Interactive Brokers vs. E*TRADE Introduction
Active traders who want professional-style trading tools should take a close look at Interactive Brokers and
E*TRADE. These two brokerage firms offer advanced software and a lot of additional services.
Services
| Broker Review |
Cost |
Investment Products |
Trading Tools |
Customer Service |
Research |
Overall Rating |
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E*TRADE
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IB
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Commissions and Fees
| Broker Fees |
Stock/ETF
Commission |
Mutual Fund
Commission |
Options
Commission |
Maintenance
Fee |
Annual IRA
Fee |
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E*TRADE
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$0
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$0
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$0.65 per contract
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$0
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$0
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IB
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$0
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3% of trade value up to $14.95
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$0.65 per contract
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$0
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$0
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To Begin, Let’s Examine Investment Services
In self-directed accounts, E*TRADE customers can trade these asset classes:
- Futures contracts
- Stocks
- Closed-end funds
- Mutual funds
- Exchange-traded funds
- Option contracts
- Bonds and other fixed-income securities
Interactive Brokers offers everything on the list above, plus the following:
- Cryptocurrencies
- Foreign securities
- Warrants
- Precious metals
- Forex
- Structured products
Both firms also provide robo accounts through affiliated companies (E*TRADE Capital Management and Interactive Advisors). E*TRADE charges 0.30% per year for its service, while the management fee at Interactive Advisors ranges from 0.10% to 0.75%, depending on the portfolio selected. Traditional human-managed accounts are also available through E*TRADE’s parent company Morgan Stanley.
Winner: Pretty even overall
Next, It’s Website Tech
During our test of the two brokers’ websites, we found E*TRADE’s platform more intuitive and easier to
move around. The site’s dashboard is called Complete View. It appears automatically after login by
default. On the dashboard is a launch pad with several tools, one of which is Power. This is a
browser-based platform with many useful features. E*TRADE’s website can also place trades and handle other
trading tasks, such as charting.
Together, the website and browser platform provide many helpful tools, including:
- Full-screen charting with many tools
- Advanced trade types, such as OCO and trailing
- Quick trade ticket
- Advanced option tools, including P/L diagrams and integrated spreads
- Paper trading
Interactive Brokers has a dedicated Client Portal platform on its website for trading. The trading tools include
account-management features, advanced charting, and a good order ticket.
The trade ticket displays real-time data, account-balance details, including buying power, and trade fields further down the page. These include on-the-close orders and a price-management algo feature. Bracket orders (take profit and stop loss) can also be attached to an entry. Although these are useful features, there is no simulated-trading mode on the website.
Winner: E*TRADE
Third, We Need to Inspect Their Mobile Apps
Web-based trading is only the starting point with these two firms. Both companies have very good mobile
apps that should satisfy many demanding traders. E*TRADE actually has two of them: a basic app and a Power app.
The Power app, as expected, is built for trading. It can be used to trade stocks, ETFs, options, and futures. Even though it focuses heavily on trading, it also has helpful account-management tools, such as alerts, live streaming of Bloomberg TV, order management, and advanced charting. Together, the two E*TRADE apps provide strong trade tickets, useful charting tools, market news, educational resources, and research features.
Interactive Brokers has multiple mobile choices, including IBKR Mobile and IBKR GlobalTrader. IBKR Mobile fits a lot of power into a small platform. It has advanced order tools, account monitoring, portfolio tracking, and trading across global markets. We also like the inclusion of an AI tool that we didn’t find on E*TRADE’s apps (the E*TRADE website does have robo chat).
Options traders will find plenty to like on the IB app. During our review, we found multi-leg trading with Greek values and P/L charts. Although there aren’t many integrated spreads, there is an options strategy builder.
Winner: Draw
Fourth, We Need to Take a Look at Other Software
Interactive Brokers offers API functionality. This, of course, can take trading to a much higher technical level. For traders who do not need that much technology, there is Trader Workstation (TWS). This is Interactive Brokers’ flagship desktop trading platform. It has significant trading power, including access to foreign exchanges.
E*TRADE does not offer trading on foreign exchanges, but it does have a desktop program and an API.
