Etrade vs Interactive Brokers: Which Broker Is Best?
Choosing the right online broker can feel like navigating a minefield. With countless options vying for your attention, it’s easy to get lost in the jargon and complexities. But don’t worry, we’re here to help you make an informed decision and find the perfect match for your investment goals.
Today, we’re putting two industry titans head-to-head: etrade and interactive brokers. Both platforms offer a wide array of features, from stock trading to futures and options. We’ll delve into the nitty-gritty, comparing their fees, trading platforms, research tools, and overall suitability for different types of investors.
Whether you’re a seasoned trader or just starting your investment journey, understanding the nuances of etrade vs interactive brokers is crucial. This comprehensive comparison will equip you with the knowledge to select the broker that aligns best with your needs, risk tolerance, and investment style. Let’s dive in and find your ideal brokerage solution!
Specs at a Glance
| Feature | ET | IBKR |
|---|---|---|
| Trading Platform | Web, Mobile | Web, Desktop, Mobile |
| Investment Products | Stocks, ETFs, Options, Futures, Mutual Funds | Stocks, ETFs, Options, Futures, Forex, Bonds, Mutual Funds |
| Margin Rates | Competitive | Very Competitive |
| Research Tools | Yes | Yes, Extensive |
| Educational Resources | Yes | Yes |
| Account Minimum | $0 | $0 |
| Fractional Shares | Yes | Yes |
| International Trading | Limited | Extensive |
| Advanced Order Types | Yes | Yes, Robust |
| API Access | Limited | Yes |
| Customer Service | Phone, Chat | Phone, Email, Chat |
| Mobile App | Yes | Yes |
Feature-by-Feature Breakdown
Trading Fees
- Etrade: Offers commission-free trading for stocks, ETFs, and options. However, options trades have a per-contract fee. E*TRADE also has a tiered commission structure for futures trading.
- Interactive Brokers: Known for its low, tiered commissions, which can be very competitive, especially for active traders. Offers commission-free trading on US stocks.
- Winner: Interactive Brokers
Platform & Tools
- Etrade: Provides a user-friendly platform with robust research tools, including charting, screeners, and market data. Offers both a web platform and mobile app.
- Interactive Brokers: Offers a more complex platform, Trader Workstation (TWS), which is highly customizable and powerful but can have a steeper learning curve. Also provides web and mobile platforms.
- Winner: E*TRADE
Investment Choices
- Etrade: Provides access to a wide range of investment products, including stocks, ETFs, options, futures, mutual funds, and bonds. Also offers managed portfolios.
- Interactive Brokers: Offers a vast selection of investment products, including stocks, ETFs, options, futures, forex, bonds, and more, across numerous global markets.
- Winner: Interactive Brokers
Research & Education
- Etrade: Offers comprehensive research tools, including market analysis, news, and third-party research reports. Also provides educational resources for investors of all levels.
- Interactive Brokers: Provides research reports, news feeds, and educational content, although it may not be as accessible or user-friendly as E*TRADE.
- Winner: E*TRADE
Margin Rates
- Etrade: Offers competitive margin rates, though they may not be as low as Interactive Brokers, particularly for larger margin balances.
- Interactive Brokers: Generally has some of the lowest margin rates in the industry, making it attractive for traders who use leverage.
- Winner: Interactive Brokers
Customer Service
- Etrade: Provides customer support via phone, email, and live chat. Generally has a good reputation for customer service.
- Interactive Brokers: Customer service can be somewhat less responsive than E*TRADE.
- Winner: E*TRADE
Account Minimums
- Etrade: Generally, E*TRADE doesn’t require a minimum account balance to open an account or trade.
- Interactive Brokers: Interactive Brokers also generally has no minimum account balance, making it accessible to a wider range of investors.
- Winner: Tie
International Trading
- Etrade: Provides access to some international markets, but the selection may be more limited compared to Interactive Brokers.
- Interactive Brokers: Offers access to a vast array of global markets, allowing trading in numerous countries and currencies.
- Winner: Interactive Brokers
Winner by Category
| Category | Winner |
|---|---|
| User-Friendliness | E*TRADE |
| Trading Platform | Interactive Brokers |
| Fees | Interactive Brokers |
| Investment Products | Interactive Brokers |
| Margin Rates | Interactive Brokers |
| Research Tools | Interactive Brokers |
| International Trading | Interactive Brokers |
What They Have in Common
- Account Types: Both brokers offer a variety of account types to suit different investor needs, including taxable brokerage accounts, retirement accounts (like IRAs), and more.
- Regulatory Oversight: Both E*TRADE and Interactive Brokers are regulated by major financial authorities, ensuring a level of security and oversight for client assets.
- Mobile Trading: Both platforms provide mobile trading apps, allowing users to manage their portfolios and execute trades on the go from their smartphones or tablets.
- Educational Resources: Both brokers offer educational resources, including articles, videos, and webinars, to help investors improve their trading knowledge.
- Securities Available: Both brokers provide access to a wide range of securities, including stocks, ETFs, and options.
Etrade Vs Interactive Brokers Buying Guide
Account Opening & Funding
Opening an account with E*TRADE is generally considered user-friendly, offering a streamlined online application process and various account types to choose from, including retirement, brokerage, and custodial accounts. Funding your E*TRADE account is also straightforward, with options like electronic funds transfer (EFT), wire transfers, and check deposits. Interactive Brokers also provides a wide array of account types and supports multiple currencies. Their application process can be more involved due to their extensive offerings and regulatory requirements, but offers significantly more international options. Funding is done via ACH, wire, or check.
