E*TRADE Review – Top Trading Tools

Update June 2020: E*TRADE was purchased by E*TRADE. For more information, read our full review of E*TRADE.

E*TRADE has developed a reputation as one of the top-rated investment brokerage platforms in the industry. This is particularly true of its options trading capacity, as the name of the platform indicates. E*TRADE has been well recognized in the financial press as a top brokerage firm, especially in the area of options.

If you are looking for a very low-cost investment brokerage firm that also has top-of-the-line trading technology and trading resources, E*TRADE should be one of the platforms that you are considering.

It is a perfect trading platform for new and small investors, as well as active traders, not only because of its very low trading fees but also because it has no required account minimum balances.

Before you make your decision on investing, we recommend that you understand and learn about all of your best options so that you make the best all-around decision for your investing needs. For your reference, we have posted many reviews. Check them out here:

• Motif Investing Review
• Lending Club Review
• Betterment Review
• Personal Capital Review
• E*Trade Review

About E*TRADE

E*TRADE began operations in 2005. It provides active traders with a brokerage platform that offers low prices, high-speed execution, and premium products.

The trading platform provides you with real-time market data, fast execution, and comprehensive research tools. It provides robust, customized options chains so that you can execute trades quickly. This includes the ability to view 16 different options chains and to select single options and strategies to place your orders quickly from the same page.

In 2016, Investor’s Business Daily ranked E*TRADE as the top “Options Trading Platform”, and listed it as number four among all brokers for “Low commissions and fees”.  This puts them in the same ratings as more well-known brokerages like Scottrade and E*Trade.

Also in 2016, StockBrokers.com ranked E*TRADE #1 for Commissions & Fees, #1 Web Based Platform, and #1 for Options Trading. They were also ranked as the #1 Web Based Platform in 2015, as well as Best in Class for Mobile Trading for the same year.

E*TRADE Features and Benefits

E*TRADE offers a wealth of features and benefits that will help you to become a better and more prosperous trader. Some of the more significant features and benefits include:

Minimum Initial Deposit/Account Minimum Balance

E*TRADE does not have either a minimum initial deposit requirement or an account minimum balance, though there may be funding requirements depending upon the type of trading you engage in. For example, they suggest funding your account with a minimum of $1,000 for a cash account, and they do require a minimum of $2,000 for a margin account. Should the account balance drop below the $2,000 required minimum, the account will be converted from a margin account to a cash account.

E*TRADE also requires a minimum of $2,000 to provide check-writing privileges. There’s also a minimum balance requirement of $10,000 to establish debit card privileges for both cash and margin accounts.

Funding Your Account

Account Types Available

E*TRADE allows you to open accounts for individual, joint tenants with rights of survivorship, business accounts, including trusts, LLCs, corporate accounts, partnership accounts, investment clubs, sole proprietorship accounts, as well as accounts for estates and tax-exempt organizations. You can also open UTMA and UGMA education accounts, including Coverdell accounts.

Retirement accounts available include the full range of IRAs, including traditional, Roth, rollover, beneficiary, SEP, and SIMPLE IRA accounts.

Investment Products Available

E*TRADE enables you to trade equities, options, futures, mutual funds and exchange-traded funds (ETFs), and bonds.

Power E*TRADE

When you open a real trading account with E*TRADE you are automatically given access to a paperTRADE account that allows you to test-drive strategies and learn the platform using virtual money. This enables you to try your hand at both learning and trading without risking real money.

Customer Service

E*TRADE offers three ways to reach customer service:

• Phone: You can reach customer service using an 800 number Monday through Friday between 7:00 AM and 7:00 PM Central Time, except holidays

• Email: Available anytime

• Online Chat: Available Monday through Friday, 8:00 AM to 8:00 PM, Eastern time, except exchange holidays

Extended Hours Trading. E*TRADE provides extended hours trading from 7:00 AM to 4:00 PM Central time, Monday through Friday, except on market holidays.