The desktop system is called Power E*TRADE Pro, and it has useful features for both advanced and newer traders. The software is a little easier to use than TWS, while TWS has the advantage for international market access.
For actual trading, the order form on Trader Workstation is more advanced. It has more order types, and an advanced tab pushes the experience even further with hedge orders and other tools.
Winner: Interactive Brokers
Let’s Not Forget Margin
With such powerful trading software, it should not be surprising that both broker-dealers in this
comparison offer margin trading. Both also show margin details on specific assets inside their software.
A cash account can be upgraded to margin capability on either website, which is very convenient.
Not surprisingly, trading with borrowed money comes with a cost at either brokerage house.
E*TRADE’s margin rates range from 12.45% to
10.45%, while Interactive Brokers is on a much lower
level (6.14% for Lite clients, and rates as low as 5.14% for Pro clients).
Winner: Interactive Brokers
Up Next Is Day Trading
Direct Access to ECNs: Routing choices are available on Trader Workstation and Power E*TRADE Pro. TWS has many more venues.
Shorting: Both brokerage firms allow short positions. E*TRADE has a separate button for sell short. IBKR’s software displays whether a security is shortable. TWS also provides details on the current fee rate and the number of shares available for shorting. E*TRADE does not provide the same level of detail.
Extended Hours: E*TRADE customers can trade during pre-market, after-hours, and overnight sessions, with overnight trading limited to certain ETFs. Interactive Brokers offers overnight trading in many U.S.-listed stocks and ETFs, nearly 24/5 trading through IBKR GlobalTrader, and 24/7 cryptocurrency trading. Interactive Brokers also provides access to many foreign markets, which can further expand trading opportunities.
Routing Fees and Rebates: Interactive Brokers customers, but not E*TRADE clients, can receive rebates on trades.
Level II Quotes: Market-depth quotes are available at both firms.
Winner: Interactive Brokers
Finally, Let’s Have a Look at Extra Services
Banking Tools: E*TRADE has bank accounts with many perks, including ATM-fee refunds. Interactive Brokers has integrated cash-management tools, mobile check deposit, and the Karta Visa Infinite charge card.
IPOs: E*TRADE and Interactive Brokers customers can access IPO opportunities when offerings are available.
Dividend Reinvesting: Available at Interactive Brokers for stocks. Available at E*TRADE for stocks and ETFs.
IRAs: Individual Retirement Accounts can be opened at both E*TRADE and Interactive Brokers. E*TRADE has more IRA types, although it does have a $25 early withdrawal penalty.
Ongoing Investments: E*TRADE offers automatic investing for mutual funds and ETFs. Interactive Brokers offers recurring investments for eligible stocks using fractional-share trading.
Fractional Shares: Interactive Brokers offers fractional-share trading in eligible stocks and ETFs. E*TRADE offers ETF fractional shares through Automatic Investing, but it does not provide regular self-directed fractional-share trading in individual stocks.
Winner: E*TRADE
Websites
Interactive Brokers: Use this referral link to get up to $1,000 of IBKR stock for free!
E*TRADE:
Currently, no promotions.
Recommendations
Here’s where the comparison really matters:
Beginners: An automated account with E*TRADE Capital Management or Interactive Advisors would be a good starting point. A traditional advisory account with Morgan Stanley would be even better, although it would cost more.
Small Accounts: E*TRADE’s robo service requires $500 to get started. Interactive Advisors has a $100 minimum, although some portfolios can require as much as $50,000. Neither broker has minimums or fees for self-directed trading. Because Interactive Brokers offers fractional-share trading starting with just $1, small accounts will be better off there.
Long-Term Investors and Retirement Planning: E*TRADE’s website has better tools for retirement planning. For example, its mutual fund screener can look specifically for target-date mutual funds. Interactive Brokers’ fund screener cannot.
Mutual Funds: Speaking of mutual funds, E*TRADE has stronger resources, including a list of pre-screened funds and a category analysis tool.
Active ETF & Stock Trading: With fractional shares and Trader Workstation, we would choose Interactive Brokers.
IBKR vs E*TRADE Judgment
Neither choice is a bad one. E*TRADE and Interactive Brokers both offer excellent technology for
advanced traders and managed accounts for complete beginners. Everyone in between should be in good
hands, too.
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