Trading Platforms & Tools
E*TRADE provides a suite of trading platforms, catering to both beginners and experienced traders. Their web platform is intuitive, offering real-time streaming quotes, charting tools, and research reports. Power E*TRADE, their advanced platform, provides more sophisticated tools, including options analysis and advanced charting. Interactive Brokers, on the other hand, offers Trader Workstation (TWS), a powerful and highly customizable platform. TWS is known for its advanced features, direct market access, and sophisticated order types, making it suitable for active traders and professionals. However, it has a steeper learning curve.
Investment Choices & Products
E*TRADE offers a broad selection of investment choices, including stocks, ETFs, options, futures, and mutual funds. They also provide access to fixed income products and new issues. The variety caters to different investment strategies and risk tolerances. Interactive Brokers boasts an even wider range of investment products, including stocks, options, futures, forex, bonds, and more, across numerous global markets. This extensive product selection makes it a strong choice for those seeking to diversify their portfolios internationally and trade in various asset classes. IBKR offers access to a truly global market.
Fees & Commissions
E*TRADE has a competitive fee structure, with commission-free trading for stocks, ETFs, and options. There are fees for options contracts and futures trading. They also offer a margin interest rate that is competitive. Interactive Brokers is known for its exceptionally low commission rates, particularly for high-volume traders and those trading in international markets. Their commission structure is tiered, meaning commissions decrease as trading volume increases. They also have very competitive margin rates, making them a cost-effective option for active trading.
Research & Education
E*TRADE provides a comprehensive suite of research tools and educational resources, including market analysis, analyst reports, and educational articles and videos. They cater to different skill levels, from beginners to experienced traders. Interactive Brokers also offers research tools and market data, but it may not be as user-friendly or as readily accessible as E*TRADE’s. However, IBKR provides a wealth of educational materials, including webinars, tutorials, and a knowledge base, to help clients understand their platform and investment strategies.
Customer Service & Support
E*TRADE is generally praised for its customer service, offering phone, email, and live chat support. They also have a helpful FAQ section and a strong online presence. Interactive Brokers provides customer support through phone, email, and chat, but customer service can be more challenging to navigate, especially for beginners. The complexity of their platform and the global nature of their business can sometimes lead to longer wait times. E*TRADE’s focus on a more streamlined experience often translates to easier access to support.
Who Should Buy What?
Buy E*TRADE If…
- You are a beginner or intermediate trader seeking a user-friendly platform.
- You prefer a broker with strong educational resources and customer support.
- You value a streamlined trading experience with readily available research tools.
Buy Interactive Brokers If…
- You are an experienced trader seeking low fees and advanced trading tools.
- You trade a wide variety of assets, including international stocks and futures.
- You require margin rates.
- You need access to a powerful trading platform with advanced order types and API access.
Frequently Asked Questions
What are the main differences in trading platforms?
E*TRADE’s platforms are known for their ease of use, making them suitable for beginners. They offer web and mobile platforms along with Power E*TRADE for advanced traders. Interactive Brokers’ Trader Workstation (TWS) is powerful but complex, ideal for experienced traders seeking advanced tools, direct market access, and customization options. TWS supports automation via APIs. E*TRADE provides a simpler, more streamlined interface.
Which platform offers lower trading fees?
Interactive Brokers generally offers significantly lower trading fees, especially for high-volume traders. Their tiered commission structure and competitive margin rates make them a cost-effective choice. E*TRADE provides commission-free trading for stocks and ETFs, but options contracts and futures trading have fees. IBKR is typically the cheaper option.
How do the research and educational resources compare?
E*TRADE offers a user-friendly and comprehensive suite of research tools and educational resources, catering to various skill levels. Interactive Brokers also provides research but may not be as accessible. IBKR offers a wealth of educational materials, including webinars, tutorials, and a knowledge base, to help clients understand their platform and investment strategies. Both have extensive data.
What types of investments are available on each platform?
E*TRADE offers a broad selection of investment choices, including stocks, ETFs, options, futures, and mutual funds. Interactive Brokers boasts an even wider range, including stocks, options, futures, forex, bonds, and more, across numerous global markets. IBKR also offers access to a truly global market, giving traders access to more international markets.
Which platform is better for beginners?
E*TRADE is generally considered more beginner-friendly due to its intuitive platforms, accessible research, and straightforward account opening process. Interactive Brokers’ complex platform and extensive features can be overwhelming for novice traders. While IBKR offers educational resources, E*TRADE’s ease of use gives it a leg up.
How does customer service compare?
E*TRADE is generally praised for its accessible customer service options, including phone, email, and live chat. Interactive Brokers provides support, but the complexity of their platform and global operations can sometimes lead to longer wait times and more challenging navigation. E*TRADE’s support is often easier to access.
What are the account opening requirements?
E*TRADE’s account opening process is straightforward, with a streamlined online application. Interactive Brokers’ application can be more involved due to their wider array of account types and regulatory requirements. Both platforms offer a variety of account types, but IBKR’s is often more complex. IBKR also offers more international options.
Final Verdict
E*TRADE excels in user-friendliness, offering an accessible platform, comprehensive research, and strong customer service, making it suitable for beginners and those prioritizing ease of use. Interactive Brokers, with its lower fees, extensive investment choices, and powerful trading tools, caters to active traders and those seeking a global reach. While both platforms have their strengths, the best choice depends on individual needs and trading experience. For beginners, E*TRADE is the better option. For active traders, Interactive Brokers is superior.
Winner: E*TRADE