Compare TD Ameritrade vs Etrade
Two of the largest and most familiar low-cost brokerage firms are TD Ameritrade and E*Trade. If you have been an active trader or investor for any length of time, you will definitely be aware of both firms and the competing services they offer.
As both brokerage houses offer a wide selection of both banking and investment services to retail investors, it is prudent to compare each other’s offerings to determine which firm is the best pick. This review will pit both firms against each other to do just that.
Fees and Account Minimums
Most brokerage firms offer a service that has become somewhat commoditized in the marketplace; they all offer the ability to buy and sell stocks, bonds, options, and other financial products. As a result, when comparing brokers, it makes sense to start with a comparison of the various fees and account minimums extended by each firm.
Let’s start with stock trading fees. At both TD Ameritrade and E*Trade, the standard fee to buy and sell stocks and ETFs is $9.99 per trade.
Keep in mind that both firms do offer the ability to buy and sell over 100 ETFs with zero commissions, as is becoming very common in the industry.
For more active traders, there are discounts available. At E*Trade, trades drop to $7.99 per trade (a $2.00 discount) once 150 or more trades are
made in a quarter. Discounts are available at TD Ameritrade as well, however a customer that can show that he is an active trader will need to
contact the firm directly and negotiate a lower rate. Traders are able to negotiate similar or even better than at E*Trade discounts on trades if
the trading volume is high enough.
Making a trade with a customer representative over the phone is also available at both firms, although this is not an option that is used very often. TD Ameritrade charges a huge premium on placing the trade via a representative (as if to discourage traders from doing so). The fee is $44.99 per trade.
Trading using a representative at E*Trade is much less at “only” $25 per trade.
In addition to the above fees and commissions, here is a quick comparison of some of the other fees charged by both companies:
- Zero account maintenance fees at both discount brokerage firms
- Zero inactivity fees at both discount brokerage firms
- Both discount brokers offer zero-fee IRAs.
- Minimum initial deposits: E*Trade = $500 and TD Ameritrade = $0
Based on the comparison of fees and account minimums at both E*Trade and TD Ameritrade, there is no clear winner as both offer similar structures.
TD Ameritrade offers a large number of mutual funds to its customers. They provide their clients with access to over 11,000 mutual funds. Of these, approximately 2,000 are no-load and can be purchased without a transaction fee. For the funds that do have a transaction fee, that fee is a whopping $49.99 per trade.
E*Trade on the other hand has access to few funds – over 8,000 to be specific. 1,300 of these funds do not have a transaction fee and are no-load. For the funds that do have a transaction fee, that fee is a more reasonable, but still high $19.99 per trade.
Neither discount broker jumps ahead in the rankings with respect to mutual funds. There may be a sight edge to TD Ameritrade given the higher number of funds offered, however that high transaction cost could be a huge detriment if the fund the trader wants to purchase is not a no-load/no transaction fee fund.
Research and Education
With the proliferation of research and education tools covering a wide variety of trading and investing available on the web today, the additional services offered by discount brokers can be seen as providing little additional value. As a result, the winner in this area is the firm that provides access to more premium education and research with no extra costs.
At TD Ameritrade, clients have access to research on stocks, ETFs, and general market views from the likes of The Street, S&P Capital IQ, Credit Suisse, and Morningstar. In addition, TD Ameritrade owns and provides clients with access to Investools which offers courses on a number of trading and investing topics such as options, stock analysis, and forex.
E*Trade offers a number of different research and education products as well. They provide clients with on-demand videos as well as live, in-person seminars that cover financial topics such as fixed income, investing within IRAs, as well as buy and selling options.
Neither firm really jumps out as the clear winner in this category, however TD Ameritrade’s Investools does offer some interesting offerings.
Stock trading is a global business, and TD Ameritrade offers around the clock support for customers who require assistance with their accounts. In addition, customer service can be obtained from representatives who speak, Mandarin, Cantonese, or Spanish.
TD Ameritrade also has over 100 branches in the U.S. that can be used if more personalized service is required.
