Navigating the world of online brokers can be daunting, with numerous platforms vying for your attention. E*TRADE, a well-established name now under the Morgan Stanley umbrella, remains a popular choice for many investors in the United States, offering a blend of tools and resources for various experience levels.
This review dives deep into E*TRADE’s offerings, particularly focusing on its options trading capabilities, the suite of tools available to investors, and an overall assessment of its trading platforms. We’ll explore whether it lives up to its reputation and if it’s the right fit for your investment journey.
Understanding E*TRADE Investments
Founded in the early days of online trading, E*TRADE carved out a niche by making investing more accessible. Its acquisition by Morgan Stanley in 2020 has further solidified its position in the market, integrating Morgan Stanley’s extensive research capabilities while maintaining the E*TRADE platform’s user-friendly approach. E*TRADE caters to a broad spectrum of investors, from beginners opening their first IRA to seasoned traders executing complex options strategies.
Account Types Available
E*TRADE offers a comprehensive range of account types to suit different financial goals and circumstances. Here’s a quick overview:
- Brokerage Accounts: Standard individual or joint accounts for trading stocks, ETFs, options, bonds, and mutual funds.
- Retirement Accounts: Includes Traditional IRAs, Roth IRAs, Rollover IRAs, and Small Business Retirement plans (SEP IRA, SIMPLE IRA).
- Managed Portfolios: Core Portfolios offer automated investing (robo-advisor) based on your risk tolerance and goals.
- Bank Accounts: E*TRADE provides checking and savings accounts through Morgan Stanley Private Bank, offering integration with investment accounts.
- Coverdell ESA: For education savings.
- Custodial Accounts: UGMA/UTMA accounts for minors.
Investment Offerings: Beyond the Basics
E*TRADE provides access to a wide array of investment products, ensuring diversification opportunities for its clients.
- Stocks: Access to US-listed stocks on major exchanges.
- ETFs (Exchange-Traded Funds): A vast selection of commission-free ETFs from various issuers.
- Mutual Funds: Thousands of mutual funds, including a large number of no-load, no-transaction-fee (NTF) funds.
- Bonds: Access to corporate, municipal, treasury, and agency bonds.
- Futures: Available for experienced traders looking to speculate or hedge.
- Options: A significant focus area for E*TRADE, with robust tools and resources.
Deep Dive into Options Trading on E*TRADE
E*TRADE has long been recognized for its strong options trading capabilities, catering to both novice and advanced traders. Key features include:
- Platform Integration: Options trading is seamlessly integrated into both the standard E*TRADE web platform and the more advanced Power E*TRADE platform.
- Tools & Analysis: Power E*TRADE, in particular, shines with its options tools. This includes spectral analysis, risk/reward probabilities, volatility skew charts, and strategy optimization tools (like StrategySEEK and Risk Slide).
- Screening & Idea Generation: Tools to scan the market for potential options trades based on criteria like volatility, probability of profit, or specific strategies (e.g., covered calls, spreads).
- Pricing: Competitive commission structure for options ($0 base commission + $0.65 per contract, reduced to $0.50 for active traders making 30+ trades per quarter).
- Education: Extensive educational resources dedicated specifically to options trading concepts and strategies.
The platform supports multi-leg options strategies, making it suitable for traders employing complex approaches like iron condors, butterflies, and calendar spreads. The visual tools help in understanding the potential profit and loss scenarios associated with these strategies.
E*TRADE Trading Platforms Reviewed
E*TRADE offers multiple platforms designed for different types of investors and traders. Understanding the differences is key to choosing the right experience.
E*TRADE Web Platform
This is the standard browser-based platform suitable for most investors. It offers a clean interface for managing accounts, placing trades, accessing research, and tracking portfolio performance. Key features include:
- Portfolio analysis and tracking tools.
- Stock, ETF, and mutual fund screeners.
- Access to news, quotes, and basic charting.
- Easy order entry for stocks, ETFs, options, and mutual funds.
- Integration with E*TRADE Bank accounts.
It’s intuitive and sufficient for buy-and-hold investors and those making occasional trades.
Power E*TRADE Platform
Designed for active and derivatives traders, Power E*TRADE is a robust platform available via web browser and desktop application. It stands out for:
- Advanced Charting: Over 100 technical studies, drawing tools, and customizable chart layouts.
- Technical Analysis Tools: Pattern recognition, technical event scanners.
- Options-Specific Tools: As mentioned earlier (StrategySEEK, Risk Slide, spectral analysis).
- Trade Execution: Snap-to-market orders, conditional orders, and streamlined trade tickets.
- Futures Trading: Integrated futures ladder and analysis tools.
- Customization: Highly customizable layouts to suit individual trading styles.
Power E*TRADE directly competes with platforms like thinkorswim (Charles Schwab) and Active Trader Pro (Fidelity).
E*TRADE Mobile App
E*TRADE offers two mobile apps:
- E*TRADE Mobile: A comprehensive app mirroring much of the web platform’s functionality, including trading, research, money movement, and account monitoring.
- Power E*TRADE Mobile: Brings the advanced charting and options trading tools of the Power E*TRADE platform to mobile devices, ideal for active traders on the go.
Both apps are well-regarded for their design and functionality across iOS and Android.
