Brokerage Review: E*TRADE


15 May,2012

You can’t seem to avoid the Etrade Baby. Indeed, the cute baby has become the symbol of Etrade, and the amusing commercials illicit chuckles from nearly everyone. But is Etrade the online brokerage for you? If you are looking for a place to park your retirement account, and do a little buy and hold investing, it might not be a bad option, and very active traders can benefit from lower commissions. However, for the occasional trader might do better elsewhere.

Account Options and Fees

As with most investment accounts, you need to go through a process to get started. The process takes about 10 minutes, and you can begin exploring the site. However, you won’t be able to start trading until your funds are in the account. This can take between one business day (if you choose wire transfer) and eight business days (if you choose account transfer). ACH transfer is among the popular options, and that takes about three business days.

Your money is held in one of the Sweep Options. For many investors, the default option, the ETRADE Financial Extended Insurance Sweep Deposit Account, is a fine choice. This account is FDIC insured and earns interest. If you maintain a minimum balance of $1,000, you can get access to a free debit card and check writing. This can make your account much like a fee-free checking account. As long as you maintain the minimum, it can be one way to earn daily interest on your checking account money, and avoid fees.

Your trading opportunities are reasonably varied, with the following investment products:

  • Stocks
  • Bonds
  • Mutual funds (including index funds)
  • ETFs
  • Options
  • Futures

You can also open a margin account, but you need $2,000 minimum in order to begin trading on margin. They also require that you have a deposit of $500 in cash or securities within 60 days of opening your account. If you don’t meet the minimum by the end of 60 days, your account can be closed. You don’t have to provide a minimum for certain accounts, though. Retirement accounts, custodial accounts, and employee stock plan accounts don’t have account minimums.

Fees are at the high end of average commissions charged by online brokers. Stocks and ETFs cost $9.99 per trade when you trade between 0 and 149 transactions per quarter. Once you hit 150 trades in a quarter, though, the fee drops to $7.99 per transaction. This is a higher rate than some of the other brokerages, including Scottrade, Zecco and TradeKing. Futures contracts are $2.99 per contract, per side + other fees. You can expect to pay $9.99 or $7.99 for options (depending on how many trades you make in a quarter), plus $0.75 per contract. Mutual fund fees are in line with other brokerages at $19.99 for trades.

Research and Tools

Etrade is known for its powerful trading tools, and this is where the brokerage really shines. You can get access to real-time quotes, along with intrinsic and time values. Other tools allow you to screen for stocks that are likely to meet your budget needs and interests. There are a number of technical tools and charts that can help you track performance, as well as customize how you view the market. They also help you create your own strategy by analyzing your experience, goals, and risk tolerance. These are all tools that any trader can use to enhance his or her experience.

Additionally, they also offer the Etrade Pro. This is a desktop trading platform with direct access to your account and to real-time trading. It’s also possible to find real-time quotes and see streaming news from CNBC. And, of course, like most brokers, They also offer mobile applications for those who are on the go. It’s possible to direct your investments in a way that you customize when you use Etrade.

In addition to great research tools, Etrade is also known for its extensive research. You can find a body of research on common investment terms and strategies, as well as in-depth information on various investments. They also offer a section for guidance and retirement that can help you figure out how to invest in a way that helps you reach your retirement goals. This can be very helpful if you aren’t sure where to begin. There is also a community of investors that can help you with tips and information, and you can share your own knowledge with others.

Is Etrade Right for You?

What online broker you decide to use depends largely on your goals, as well as what you are willing to pay for the opportunities you have to trade. It can be a decent choice if you are looking to open a retirement account, since the broker features an IRA account that doesn’t require a minimum, and you don’t have to worry about inactivity fees with an IRA account. Additionally, they got rid of account minimum fees, since customers were complaining about them. Now, there are no account maintenance fees, it can be worth it for some traders to use Etrade. Additionally, the reasonable rate for real-time trades can be a plus for many active investors who make more than 150 trades in a quarter.

For many investors, though, it can get expensive. The inactivity policy for some accounts can become annoying, and there is a minimum for certain accounts, including the ability to use the cash account as a checking account, and the high minimum for trading on margin. Additionally, Etrade’s $9.99 trades for those who make less than 150 trades in a quarter can be discouraging. If you are just using dollar cost averaging once a month to automatically build your retirement account, it’s not so bad. However, if you make three or four trades a month, you might want to look at a brokerage with lower per-transaction fees.

While they offer a number of helpful investing tools, it is worth noting that the high cost can be a turn-off for some investors. Carefully think about your investing needs, and what you want to pay. There is a chance that Etrade is more expensive than you would like.

CLICK HERE to visit E*TRADE website.