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E*TRADE vs. Interactive Brokers


When it comes to big-name investment platforms, E*TRADE and Interactive Brokers are two of the largest. They have long-standing histories and are full-featured investment platforms. Neither seems to be slowing down any time soon, but are they the right online brokerage for you? Here’s how E*TRADE and Interactive Brokers stack up against each other.

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Overview of E*TRADE vs. Interactive Brokers

E*TRADE and Interactive Brokers come to you as low-fee online brokerages. Both have experience in the field, with areas they specialize in.

Many new investors have utilized E*TRADE over the years to bring them into the investment world. Its easy-to-use interfaces make it possible to focus on building a strategy rather than deal with a clunky website. It has a similar range of asset classes to its competitor, Interactive Brokers.

Interactive Brokers is branching out to retail investors but has a history of working with high-volume traders. Its system reflects a sophisticated user base who need high-quality tools at their disposal.

E*TRADE vs. Interactive Brokers: Fees

Both E*TRADE and Interactive Brokers have $0 account minimums, which can make them accessible to a larger pool of people. E*TRADE and Interactive Brokers take that a step further with their $0 commissions for ETFs and stock trading, though E*TRADE also extends this to mutual funds. Both charge up to $0.65 per options contract.

They begin to differ in their futures trading, though. E*TRADE charges $1.50 to trade futures, whereas Interactive Brokers comes with up to an $0.85 charge. Interactive Brokers does offer some discounts to high-volume traders, though.

Interactive Brokers offers two pricing plans for its U.S. futures and options trading. There is fixed pricing, which charges a single flat rate per contract plus applicable fees ($0.85 and $0.65, respectively), and there is volume-tiered pricing. So, the greater volume you trade in, the lower the broker commission, with rates ranging from $0.25 to $0.85 for futures and $0.15 to $0.65 for options. These prices will further vary depending on which market you trade in and where you reside.

Where their zero-fee commission trading comes in is with their IBKR Lite account. IBKR Lite is designed for retail traders and comes with those $0 stock and ETF fees. All other assets come with either fixed or tiered pricing.

E*TRADE vs. Interactive Brokers: Services & Features

A PC-based trading platform

E*TRADE and Interactive Brokers are full-service online brokerages. Therefore, they offer the most popular trading asset classes like stocks, bonds, ETFs, options, mutual funds and futures. Interactive Brokers offers a similarly full range of trading classes. However, it slightly differs with its access to forex, or foreign exchange currency, and engages in trading in numerous countries’ markets.

Interactive Brokers brings its Trader Workstation to the table. Without this feature, trading through Interactive Brokers would be much the same as E*TRADE. Should you want to use Trader Workstation, it is a complex desktop product that provides you with sophisticated trading tools. It mostly benefits the high-volume trader with its alerts, customizable dashboard and available data. It also offers fundamental analysis, which many systems lack.

You do not get access to the Trader Workstation with IBKR Lite; however, many beginners benefit from the IBKR Lite plan, and Trader Workstation’s depth of tools might come off as overwhelming to this audience.

IBKR offers a simulated trading account to clients called a paper trading account. Paper trading lets you use the full range of trading facilities in a simulated environment using real market conditions.

In comparison, E*TRADE offers Power E*TRADE. It comes equipped with its own complicated set of tools that benefit the sophisticated or higher-volume investor. The Power platform allows for increased customization, real-time data and better data analysis.

E*TRADE also comes with a great tool for beginner investors. Its paper trading feature allows you to simulate trading with fake money. You can use this feature to play out certain strategies and familiarize yourself with the system before taking any bigger risks.

E*TRADE vs. Interactive Brokers: Online & Mobile Experiences

E*TRADE is possibly the more efficient system of the two, although both have their share of complicated tools. That cleaner user experience comes with E*TRADE’s target demographic. The active, day trader takes a bigger priority on their normal site than they do on Interactive Brokers. Although the latter has the IBKR Lite program, it’s more of a financial opportunity than a technological one.

E*TRADE has a long-standing relationship with introducing new traders to investment, so it’s slightly easier to navigate, and the overall design prioritizes important but basic information. With E*TRADE’s mobile interface, you can also check your balances, investment history and more. There is also the option to deposit checks directly into your account using your phone’s camera.

Interactive Brokers offers many of its desktop features across its web and mobile platforms, although not quite as dense. Its focus is to offer a wide array of data that can help with sophisticated trades on volatile markets, such as those on a global scale. That can make it difficult for newcomers to learn or effectively use it right away.

Deciding Between E*TRADE and Interactive Brokers

Hispanic woman investor

E*TRADE has been around for a while, and it shows in the online broker’s efficiency. Its interfaces are relatively easy to navigate, and even its Pro platform comes with customization. It is optimal for frequent and active traders as well as beginners, thanks to its relatively low costs. On top of that, its paper trading feature can make it particularly useful for newcomers who are still learning the system.

Interactive Brokers have the potential to use for a varied user base. A crucial advantage it has over its competitor is its access to the Forex market. So, traders who are interested in foreign markets and currency have a great opportunity when it comes to using Interactive Brokers. However, despite its IBKR Lite program and its cheap costs, it may still leave some interface gaps. The density of information can overwhelm beginners who aren’t equipped to understand every tool.

Bottom Line

E*TRADE and Interactive Brokers are two online brokerages with numerous options for their investors. They offer full ranges of asset classes as well as specific categories they specialize in. So, the choice to use either one depends on who you are as a trader. You may feel more comfortable with E*TRADE if you’re just starting out or you might prefer Interactive Broker’s IBKR Lite program. Whichever you chose, both platforms will give you the tools you need to create a portfolio of investments fit for you.

Tips on Investing

  • Investing is more than the platform you use. It requires a careful strategy and a narrow focus on your financial goals. While planning may be hard, you don’t have to do it alone. A financial advisor can help you through the steps. Finding a financial advisor doesn’t have to be hardSmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Whether you’re considering getting started with investing or are highly experienced, an investment calculator can help you figure out how to meet your goals. It can show you how your initial investment, frequency of contributions and risk tolerance can all affect how your money grows.

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