ETRADE Review – Overview of ETRADE

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)

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).   They 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.  You can trade out of your 401k with them, you can use the bill pay system to take care of all your monthly bills, you can even get a credit card and a checkbook linked to your brokerage account.  If you have a great day in the market you can celebrate with a nice dinner and charge the Credit Card.  If you are taking 10+ trades/day and you aren’t using a 401k account, it’s critical that you look for a better priced firm to trade with.  If you are trading less frequently, using a 401k, or simply willing to pay for the convenience, ETRADE is a great match.  I would also suggest 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.


Reviews by Warrior Trading