Dividend Reinvestment Plans (DRIPs). DRIPs can be established with any stocks that you hold in your portfolio as long as they are eligible for DRIP participation. DRIPs are not available for master limited partnerships, limited partnerships, and royalty trusts.

TRADE IT. E*TRADE has partnered with TRADE IT to make it more convenient for clients to trade stocks quickly right from participating market research websites. The feature is available only for equity trades, but you can use market, limit, stop, and stop limit orders. At present, it is available for TheStreet.com, but is expected to include other sources in the future.

International Accounts. E*TRADE allows you to open an account if you are a citizen or permanent resident of certain countries or a US expatriate residing in such countries. Those countries include China, Germany, Hong Kong, India, Singapore, Taiwan and the United Kingdom.

There are specific regulations and restrictions that you must comply with in order to open an international account. However, this is a major advantage of E*TRADE since not all brokerage firms provide this privilege.

Account Protection. Through its clearing firm, Apex Clearing Corporation, E*TRADE provides both FDIC and SIPC insurance coverage on investor’s accounts. Cash balances that are swept into FDIC-insured deposit accounts at various depository institutions are insured for up to $2,500,000.

SIPC coverage insures your account for up to $500,000, including up to $250,000 in cash. Apex Clearing provides additional protection for securities and cash of up to $150 million, subject to maximum limits of $37.5 million for any one customer’s securities and up to $900,000 for any one customer’s cash.

Both SIPC and the additional insurance coverage are to insure against broker failure, but not against declines in value resulting from investment market conditions.

Account Security. OptionsHouse provides strong 256-bit SSL encryption and other industry best practices to protect sensitive data. This includes the most advanced encryption technology for all online transactions, including funding through your financial institution.

Key Features and Benefits of E*TRADE

Feature/Benefit	Description
Minimum Initial Deposit	No Specific Requirement, but Funding May Be Required for Certain Account Types
Account Types	Individual, Joint, Business, Retirement, Education, and More
Funding Options	Electronic Transfer, Wire Transfer, ACAT, or Check (3 Business Days for Check Funds)
Investment Products	Equities, Options, Futures, Mutual Funds, ETFs, and Bonds
Power E*TRADE	Access to a PaperTRADE Account for Practice With Virtual Money
Customer Service	Phone, Email, and Online Chat Support During Specific Hours
Extended Hours Trading	Trading Hours From 7:00 AM to 4:00 PM Central Time, Mon-Fri
Dividend Reinvestment Plans	Available for Eligible Stocks, Excluding Specific Partnerships
TRADE IT Integration	Quick Equity Trading From Select Market Research Websites
International Accounts	Available to Citizens or Residents of Certain Countries, With Specific Regulations
Account Protection	FDIC and SIPC Insurance Coverage, With Cash Balances Insured up to $2.5 Million
Account Security	Strong Security Measures, Including 256-Bit SSL Encryption for Online Transactions

E*TRADE Tools and Calculators

E*TRADE has a wide range of tools and calculators, particularly those that benefit options traders. Some of those tools and calculators include:

tradeCYCLE. This tool enables you to develop a deeper understanding of the E*TRADE trading platform. It uses six steps:

• Step 1 – Do Your Homework: This shows you how to master the research options that are available on the platform

• Step 2 – Find/Craft a Strategy: This enables you to quickly and easily learn how to test different market strategies

• Step 3 – Test the Strategy: This shows you how to configure the positions page and customize settings for quicker views of your performance, as well as to develop faster trading

• Step 4 – Execute the Trade: Teaches how to execute trades and to gain confidence using the advanced techniques offered through the platform

• Step 5 – Plan Your Exit: This is where you learn how to set alerts and to move in and out of the market

• Step 6 – Adjust as Needed: This will walk you through the many tools that are available on the platform to help you adjust to changes in the market

tradeLAB. This tool enables you to gain insight into profit from market moves by providing a profit/loss ratio snapshot. It provides you with the ability to look at the best ways to look at a trade from every angle.

