E*Trade Review – How Does E*Trade Work? (Is E*Trade Good for Investors & Traders)
E*Trade is a full-service online broker which focuses on technology and innovation in order to deliver the best in customer experience. With its easy-to-navigate trading platforms, the company considers itself to be at “the forefront of the digital revolution.”
The company does not compete on price (E*Trade fees are on the high side) but on the quality and breadth of the services provided. E*Trade supplies a wide range of services that cater to all levels of investors – from beginners to advanced traders.
As well as cutting-edge trading technology, the company provides a huge level of research and educational resources for its clients. It also provides integrated banking services (with the E*Trade checking account), retirement planning assistance, and much more.
Image source: E*Trade
In its 2016 review of the best online brokers, stockbrokers.com awarded E*Trade “best-in-class” status in 10 out of 18 categories and the number 1 position for its mobile trading app.
In this E*Trade review, we will look at how E*Trade works, the tools and services it provides to its clients, and the E*Trade fees structure. We will also seek to answer the question: Is E*Trade a good value?
How Does E*Trade Work?
In order to use its award-winning trading platform and technology, you must open an account with E*Trade. The website offers a large array of different accounts, with its brokerage account being the most popular.
The company also offers integrated banking, with an E*Trade checking account. (For more on this, see the E*Trade checking account section below).
The initial E*Trade minimum balance when opening a brokerage account is $500. The account gives you access to the best-in-class trading platforms, the opportunity to invest in a large range of products, and great resources for researching ideas and markets.
E*Trade Web Trading Platform
E*Trade describes its web platform as “the do-everything platform for traders and investors.” It does indeed offer a huge level of services to its clients as well as options to customize the platform to meet your personal needs.
In its E*Trade review of May 2016, stockbrokers.com gave the company a rating of 4.5 out of 5, noting among other things its easy-to-use website.
The web platform has a customizable dashboard, called E*Trade 360. This is an innovative tool that makes using the E*Trade platform a breeze.
E*Trade 360 is a fully customizable, drag-and-drop homepage that lets you have all the information you need on one page. From this page, you can track your accounts, create watch lists, view free streaming market data, and place trades. The optional features that you can place on your dashboard include alerts, detailed balances, news, portfolios, positions, quotes, and much more. With E*Trade 360, you truly have everything you need to trade all in one place.
What Products Can You Trade on E*Trade?
Whilst E*Trade fees are among the highest in the industry, the company competes well in terms of the breadth of investment products available to its clients. In its E*Trade review of 2016, nerdwallet.com placed E*Trade at the top of the rankings for investment selection offered.
E*Trade offers an impressive array of investment products to its clients. Customers can trade in stocks, ETFs, up to 8,000 different mutual funds, 30,000 different bonds and fixed-income assets, options, and futures. Access to IPOs and other new issues is also available for qualified investors.
In its E*Trade review of May 2016, stockbrokers.com pronounced E*Trade Mobile as the best online broker app in the industry.
E*Trade mobile is an app for smartphones, tablets, and for the Apple Watch. The app fully syncs with the E*Trade web platform and E*Trade pro (see more on E*Trade pro below), allowing you to manage your accounts on the move. You can track your portfolio and view real-time balances, quotes, and performance. You can also place trades via the app – including complex transactions, such as multi-leg options orders, and an array of conditional orders.
In addition, the app provides handy cash management options – such as transferring funds with a click, depositing checks, and paying bills. You will need an E*Trade checking account in order to take full advantage of these cash management tools (see below for more on the E*Trade checking account).
E*Trade Mobile provides the same breadth of resources as the website, with watch lists, screeners, CNBC live video, earnings estimates, and independent analyst research.
E*Trade describes its E*Trade Pro platform as its “premier platform for active traders.”
The Pro platform is only available to “elite” clients who maintain an E*Trade account minimum of at least $250,000 or execute at least 30 stock or options trades during a calendar quarter. If you do not meet the E*Trade minimum balance criteria or the required level of trading, the cost of accessing E*Trade Pro is $99 per month.
Image source: Big Stock
The platform provides tools for active traders who require the best in terms of speed and performance. The platform is downloaded to your desktop, where you can fully customize it. In addition to the tools and resources available on the web platform, E*Trade pro provides an array of tools for advanced traders. These include easy-to-use backtesting, an options analyzer, a margin analyzer and calculator, advanced charting tools, level II quotes, streaming live CNBC TV, a strategy scanner to generate ideas, and more.
For active and advanced traders who meet the E*Trade minimum balance or the minimum trade frequency, E*Trade Pro is a sleek and valuable trading and research tool. For those who do not trade so frequently, the cost of the E*Trade Pro plus the already high E*Trade fees make this platform expensive. The E*Trade web and mobile platforms may suit these traders better.
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Research and Analysis
E*Trade provides an array of tools for performing detailed research on possible investments or trading strategies. The depth and breadth of E*Trade’s research and analysis was recognized by barrons.com in its E*Trade review of 2016. In the Research Amenities category, E*Trade scored 4.9 out of 5, which was matched by only one of its competitors: Fidelity.
Here are some of the research resources provided by E*Trade:
E*Trade provides its clients with in-depth research from independent analysts, such as Credit Suisse, Standards & Poor, Capital IQ, and Thomson Reuters. Detailed company-specific analysis and company comparisons are provided to help you research stocks that you are interested in.
