Interactive Brokers vs. E*trade: Which Broker Is Best?
Choosing the right online broker can feel like navigating a financial labyrinth. With countless options, each boasting unique features and fee structures, it’s easy to get lost. Two of the most popular choices for traders of all levels are Interactive Brokers and E*TRADE, but which one reigns supreme?
This in-depth comparison dives headfirst into the core offerings of Interactive Brokers and E*TRADE. We’ll explore their trading platforms, commission fees, investment choices, and overall suitability for different types of investors. Whether you’re a seasoned day trader or just starting your investment journey, understanding these key differences is crucial.
We’ll break down the nuances of each platform, comparing their strengths and weaknesses across various categories. By the end of this analysis, you’ll have a clear understanding of which broker, Interactive Brokers or E*TRADE, aligns best with your individual financial goals and trading style, empowering you to make a confident decision.
Specs at a Glance:
| Feature | IBKR | ETRD |
|---|---|---|
| Trading Platforms | Trader Workstation (TWS), WebTrader, Mobile | E*TRADE Web, E*TRADE Pro, Mobile |
| Tradable Assets | Stocks, Options, Futures, Forex, Bonds, Funds, CFDs, and more | Stocks, Options, Futures, Forex, Bonds, Funds |
| Margin Rates | Competitive, Tiered | Competitive, Tiered |
| Account Minimum | Generally $0 | Generally $0 |
| Research Tools | Extensive, Advanced | Solid, Integrated |
| Educational Resources | Comprehensive | Good |
| Customer Service | Varied | Good |
| Mobile App | Trader Workstation Mobile | E*TRADE Mobile |
| Advanced Order Types | Yes, Extensive | Yes |
| International Trading | Extensive | Limited |
| Fractional Shares | Yes | Yes |
| API Access | Yes | Yes |
Feature-by-Feature Breakdown
Trading Fees
- Interactive Brokers: Offers extremely low, tiered commissions, often the lowest in the industry, especially for high-volume traders. They offer a per-share or a percentage-based commission structure. However, there are activity fees if you don’t meet minimum activity levels.
- Etrade: Offers commission-free trading for stocks, ETFs, and options. Options trades have a small per-contract fee. E*TRADE’s commission-free model is simpler than Interactive Brokers’ tiered structure.
- Winner: Interactive Brokers
Platform & Tools
- Interactive Brokers: Provides a robust, professional-grade platform, Trader Workstation (TWS), with advanced charting, market data, and order routing capabilities. It has a steeper learning curve but offers incredible customization and features.
- Etrade: Offers two primary platforms: E*TRADE Web and Power E*TRADE. Power E*TRADE is geared towards active traders, with advanced charting and tools. E*TRADE’s platforms are generally user-friendly but less customizable than TWS.
- Winner: Interactive Brokers
Investment Choices
- Interactive Brokers: Provides access to a massive range of investment options, including stocks, options, futures, forex, bonds, and mutual funds, across a global market. This breadth is a major strength.
- Etrade: Offers a wide selection of investments, including stocks, ETFs, options, mutual funds, and futures. While comprehensive, the global market access may be more limited compared to Interactive Brokers.
- Winner: Interactive Brokers
Margin Rates
- Interactive Brokers: Generally offers very competitive margin rates, especially for larger balances. Their rates are often lower than competitors, making it attractive for leveraged trading.
- Etrade: Offers margin trading, but its margin rates tend to be higher than Interactive Brokers, particularly for larger margin loans.
- Winner: Interactive Brokers
Account Minimums
- Interactive Brokers: Has no minimum account balance, making it accessible to a wider range of investors.
- Etrade: Has no minimum account balance.
- Winner: Tie
Research & Education
- Interactive Brokers: Offers a wide array of research tools and educational resources, including news feeds, market analysis, and educational videos, but the volume of information can be overwhelming for beginners.
- Etrade: Provides extensive research tools, including third-party reports from Morningstar and Thomson Reuters, as well as educational content suitable for all experience levels, making it easier to navigate.
- Winner: etrade
Customer Service
- Interactive Brokers: Customer service can sometimes be challenging to navigate, with reports of wait times and a complex system.
- Etrade: Offers generally good customer service, with multiple contact options and helpful representatives.
- Winner: etrade
Mobile Trading
- Interactive Brokers: Offers the IBKR Mobile app, which provides access to trading, account management, and market data. It can be complex to use compared to other mobile platforms.
- Etrade: Offers a user-friendly mobile app, with a clean interface and good functionality. Provides a convenient trading experience.
- Winner: etrade
Winner by Category:
| Category | Winner |
|---|---|
| Trading Platform | Interactive Brokers |
| Tradable Assets | Interactive Brokers |
| Commissions & Fees | Tie |
| Research Tools | Interactive Brokers |
| Customer Service | E*TRADE |
| Ease of Use | E*TRADE |
| International Trading | Interactive Brokers |
What They Have in Common:
- Commission-Free Trading: Both Interactive Brokers and E*TRADE offer commission-free trading for stocks and ETFs, making them attractive options for cost-conscious investors.
- Mobile Trading Apps: Both platforms provide mobile apps that allow users to trade on the go, monitor their portfolios, and access market data from their smartphones or tablets.
- Variety of Account Types: Both brokers offer a range of account types, including taxable brokerage accounts, retirement accounts (like IRAs), and custodial accounts.
- Educational Resources: Both Interactive Brokers and E*TRADE offer educational resources, such as webinars, articles, and videos, to help investors learn more about trading and investing.
- User-Friendly Platforms: Both brokers offer web-based and desktop platforms, allowing users to trade, manage their portfolios, and access market data.
