My E*Trade Brokerage Review
E*TRADE is an online brokerage site that specialize in stock, option, bond, future and mutual fund. E*trade also provides many additional banking financial services such as High Yield Saving accounts, checking account & mortgage. Etrade also offers a wide selection of trading tools for their customers, as well as low trading commissions. E*TRADE also allows its investors or traders to trade stocks on their smart phones such as iPhone and BlackBerry with the use of E*Trade Mobile Pro. They are one of the largest financial brokers in the world with > 4.5 million accounts in about 40 countries with customer assets in excess of $100 billion.
Details about Etrade
E*Trade was founded on 1982. E*Trade Financial Corp is a public company listed on NASDAQ with ticker ETFC. Etrade offers product such as stocks, options, futures, bonds and mutual funds. The minimum fund to open an account is $500. There is no inactivity fee; this is one of the latest changes on Q2 2010. The client asset is being held by E*TRADE Securities LLC and E*TRADE Clearing LLC, member of FINRA and SIPC.This account is insured under SIPC up to $500,000 ($100,000 for cash).
The following is the standard pricing for etrade:
- Products: Stocks, options, futures, bonds & mutual fund
- Market/Limit Orders: $9.99 for stock and/or etf
- Options: $9.99/trade+$0.75/contract
- Futures: $9.99/trade+$2.99/contract
- Mutual Funds: $0.00 (No Load, NTF) & $19.99 (Transaction-fee Fund)
- Broker Assisted: Add $45 (ex: Market order = $54.99)
- Minimum to Open: $500
- Inactivity Fee: $0.00 with exception or $25.00 per quarter
- Some Other Fees: Paper Statement: $2.00 per statement; ACAT Out: $60.00.
- Maximum Margin Rate: Based on proprietary base rate
Inside Etrade Trading AccountClick thumbnail to view full-size
Opening an account
Opening account is straight forward; you just need to fill the online application through etrade website. You can open individual, joint, and Individual Retirement accounts (IRA). The following accounts are being offered by etrade such as Employee Stock Plans, Business, Corporate/LCC, Trust & Estate, incestment club, rollover IRA, traditional IRA, Roth IRA, beneficiary IRA, etc. They may require you to submit some identification as well. The application only takes about 10-15 minute. Once you are done, you’ll need to wait for their approval. Then, you can setup how you want to fund your account.
There are 4 different ways to fund your etrade account:
- Wire Transfer – usually can be done same business day
- Transfer an account from other brokers .This will take more than 10 business days
- Mailing a check will take 5 business days
- Electronic Transfer (ACH transfer) will take up to 3 business days.
For International or Foreign investor or non US resident, you can apply e trade account through website. It will direct you to your regional international website. Typically, you will need to submit your account by mail. You will need to submit W-8Ben and ID or Passport along with your application.
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Pricing or commission
For stock or ETF order, the standard commission is $9.99 per trade with no limit of shares amount. If you make 150 trades per quarter (3 months), you may qualify for $7.99 per trade. I you are an active trader and make more than 1,500 trade per quarter, you may qualify for further discount. Please check with etrade for details. As noted, for broker-assisted trades, add $45 to the total order. For example if you buy stock through broker assistance, you will be charge $54.99 ($9.99 trade fee + $45 broker assistance). When trading during pre and post market hours, an ECN fee of $.005 per share is added to the regular commission rate.
There are various stock order can be executed through etrade such as Market order, Market on Close order (MOC), Limit order, stop order or stop limit order, and trailing stop order ($ or %).
Stock trading (i.e. buy stock online) can be done through web based platform as well as software platform such as MarketTrader, PowerEtrade Pro.
In Q2 2010 E*TRADE has removed the account service fee of $40 per quarter which, however they could be assessed if certain conditions were met.
For option, the cost of 1 contract will cost $10.74 commission fee, while 10 contracts will cost $17.49 commission fee. Also, when trading options, an options regulatory fee of $0.014 per contract with a $0.04 minimum.
For mutual funds, there is about 1,100 no load no transaction fee fund with no commission fee for buy or sell. There are 7,600+ mutual funds for selection with $19.99 per trade of mutual funds.
Maintenance Fees - charge on Wednesday of last full week
To avoid $25 maintenance fees, per quarter (December, March, June, September), please make sure you qualify one of this:
- Your brokerage account balance is > $5,000 or
- You have executed at least two commissionable trades in previous six months.
- Your linked E*TRADE Securities brokerage and E*TRADE Bank accounts have a total account balance greater than or equal to $20,000.
- Your E*TRADE Securities brokerage account has been opened for less than 12 months.
- All trust and custodial accounts.
What are the advantages using etrade?
- Offer several premium services such as excellent trader platform Power Etrade Pro 5.0
- Best mobile trading application Etrade Mobile Pro for blackberry & Apple iphone
- Etrade website is very user friendly.
- There are additional banking services such as Online High Yield Saving account (complete savings), and Checking account (Max-Rate Checking & e*trade checking).
- Offer international market for trading such as Canada, France, Germany, Hong Kong, Japan, and the United Kingdom.
- Also offer after hour trading either it is pre market and post market hour.
- Offer complex and conditional buy or sell order
- Have an excellent Dividend Reinvestment Plan (DRIP) program
An investor and/or trader
need many tools for trading. E*TRADE does provide many different tools for
trading such as excellent charts, good stock engine platform as well good basic
option trading engine. It also has standard web based trading platform as well
as desktop software platform namely Power E*TRADE Pro, and a mobile application
named E*TRADE Mobile Pro. E*TRADE Mobile Pro comes in two flavors: Mobile
Pro for BlackBerry and Mobile Pro for iPhone.
Please be aware of the $25 quarterly account maintenance fee for the minority of investors that may not qualify - see more details on the commissions and fees section. E*TRADE also offers an excellent Dividend Reinvestment Plan (DRIP).
Customer complaints from my research:
- Buggy web interface
- Lot of service charges such as inactivity fees (before), closing fees, etc
- Difficult to reach customer service and unresponsive CS, sometime there is a wait for 2 hours.
- Buy order and/or option order was rejected due to error.
- Etrade received 5 stars out of 5 stars for Trading Tools, Customer Service, and Banking Services from SmartMoney Magazine for Year 2010.
- Etrade also received 4 stars out of 5 stars for long term investing & International trader from Barron’s Magazine 2010.