
Please note: You must qualify for an IRA and there are limits to these accounts. Consult a licensed financial advisor or visit the IRS website below to learn more.
2023 IRA LimitsKey Features
Knowledge
The "knowledge" feature is Etrade's library of trading and investment advice. It is one of the best collections of education advice on any platform currently available. You can get trading advice as both a beginner and advanced trader. Additional topics that Etrade covers include retirement and tax planning, general market news, life stages and more.
Core Portfolios
Even though Etrade is primarily a trading platform, they also offer an in house
robo advisor called "core portfolios" if you would like Etrade to build an investing portfolio for you. Similar to other robo advisors, all you have to do is tell Etrade what your investing goals are and they will design a portfolio for you as opposed to you choosing your own investments. There is a $500 minimum deposit to get started and expect to pay a 0.30% annual fee.
Tradeable Securities
Etrade currently offers the following tradeable securities:
Stocks
ETFs
Mutual funds: 6,500+ to choose from
Options
Bonds and CDs: 50,000+ offerings to choose from
Futures
Etrade has two mobile versions, as well as a desktop and web based versions of their platform.
Power Etrade: This is Etrade's flagship desktop trading platform. The platform offers an array of charting and technical anaylsis tools including:
Technical pattern recognition: Charts that automatically draw support & resistance lines and identify technical patterns.
Earnings move analyzer: View a stocks’ expected price move, average implied move, and average historical move.
Risk/reward probabilities: Understand the risk/reward probabilities of an option trade with Snapshot Analysis.
Custom and preset scans: Scan for trade ideas your way; with customizable data points or with preset scans in Live Action.
Powerful charts: 145+ chart studies and drawing tools, with the ability to save your setup and trade right from the chart.
Exit plan: Set up exit strategies to help limit risk or lock in potential profits by entering your profit target and stop loss amount and easily creating the order.
Paper trading: Get to test out trading, different strategies, and sharpen your skills without risking real money.
Etrade Apps: Etrade has two mobile apps. The Power Etrade app is the mobile version of the Power Etrade desktop platform that offers similar technical tools to execute trades. The Etrade mobile app has more of a focus on following the overall markets and managing your accounts as opposed to analyzing and executing trades.
Etrade online: If you don't want to download the desktop or mobile based platforms, you can also opt to use the online version as long as you have an internet connection.
Cost
Mutual Funds and ETFs
$0 commissions
Options Contracts
$0.65 or $0.50 with 30+ trades per quarter
Options Contracts
$1.00 per bond
Customer Support
Etrade offers both phone and email support, as well as a 24/7 chat feature. The online help center also does a good job at addressing most general questions.
Other Details
Since Etrade is owned by Morgan Stanley, you can also get access to a couple of good bank accounts to keep your money when your not actively investing.
Premium savings account: This account currently earns 3.85% APY and does not require a minimum deposit to open the account. The account is FDIC insured up to $500,000 and can be managed from the Etrade mobile app.
Max rate checking account: This account currently earns 0.05% APY and offers unlimited ATM refunds from a network of 2 million ATMs worldwide. A minimum deposit is not required to open the account.
Advantages of Etrade
The primary advantage of using Etrade is that the platform is very well balanced. You have access to both a wide range of tradeable assets and accounts, while still having the option to automate your investing through the "core portfolios" feature. The desktop and mobile platforms both work well and having banking options through Morgan Stanley is an added bonus.
Disadvantages of Etrade
There are a few disadvantages of Etrade. First, the platform does not allow you to buy crypto directly. Instead, the only option you have is to buy securities that track or own assets tied to cryptocurrencies. Second, Etrade does not offer fractional shares. If you want to buy a security, you are going to have to pay full price.
Is Etrade right for you?
Etrade is right for you if:
You want a well balanced platform that also includes an option for automated investing
You want strong platform options on both a desktop and mobile level
You want to take advantage of the banking options offered by Morgan Stanley
Alternatives to consider
Take me to the reviewConsider using Webull if you want a easy to use platform
Fees
$0 and 1% for crypto
Minimum Deposit
$0
Take me to the reviewConsider using Etoro if you want a social platform
Fees
$0 and 1% for crypto
Minimum Deposit
$10
Take me to the reviewConsider using IBKR if you want a platform with global markets
Fees
$0 on select assets
Minimum Deposit
$0