There is a huge amount of premium independent research on the site, which somewhat makes up for the high E*Trade trading fees.
E*Trade also provides consensus ratings in summary report format. In these reports, you can quickly and easily see the consensus rating for a particular stock, arrived at by amalgamating the views of multiple research providers.
E*Trade also provides a library of videos by industry experts, talking about market trends and investing topics. Whether you want to learn about investing in emerging markets, investing in REITs, ethical investing or whatever it may be – you will find this library of information both interesting and helpful.
The E*Trade Community
The E*Trade Community is a place where you can connect with other investors from around the world. It is effectively a social network for E*Trade investors.
You can join discussion boards, ask questions of experienced investors, compare investing strategies, find out from other investors how E*Trade works for them, and much more.
From the Communities section of the dashboard, you can view the most actively traded stocks by E*Trade customers. There is also the option to join or start a conversation on the Discussion Boards. You can gain an idea of community sentiment – is it bullish or bearish?
Furthermore, there is the ability to view community opinions on various stocks, view and follow the top performers, and track your performance against the rest of the community to see how well your portfolio is doing.
Stock and Fund Screeners
The screener tools help you find investments that meet your criteria. The screener tools allow you to scan thousands of investment choices based on a range of factors. You can choose pre-defined screens or set up your own screening criteria.
For example, if you are looking for a certain type of stock, you can include criteria, such as dividend yield, P/E ratio, and industry. With the Mutual Fund Screener, you can scan over 8,000 funds using criteria such as objective, cost, risk, and Morningstar rating.
With the ETF screener, you can search for ETFs on the basis of fund rating, historical performance, holdings, etc. Or with the Bond Screener, you can search by category, price, maturity date, coupon, credit rating and more.
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Investor Education Center
Again, in its E*Trade review of 2016, barrons.com gave the website a high score (4.8 out of 5) for the category of “Customer Service, Education, Security.”
E*Trade’s Investor Education Center provides a wealth of educational resources for clients who are newer to investing and trading.
The center provides articles, videos, live events, and courses covering pretty much every topic relating to investing. There is also a section dedicated to helping customers understand how E*Trade works and making the most out of the platform.
Furthermore, the website has a comprehensive section covering retirement planning, which aims to help investors build the right retirement plan for themselves.
The investor education center is an incredible tool for newer investors or investors looking to branch into new investment products.
E*Trade Checking Account
In addition to its trading accounts, the company offers a competitive E*Trade checking account.
The account features include free, unlimited online bill payments, a free ATM/Visa Debit card, unlimited debit card and check transactions, online images of cleared checks, deposited checks, and deposit slips.
The E*Trade checking account is guaranteed by the FDIC which covers balances in your account up to $250,000.
Below is a chart of the E*Trade fees for its checking account. There are no monthly fees as long as you comply with the E*Trade account minimum of $5,000.
The E*Trade checking account provides convenience to investors that want their banking fully integrated with their brokerage account.
As mentioned in a number of E*Trade reviews online, E*Trade trading fees are among the highest in the industry. For stocks, each trade will cost you $9.99.
This is significantly higher than online brokers such as tradeking.com who offers stock trades at $4.95 per trade. While the E*Trade fees do not compete well against discount online brokers, they are somewhat comparable to the other large players in the industry. Charles Schwab, for example, charges a flat rate of $8.95 per stock trade, Fidelity charges a flat rate of $7.95, and TD Ameritrade charges a flat rate of $9.99.
The E*Trade fees on stocks do decrease as you trade more. If you place over 150 trades in a quarter, the fees on stock trades drops to $7.99.
If you place over 1,500 trades in a quarter, the cost drops even further to $6.99. This is good for active traders, but for the casual trader or investor, the fees remain high.
It is worth noting that E*Trade does offer its clients access to no-transaction-fee mutual funds and commission-free ETFs.
See the table below for a summary of E*Trade fees by product.
Is E*Trade A Good Value?
Given the breadth and depth of the services provided, it is not surprising that the E*Trade fees and commissions are on the high side.
The company justifies this by pointing to the unique customer experience it provides via its award-winning digital trading platforms and the quality of services and resources available to its clients.
Newer investors and casual traders will find a lot of value in the huge array of tools provided for research, education, and retirement planning. This may make up for the high E*Trade trading fees. More advanced traders may prefer to compare E*Trade fees with competitors to make sure they are getting the best of both price and technology.
Since its founding in 1982, E*Trade has been at the forefront of on-line trading for individual investors. The company executed the first electronic trade for an individual investor in 1983.
Since that time, E*Trade has grown to be one of the biggest players in online broking and continues to remain popular among individual investors. At the end of December 2015, E*Trade announced that it had reached $3.2 million in individual brokerage accounts. There was also a net increase of $96,000 in investor accounts in 2015.
So, is E*Trade good for you?
If you are looking for discount trades, E*Trade is most probably the best choice. If, however, you are looking for a platform that provides you with an easy-to-use, comprehensive, and innovative service, E*Trade is definitely worth a look.
In its November 2015 E*Trade review, reviews.com pronounced the E*Trade platform as “by far the best Web-based experience in the industry.”
While E*Trade fees are among the highest in the industry, the company provides an immense array of investing tools, a premium Education Center, and sleek, best-in-class trading technology.
It also offers you access to a huge array of investment products, including futures and international and forex markets – which are not offered by all online brokers.
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