Platform Comparison Table
| Feature | E*TRADE Web | Power E*TRADE | E*TRADE Mobile Apps |
|---|---|---|---|
| Target User | Beginner to Intermediate Investors | Active Traders (Stocks, Options, Futures) | All Users (Standard & Power versions) |
| Platform Type | Web Browser | Web Browser, Desktop Application | iOS, Android |
| Charting | Basic to Intermediate | Advanced (100+ studies, drawing tools) | Intermediate to Advanced (depending on app) |
| Options Tools | Basic Chains, Simple Strategies | Advanced Analysis, Strategy Tools, Risk Analysis | Robust (especially Power E*TRADE app) |
| Futures Trading | No | Yes (Integrated) | Limited (via Power E*TRADE app) |
| Research Access | Full (Morgan Stanley, etc.) | Full (Morgan Stanley, etc.) | Full (Morgan Stanley, etc.) |
| Ease of Use | High | Moderate (Steeper learning curve) | High |
Tools, Research, and Educational Resources
E*TRADE excels in providing investors with ample resources.
- Research: Access to proprietary research from Morgan Stanley analysts, plus reports from Thomson Reuters, Argus, and TipRanks. This includes ratings, earnings estimates, and detailed company analysis.
- Screeners: Powerful tools for screening stocks, ETFs, mutual funds, and bonds based on numerous criteria. Options screeners are available on Power E*TRADE.
- Education: A rich library of articles, videos, webinars, and tutorials covering topics from basic investing principles to advanced trading strategies. There’s specific content tailored to options and futures trading.
- Market Commentary: Regular updates and analysis on market trends and economic events.
The integration of Morgan Stanley research is a significant value-add, providing institutional-grade insights typically not available to retail investors at this level.
Understanding E*TRADE’s Fees and Commissions
E*TRADE generally aligns with the industry standard of commission-free online stock, ETF, and options trades (though per-contract fees apply for options).
Trading Costs Breakdown
| Investment Type | Commission/Fee |
|---|---|
| Stocks & ETFs (Online US Listed) | $0 |
| Options (Online) | $0 commission + $0.65 per contract ($0.50 for active traders) |
| Mutual Funds (NTF) | $0 |
| Mutual Funds (Transaction Fee) | $19.99 (reduced for some funds) |
| Futures Contracts | $1.50 per contract, per side |
| Broker-Assisted Trades | $25 + standard commissions/fees |
Account Fees
E*TRADE does not charge general account maintenance or inactivity fees for standard brokerage or retirement accounts. However, fees may apply for specific services like wire transfers or paper statements. It’s always best to consult their official fee schedule for the most current information.
Pros and Cons of Using E*TRADE
Pros:
- Robust Trading Platforms: Power E*TRADE is excellent for active and options traders. The standard web platform and mobile apps are user-friendly.
- Strong Options Trading Capabilities: Advanced tools, analysis, and strategy support.
- Comprehensive Investment Selection: Wide range of stocks, ETFs, options, mutual funds, bonds, and futures.
- High-Quality Research: Access to Morgan Stanley research is a major advantage.
- Extensive Educational Resources: Great for both beginners and experienced investors.
- Competitive Pricing: $0 stock/ETF commissions and competitive options pricing.
- Integrated Banking: Convenient banking options via Morgan Stanley Private Bank.
Cons:
- Power E*TRADE Learning Curve: The advanced platform can be intimidating for beginners.
- Mutual Fund Fees: While many NTF funds exist, transaction fees on other funds can be higher than some competitors.
- No Fractional Shares: Unlike some newer brokers, E*TRADE does not currently support trading fractional shares of stocks or ETFs.
- International Trading: Limited direct access to international stock exchanges compared to some global brokers.
Customer Support Experience
E*TRADE offers customer support through various channels:
- Phone Support: Available 24/7 for general inquiries and trading assistance.
- Email & Secure Message: Options for less urgent queries.
- Live Chat: Available during business hours for quick questions.
- Physical Branches: A network of branches (often co-located with Morgan Stanley) for in-person assistance.
Customer service reviews are generally positive, although experiences can vary, particularly during high-volume trading periods.
Is E*TRADE the Right Broker for You?
E*TRADE remains a formidable player in the online brokerage space. It’s particularly well-suited for:
- Options Traders: The Power E*TRADE platform and dedicated tools make it a top choice.
- Active Stock Traders: Power E*TRADE offers the necessary charting and analysis tools.
- Investors Seeking Research: The integration of Morgan Stanley research provides significant value.
- Investors Wanting an All-in-One Platform: The combination of robust trading, diverse investments, educational resources, and banking integration is appealing.
Beginners will find the standard platform and educational resources helpful, though the lack of fractional shares might be a drawback for those starting with smaller amounts. Long-term investors focused solely on low-cost index funds might find slightly simpler interfaces elsewhere, but E*TRADE’s overall package remains competitive.
Conclusion: A Comprehensive Platform with Strong Options Focus
E*TRADE successfully bridges the gap between beginner-friendly access and sophisticated tools for active traders, especially those involved in options. The acquisition by Morgan Stanley has enhanced its research capabilities without sacrificing the platform’s usability. With competitive pricing, a wide range of investment choices, and excellent educational content, it stands as a strong contender in the online brokerage market.
While potential users should consider the lack of fractional shares and the learning curve of Power E*TRADE, the overall offering is robust. For a deeper understanding of factors to consider when selecting a broker, you can consult resources from regulatory bodies. For comprehensive guidance on evaluating brokerage firms, consider reviewing information provided by the Financial Industry Regulatory Authority (FINRA) regarding how to choose brokerage firms.
