Traders have many different choices when choosing an online broker, with each option providing a different set of tools and features. In this guide, we’ll take a look at E*Trade and help you decide if it’s the right online broker for you. If you’re already an E*Trade client, you may still find some tips and tricks to help you trade more efficiently and ultimately enhance your returns.
E*Trade offers flat commissions, no account service fees, no per share fees, and valuable free features like unbiased research, real-time quotes, and customer support seven days per week. For basic stocks and options, the broker charges $9.99 for the first 149 trades and $7.99 thereafter with an additional $0.75 option contract fee for those trading simple stock options.
Complex options, exchange-traded funds (“ETFs”), global trading, mutual funds, bonds, futures, margin trades, and other events all involve different fee schedules.
The broker permits global trading in Canada, France, Germany, Hong Kong, Japan, and the United Kingdom with commissions charged in local currency based on the market rates when they were placed. Additional fees apply to Hong Kong and the United Kingdom, including stamp duty and other levies and fees.
E*Trade itself is a publicly traded company on the NASDAQ under the ticker symbol “ETFC” where it has a market capitalization of about $6.2 billion. Moody’s Investment Service upgraded E*Trade to B1 with a Positive Outlook as of mid-2014.
Tools & Features
E*Trade offers a number of tools designed to help traders enhance their risk-adjusted returns over the long run, ranging from simple mobile tools to complex active trading tools enabling trading strategy development.
Popular features include:
- E*Trade Pro – The broker’s premier trading platform for active traders, featuring its cutting-edge Strategy Scanner technology that enables traders to find ideas with trading strategy recognition, real-time streaming alerts, and integrated backtesting, as well as a host of other features.
- E*Trade 360 – The broker’s one-page website investing experience for all customers, which includes a graphical view of all accounts, customizable features to management investments, and free streaming market data.
- E*Trade Mobile – The broker’s mobile device platform that provides free real-time quotes, news, and charts, voice recognition, and barcode scanning to identify the public companies behind product barcodes.
E*Trade clients can access charts by clicking on the chart icon in the tools menu on the navigation console or by right-clicking the row for the security from a watch list or list of positions and then clicking send symbol to and then charts. By default, daily candlestick charts are shown, although other types are available by using the various dropdowns located just above the chart [See also Visual Guide to 8 Candlestick Patterns Every Trader Must Know].
Traders can add technical studies using the chart’s studies menu, as well as add trend lines and other drawings using the tools menu. Finally, additional ticker symbols can be added by entering the information in the symbol fields at the top of the window, enabling traders to compare multiple securities with each other.
Buying & Selling
E*Trade clients can easily buy and sell securities by clicking on the order entry icon in the tools menu on the navigation console or by double-clicking a security’s ask or bid price directly from a watch list or list of positions. There are also a number of other shortcut keys that can be used to rapidly establish specific types of positions, such as market orders or buy-to-cover orders in one click.
Assuming traders use the first option to place an order, the next steps are to enter the symbol, quantity, and order type, specify the execution price if required, select the market center of choice, and then check the box for all-or-none, if desired. Finally, traders can click the trade button that corresponds to the order type desired and then a confirmation window will appear to actually place the trade.
E*Trade offers many other advanced features, including its Strategy Scanner and built-in backtesting, providing powerful tools for active traders. The Strategy Scanner is accessible by clicking on the Strategy Scanner icon in the tools menu on the navigation console and then either selecting an existing strategy or creating a new one by clicking on Strategy Wizard.
Other advanced features include an options montage showing full market depth for stock options, as well as NASDAQ TotalView and NYSE OpenBook features showing the complete order book at both exchanges. The broker’s XML API also enables integration with third-party trading software providers, including InvestorsHub, AbleTrend and other solutions designed to enhance trading.
E*Trade has a few drawbacks that traders should consider before signing up for an account. For active traders, the broker has somewhat high commissions on stocks and ETFs since they are flat commissions rather than scalable per-share commissions that can be cheaper with larger orders. The broker also charges somewhat high margin rates compared to more advanced brokers.
E*Trade Pro, which is available for free to customers who execute at least 30 stock or options trades during a calendar quarter, also has a somewhat steep learning curve for beginners. The platform also lacks some advanced features seen in other broker platforms, including algorithmic trading and advanced options trading tools, although it does have its own set of unique features and tools in their place.
The Bottom Line
E*Trade provides active traders with unique tools and research through its E*Trade Pro platform targeting those making more than 30 trades per quarter. With moderately priced fixed commissions and stable finances, the broker provides a decent value and relatively low counterparty risk for traders. The unique strategy scanner and backtesting also make its platform a worthy competitor in the market.
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