Like TD Ameritrade, E*Trade also offers customer service 24 hours per day. However, with only 30 physical locations that can be an issue for those investors seeking more personalized service.
TD Ameritrade appears to take more care in providing customer service support to its customer, and as a result comes out ahead in this area.
The most important consideration for investors and traders, aside from fees and commissions, is the trading tools and platform offered to customers.
TD Ameritrade has some of the best in the business.
TD Ameritrade offers three types of platforms, all with free access to Level II quotes, which is a huge plus as this give you insight into the supply
and demand for shares at any given moment in the market.
The first platform is their web-based site which is easy to use and navigate. It does not offer all the bells and whistles as their more advanced platform, but for simple buying and selling of stocks it does the job well.
The second platform is Trade Architect, which is a Java-based web application that offers a few more features.
The third, and most popular is Thinkorswim. This is a full-suite software package that
gives investors and traders access to advanced trading tools. For example, they have a very strong option buying and selling tool that is yet to
be beat by other brokers.
Each of these platforms offered by TD Ameritrade have no fees to use and they also offer paperMoney which allows traders and investors to practice
trading using fake money. It is a solid way to test if your strategy will work, or to simply practice buying and selling stocks so you don’t lose
money by making a silly mistake.
E*Trade also has very solid trading tools, and they are well known for being user friendly. Called Total Trade, it provides access to all of the
most common methods of buying and selling stocks, options, and ETFs. In addition, E*Trade also has solid and more advanced trading platforms that
are designed for more active traders who want access to more robust charting and order entry tools. The
E*TRADE Pro application is the desktop version and E*Trade MarketTrader is the web-based version.
With all of that in mind, TD Ameritrade does offer a better suite of tools with Thinkorswim becoming the gold standard for trading applications available to more active traders.
Each year, more and more trades are made using iPhones and/or Android based phones. E*Trade provides clients with mobile trading support via applications for the iPad, iPhone, Amazon Fire, and Kindle Fire HD. They have spent most of their development dollars on the iPhone application which has an easy to use interface and access to order entry tools, mobile check deposit, charting, and educational videos to name a few of the key features.
TD Ameritrade has taken a slightly different approach building applications based on the level of experience the trader or investor has. For example,
for a more inexperienced trader the Mobile App or Mobile Trader App may be appropriate. However, if more advanced support is required then the
Thinkorswim app is the best choice. Thinkorswim will also give traders access to the mobile version of paperMoney for clients interested in practicing their trading on the go.
Both companies offer comparable mobile access to their platforms.
Cash Management Features
In addition to discount broker services, TD Ameritrade can provide customers with access to a checking account with free checks, no monthly account fees, and even a Visa debit cards for no cost. These accounts are fully FDIC-insured (up to $250,000) and all ATM fees are reimbursed.
E*Trade also offers FDIC-insured accounts with free Visa debit cards and checks. The ATM rebates are not as solid as TD Ameritrades, as they require account minimums of $5000 or combined balances of $50,000.
Given the ATM rebates, TD Ameritrade has the better offering in this category.
A couple of other details should be presented when doing a full review of both of these discount brokerage firms. First, TD Ameritrade offers clients the ability to trade currencies (forex). E*Trade does not provide this ability to their clients which is a definite miss on their part.
In addition, both firms allow futures trading, although TD Ameritrade is cheaper at $2.25 per contract versus E*Trades’s $2.99.
The clear winner is TD Ameritrade.
Etrade vs Ameritrade: The Results
Based on this review, and considering the results of each section TD Ameritrade (read review)
beats Etrade (read review). With the robustness of the Thinkorswim platform and the customer
service support they provide a better value to investors and traders looking for a trading platform and service that works for them.
Updated on 10/11/2016.
Review discount online brokerage firms comparison: Etrade or TD Ameritrade? Differences between investment companies. Recommendation for stocks, options, ETFs, mutual funds, bonds investors. TD Ameritrade versus Etrade for beginner
investors, long term, individual retirement accounts, active/day traders. See what stock broker service is better, cheaper, offers lower fees, cost, rated higher and easier to use. Which broker should you choose?