Since its founding 40 years ago, E-Trade has lived through many transitions. But in the 10th annual Best Online Brokers survey, the trading pioneer moved up the ranks to become a top-three online broker.
In a surprise move, E-Trade beat to the punch some of its large competitors and ended up at No. 3 overall — quite a jump from the prior year when it didn't even make it to the top five of the Best Online Brokers list.
IBD's Best Online Brokers survey polled more than 5,000 investors on 15 important performance features of their primary brokers.
E-Trade brokerage scored among the top three brokers in five out of 15 categories. It ranked No. 2 in Trade Ideas and ranked among the top three for Mobile Trading Platform, After-Market Trading, Options Trading Platform and Availability Of Account Types.
"2021 has probably been the most interesting year that I've experienced, and I've been doing this for quite some time," said Christopher Larkin, managing director, trading at E-Trade from Morgan Stanley. As the entire industry went to zero commissions a few years ago, "from there, the (trading) activity level picked up, which is what we expected. … And in the first quarter of 2021, we saw the level of business that we've never seen before."
In 2019, E-Trade was doing just under 300,000 trades a day, Larkin says. At the peak of Q1 2021, the broker was experiencing 2.5 million trades per day. The company spent a lot of time last year investing in its infrastructure "to handle the next wave of volume that will happen at some point," he said.
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The zero commissions strategy has also spurred a "wave of new, mostly young, investors coming into the market for the very first time," Larkin noted. This mostly includes millennials and Gen Zers as the secular trend continues across the industry.
E-Trade Caters To All Investors
That said, E-Trade's strategy has been to cater to all types of clients, whether new or experienced investors, young or old, with limited assets or high net worth. The company was acquired by Morgan Stanley almost two years ago, which merged some complementary features from both companies into a very comprehensive platform.
Eric Eskin, 58, has been with E-Trade for 19 years. He particularly likes the broker's breadth of tools, ease of use and speed of trade creation. He executes two to four trades per week. "Difficult to categorize a singular approach — I adopt strategies based on (market) environment," he said. "At times, I trade intraweek and there are periods where I will focus on buy and hold."
Besides its flagship E-Trade platform and mobile app, the broker caters to more active or sophisticated investors, including options and futures traders, with its Power E-Trade platform and mobile app.
Power E-Trade is a robust trading platform that provides investors with features such as technical pattern recognition, dynamic charting, risk/reward probabilities, earnings move analyzer, custom and preset scans for trading ideas, exit plan setup and paper trading to practice without risking real money.
"Love their trading platform Power E-Trade, which provides analysis for every trade," said Jacki Fromme, 77, who's been with E-Trade for 26 years. "I make my living trading for myself."
E-Trade Account Features |
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| Minimum to open an account: $0 for brokerage and retirement accounts, $500 for Core Portfolios — E-Trade's robo advisor |
| Number of accounts: Not disclosed |
| Shorting restrictions: No shorting of OTC or penny stocks |
| Shorting leveraged ETFs initial margin: Greater of 50% or special margin requirement |
| Margin restrictions: The minimum equity requirement for a margin account is $2,000 |
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Special features: 100+ customizable charts within Power E-Trade; custom scans with LiveAction provide 120 filters for stocks, ETFs and options; Earnings analyzer to visualize historical earnings data to help identify options strategies. 25+ thematic investing screeners; trade ideas and customer insights generated via exclusive Trend Watch widget based on Twitter chatter. Test-drive ideas via simulated positions |
| Website: Etrade.com |
Fromme trades every day and considers herself to be an aggressive trader. She uses complex option strategies and trades stocks for both the long and short term.
Power E-Trade App
The platform's mobile companion is the Power E-Trade app that helps make simple or complex trades from a mobile phone. Investors can quickly place stock, ETF, options and futures orders on a single trade ticket. They can also execute options strategies using customizable options chains, access interactive charts and get detailed market information.
"We're one of the leading option trading firms in the market," said Larkin. "Just over 30% of our trades in any given day are in options. So, we do cater to that client quite a bit."
Rupesh Mandala, 36, has been with E-Trade for over four years and specifically likes its option graphs. He switched from Tastyworks because E-Trade provided lower trading fees for options. He considers himself an active growth investor, executing 10 to 15 trades per month.
When it comes to finding trade ideas, investors are well served by E-Trade's platforms. They have access to stock and fund screens, thematic screens, unusual volume option trades and social sentiment.
Aggregating Financial Opinions In TipRanks
Investors can see correlation between positive sentiment and a stock price, for example. This feature is powered by TipRanks, which aggregates financial opinions from financial resources for a stock over a 12-month period and then determines the overall sentiment.
Power E-Trade users can also add the Trend Watch widget to track actionable and unique consumer insights based on Twitter chatter to find trade ideas. They can explore Mega Trends and symbol-specific commentary.
Another area where E-Trade excels is its coverage of premarket and after-hours trading.
"You can trade from 7 a.m. to 8 p.m. every day," explained Larkin. "And then we've got a subset of ETFs that you can trade 24/5, like SPDR S&P 500 Trust and Invesco QQQ Trust."
Online brokerage is a highly competitive market, Larkin noted. "We're trying to compete on all levels of the market," he said. "We really are a category of one: we are a company that can serve anybody who's got a few dollars in their account, all the way up to multimillionaires that exist in the marketplace. We've really got that breadth of offering, from the digital perspective and from the human-advice perspective as well."