Interactive Brokers Vs E*TRADE Buying Guide
Account Types and Features
Both Interactive Brokers (IBKR) and E*TRADE offer a variety of account types to suit different investor needs. IBKR provides access to a wide range of asset classes, including stocks, options, futures, forex, and bonds, often with lower margin rates. E*TRADE, while also offering a diverse selection, may have a slightly more streamlined experience for beginners. E*TRADE excels in providing educational resources and tools to aid in investment decisions. Consider your investment goals and experience level when choosing between the two.
Fees and Commissions
Commission structures are a crucial factor. Interactive Brokers generally offers significantly lower commission rates, especially for active traders and those trading in high volumes. E*TRADE, while competitive, may have higher commissions, particularly for less active traders. Both brokers eliminated commission fees for stock and ETF trades. Compare the fee structures for the specific assets you plan to trade and consider any platform fees or inactivity fees that might apply. Always review the full fee schedule before opening an account.
Trading Platforms and Tools
Interactive Brokers’ trading platform, Trader Workstation (TWS), is powerful and customizable, but it can have a steeper learning curve for beginners. It offers advanced charting, order types, and market data. E*TRADE provides a more user-friendly platform, with a web-based platform and mobile app that are easier to navigate. E*TRADE also offers options tools and research reports which are easier to use. Evaluate which platform best aligns with your trading style and technical analysis needs.
Research and Education Resources
E*TRADE is known for its robust educational resources, including articles, videos, and webinars, which are beneficial for novice investors. They offer in-depth market analysis and commentary from reputable sources. Interactive Brokers provides market data and research tools, but its educational offerings might not be as extensive or beginner-friendly. Assess your need for educational support and research tools before making a decision.
Customer Service and Support
Consider the quality of customer service offered. E*TRADE generally provides accessible customer support through phone, email, and live chat. Interactive Brokers may have more complex customer service channels, and response times can vary depending on the complexity of the inquiry. Read reviews and consider your preferred method of communication when assessing customer service quality, especially if you anticipate needing assistance with your account.
Mobile Trading
Both brokers offer mobile trading apps, allowing you to manage your portfolio and trade on the go. E*TRADE’s mobile app is generally considered user-friendly, with a focus on ease of navigation and a clean interface. Interactive Brokers’ mobile app, while powerful, may require more technical knowledge. Ensure the mobile app meets your trading needs and provides the functionality you require. Evaluate the app’s features, performance, and user reviews before committing.
Who Should Buy What?
Buy Interactive Brokers If…
- You are an experienced trader.
- You trade a wide variety of assets.
- You want access to international markets.
- You are looking for very low margin rates.
Buy E*TRADE If…
- You are a beginner or intermediate trader.
- You prefer a user-friendly platform.
- You value strong customer service.
- You prefer a more streamlined trading experience.
Frequently Asked Questions
What are the minimum deposit requirements for Interactive Brokers and E*TRADE?
Interactive Brokers has no minimum deposit for most accounts, but a minimum balance may be required to trade certain products or for margin trading. E*TRADE also generally has no minimum deposit requirement to open an account. However, you should check the current requirements, as they may change. Consider the minimum deposit and any required balance to keep your account active.
Which broker offers a wider range of investment options?
Interactive Brokers offers a much wider range of investment options, including stocks, options, futures, forex, bonds, and mutual funds, across numerous global markets. E*TRADE also offers a good selection of investment choices, but it may not offer all the same products or access to as many global exchanges. Evaluate your investment strategy and preferred asset classes to determine which broker is best.
Which platform is better for beginner investors?
E*TRADE is generally considered more user-friendly for beginner investors, offering a streamlined trading platform, educational resources, and a more intuitive interface. Interactive Brokers’ Trader Workstation (TWS) is powerful, but it has a steeper learning curve. E*TRADE provides tools, tutorials, and a wealth of educational materials to aid new investors. Consider your experience level and comfort with trading platforms.
How do commissions and fees compare between the two brokers?
Both Interactive Brokers and E*TRADE offer commission-free trading for stocks and ETFs. However, Interactive Brokers often has lower margin rates and may offer lower fees for other products. E*TRADE’s fees can be competitive, so compare the fee structures for the specific assets you plan to trade. Factor in any platform fees or inactivity fees.
Which broker has better customer service?
E*TRADE is generally known for its accessible customer service through phone, email, and live chat. Interactive Brokers’ customer service can be more complex, and response times may vary. Customer service is essential, so consider the channels available and the responsiveness of support. Consider reading reviews to determine which broker best suits your needs.
What are the mobile trading capabilities of each broker?
Both Interactive Brokers and E*TRADE offer mobile trading apps. E*TRADE’s app is generally known for its user-friendliness. Interactive Brokers’ mobile app is powerful but requires more technical knowledge. Consider the mobile app’s features, performance, and user reviews before committing to a broker, especially if you plan to trade on the go.
Which broker offers better research and educational resources?
E*TRADE excels in providing comprehensive educational resources, including articles, videos, and webinars, beneficial for novice investors. Interactive Brokers provides market data and research tools, but its educational offerings might not be as extensive or beginner-friendly. Evaluate your need for educational support and research tools before making a decision.
Final Verdict
E*TRADE offers a more user-friendly experience, making it a better choice for beginners. Its educational resources and intuitive platform are significant advantages. Interactive Brokers, with its lower commission rates and access to a wider range of assets, will appeal to experienced traders. E*TRADE’s educational resources and ease of use are ideal for new investors.
Winner: E*TRADE