Snapshot Analysis. This tool enables you to quickly view your option trade’s potential, including maximum profit, loss, or breakeven at any point, as well as risk/reward ratios and profiles and precise rollover chart views. You can even run “what if” scenarios through expiration and much more.

Spectral Analysis. This tool enables you to explore your strategy’s potential by enabling you to view a color-coded spectral to see probabilities until expiration. This enables you to see how your position changes according to various paths of the underlying security, as well as the play “what if” scenarios, by adjusting volatility. You can then edit your strategy or place your trade from a pre-populated order right from the Spectral Analysis screen.

Trigger Alerts. These enable you to be prepared to make your next trade using actionable alerts that enable you to quickly and easily place pre-populated orders. This will help you to potentially maximize profits or limit losses.

strategySEEK. This tool scans live market data for thousands of options and strategies targeted to your forecast and risk priorities. It identifies potential strategies and enables you to explore new opportunities based on your current trading approach.

E*TRADE Fees

E*TRADE offers one of the lowest trading fee structures in the industry, in addition to the fact that they do not charge annual accounts fees.

Here are the current fees for the more significant investment activities:

Stocks, ETFs, and Equities From All Major Exchanges. E*TRADE charges a fee of $0 per trade for stocks and ETFs, which is equal to the lowest trading fees available among major brokerage firms, tied with what most consider the discount brokerage leader Trade King, now known as Ally Invest and one of the lowest in the industry overall

Options Trades. E*TRADE charges a fee of $0.65 plus $0.50 per contract for single-leg trades. For spreads, straddles, and combos – up to four legs except for covered calls and puts – $4.95, plus $0.50 per contract.

They also charge a broker assist fee of $25 if broker assistance is necessary for a transaction.

Under E*TRADE’s Dime Buyback feature, commission charges and contract fees are waived when you buy to close an option for $0.10 or less. The feature will automatically start working anytime you’d like to close an option for $0.10 or less.

Futures Trading. E*TRADE is currently offering new futures traders a rate of just $1.50 per contract through September 30. After September 30, futures trades will increase to $2.00 per contract.

Mutual Funds. $20 per trade.

Margin Account Interest. Rates range from 3.25% on accounts with a minimum of $1 million to a high of 7.75% on accounts of less than $25,000.

Debit Card. E*TRADE charges a $75 annual fee for debit cards.

Funds Transfer. There are no fees for transferring funds by ACH. There is a $5 fee for first-class mail of withdrawal by check, $25 for Saturday delivery, or $30 for overnight domestic mail. There is no fee for a deposit into your account by wire transfer, but there is a $25 fee for domestic wires when withdrawing funds.

Document Fees. E*TRADE charges a $2.00 handling fee for paper statements and tax documents mailed to your home.

Physical Stock Certificate Fees. There is a minimum fee of $300 per certificate. If the certificate is returned for any reason, there will also be a minimum fee of $100 per returned certificate.

E*TRADE Caveats

E*TRADE has some limitations, but only a couple of them:

Low Rate of Interest on Cash Balances

E*TRADE pays just 0.01% on cash balances. This rate is, of course, ridiculously low, however, it is not at all unusual in the industry, as it is a result of the current very low interest rate environment.

Bottom Line

E*TRADE is currently offering commission-free trading for 60 days when you open and fund a new account with at least $5,000. The offer covers up to 100 trades. They are also offering a rebate of up to $100 to cover ACAT fees charged by your current broker if you transfer at least $5,000 in funds into a new E*TRADE account.

They also provide a $25 rebate against wire fees involved in such a transfer.

E*TRADE is an excellent investment platform choice for new investors, small investors, international investors, active traders, and particularly active options traders. The platform has all of the tools that you need and a very low fee structure that will help to improve your rate of return on your investing.

If you are looking to open up a new brokerage account or are considering moving out of your current brokerage arrangement, E*TRADE deserves to be on the short list of new brokers for your investment activities.

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