Interactive Brokers vs. E*TRADE Introduction
Active traders who want to trade like the pros really need to check out Interactive Brokers and
E*TRADE. These two firms have high-level software and so much more.
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 clients can buy and sell the following asset classes:
- Futures contracts
- Stocks
- Closed-end funds
- Mutual funds
- Exchange-traded funds
- Option contracts
- Bonds and other fixed-income securities
Interactive Brokers provides access to everything on the above list plus the following:
- Cryptocurrencies
- Foreign securities
- Warrants
- Precious metals
- Forex
- Structured products
Both firms also offer 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 chosen. 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 drive of the two brokers’ websites, we found E*TRADE’s more intuitive and easier to
navigate. The site’s dashboard is called Complete View. It appears automatically after a login by
default. On the dashboard is a launch pad of various tools, one of which is Power. This is a
web-browser platform with lots of tools. E*TRADE’s website can also place trades and perform other
trading functions, like charting.
Combined, the website and browser platform have lots of useful features, 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
The Interactive Brokers website has a dedicated Client Portal platform for trading. The trading tools include
account management features, advanced charting, and a pretty good order ticket.
The trade ticket shows real-time data, account balance details, including buying power, and trade fields further down. These include on-the-close orders and a price management algo feature. Bracket orders (take profit and stop loss) can be appended to an entry. While these are some nice 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 beginning with these two powerhouses. Both firms have very good mobile
apps that are sure to please the most demanding of traders. E*TRADE actually has two of them: a basic app and a Power app.
The Power app, not surprisingly, is designed for trading. It can be used to trade stocks, ETFs, options, and futures. Despite its focus on actual trading, it does have some nice account management tools, like alerts, live streaming of Bloomberg TV, order management, and advanced charting. Combined, the two E*TRADE apps have some really good trade tickets, nice charting tools, market news, educational resources, and useful research tools.
Interactive Brokers has multiple mobile choices, including IBKR Mobile and IBKR GlobalTrader. IBKR Mobile packs a lot into a small platform. It offers advanced order tools, account monitoring, portfolio tracking, and trading across global markets. We also like the incorporation 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 much to like on the IB app. During our investigation, we found multi-leg trading with Greek values and P/L charts. Although there aren’t very 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 bring trading to the ultimate level. For traders who don’t quite need that level of technology, there is Trader Workstation (TWS). This is Interactive Brokers’ flagship desktop trading platform. It has tremendous trading muscle, including access to foreign exchanges.
E*TRADE doesn’t 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 that both advanced and novice traders will benefit from. The software is a little more user-friendly than TWS, while TWS has the edge for international market access.
For actual trading, the order form on Trader Workstation is more advanced. There are more trade types, and an advanced tab brings the experience to an even higher level with hedge orders and more.
Winner: Interactive Brokers
Let’s Not Forget Margin
With such robust trading software, it should come as no surprise that both broker-dealers in this
survey offer margin trading. Both also provide margin details on specific assets on their software.
A cash account can upgrade to margin capability on either website, which is really convenient.
Not surprisingly, trading with borrowed money will come at a price at either brokerage house.
E*TRADE’s margin rates vary from 12.7% to
10.7%, while Interactive Brokers is on a much lower
plane (6.38% for Lite clients, and rates as low as 5.38% 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 permit short positions. E*TRADE has a discrete button for sell short. IBKR’s software displays whether a security is shortable or not. 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: Quotes on market depth 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, like 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. The former 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 equities. E*TRADE does not.
Winner: E*TRADE
Websites
Interactive Brokers: Use this referral link to get up to $1,000 worth of IBKR stock for free!
E*TRADE:
Currently, no promotions.
Recommendations
Here’s where it really counts:
Beginners: An automated account with E*TRADE Capital Management or Interactive Advisors would be a good start. A traditional advisory account with Morgan Stanley would be even better (albeit more expensive).
Small Accounts: E*TRADE’s robo service requires $500 to get going. Interactive Advisors has a $100 minimum (although some portfolios can have minimums as high as $50,000). Neither broker has any 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 much better 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 will be a bad one. E*TRADE and Interactive Brokers both offer great technology for
advanced traders and managed accounts for absolute beginners. Everyone in between will be in good
hands, too.
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