ETRADE Review | Exposing the True Drawbacks for a Pro Trader


 ETRADE Review | Exposing the True Drawbacks for a Pro Trader

Hey everyone!  Today we’re going to take a look at ETRADE.  I have a special place in my heart for ETRADE because this is the platform I first used when I committed myself to full time trading.  When I open ETRADE Pro (the desktop application), I have flashbacks of the struggles I experienced as a new trader.

After about 2 years of trading there, I moved to Speedtrader, realizing hot keys and direct access routing would be critical for my success.  Click here to read our Speedtrader Review.

Although I no longer use ETRADE as my primary trading platform, I still have account with them and I do feel there are some great benefits to using them.  Today we’ll discuss the Pros and Cons of trading with ETRADE.


ETRADE was formed in 1982 and calls itself “an online discount stock brokerage firm for self-directed investors”.  In this review we will question whether or not they are actually a discount broker by today’s standards, but in 1982, they certainly would have been discounted vs placing a order with a traditional stock broker.  The world of investing and day trading specifically, changed tremendously with the advent of the Internet and online trading.

The Internet has allowed part-time investors and traders to participate in the market without using a stock broker to place each order.  ETRADE was one of the first businesses to capitalize on the online trading craze.

As technology has changed and improved, they have continued to develop and refine their trading platforms.  The current desktop platform allows Futures, Bonds, Mutual Funds, Indices, Stocks, and Options trading from the desktop of your computer.

They also offer a mobile trading app and a web portal to place orders through your browser.


ETRADE Advantages

  • Full Service Brokerage Firm means bill pay, research tools, checkbook, credit  card, etc.
  • Very Convenient for funding and money transfer
  • An intuitive and easy to use desktop platform
  • Mobile Trading App is a big plus


ETRADE Disadvantages

  • There is no direct access routing (you choose AUTO or pay extra to use NYSE/ARCA which isn’t ideal).
  • Order execution isn’t as fast as competitors like Ligthspeed or Speedtrader.
  • You can’t create hot keys for selling 1/2 and 1/4 position sizes.
  • The charts aren’t very good quality compared with eSignal (check my eSignal review here)


My Experience with ETRADE & Why I left

From 2011 through early 2014 I traded actively with Etrade.  The reason I funded an ETRADE account was because it was a household name at the time.  I needed a trading account and I knew of ETRADE, Ameritrade, but few other brokers.

My initial experience with ETRADE was that it was simple to use and easy to establish an account.  For that reason I traded there for several years.  During this time in my trading career I was trading a mix of small caps, penny stocks, and options.

Since I had such a mix of strategies I was actively trading ETRADE was a perfect fit.  The per trade commission structure also made it appealing for buying 50k-100k shares of penny stocks.

Ultimately when I began to focus exclusively on small caps and scalp trading, I needed a broker that could keep up with the speed I wanted to trade.

I was given the opportunity to open a Speedtrader account with a $2.95 per trade commission and made the switch.  I haven’t looked back!  If I were still actively trading penny stocks or options, I might consider keeping an ETRADE account.


Commission Structure

One of the draw backs of ETRADE is the commission structure.  They start at $9.99 per trade, (the same as TD Ameritrade) which is not what I’d consider a discount broker in this day and age.  Speedtrader at $3.95/trade, and Lightspeed or TradeKing at $4.95/trade are discount brokers.

Paying $9.99/trade is easily going to cost $100-200/day for an active day trader.  Remember, $200/day is $52k/year.  That alone is a medium household income in the United States.  Paying that just in commissions is going to be hard to justify unless you are making over $200k/year (most traders aren’t).

ETRADE will negotiate with active traders down to a low of $6.99/trade if you exceed 1500 trades/quarter.  But remember, that’s still over $10k/quarter in commission (1500 x 6.99 per trade = $10485).

That is still nearly double Speedtrader’s starting commission rate. If you are looking for the cheapest broker, ETRADE isn’t it.  For those looking for more than just cheap, there are some great qualities to ETRADE that could make it worth paying the extra commissions.




Final ETRADE Review

The biggest advantage of ETRADE is certainly not the commissions, but the fact that it’s a full service brokerage.  As a full service brokerage, they have some really great convenience features.

One of the cool things is that I could trade out of my 401k with them, use the bill pay system to take care of all my monthly bills, and I can even get a credit card and a checkbook linked to my brokerage account.  If I have a great day in the market I can celebrate with a nice dinner and charge the Credit Card.

However, if I am taking 10+ trades/day and not using a 401k account, it’s critical to look for a better priced firm to trade with.  If I were trading less frequently, using a 401k, or simply willing to pay for the convenience, ETRADE is a great match.

I would also suggest traders spend a few minutes looking at TD Ameritrade as a similar full service brokerage.  I personally prefer ETRADE to TD Ameritrade because I find the desktop platform more intuitive.

Check out how ETrade compares to other brokers by clicking on the image below!