E*TRADE vs. TD Ameritrade

Arielle O'SheaFebruary 10, 2017

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E*TRADE and TD Ameritrade often top the pile of online brokers, making it tough for investors to decide between the two. You won't pay activity or annual fees at either broker. Both offer commission-free trades of stocks, options and exchange-traded funds and have no opening account minimums.

The differences are in the details — a more robust trading platform at TD Ameritrade, slightly lower costs on options contracts for active traders at E*TRADE — and the decision likely comes down to the type of investor you are. If you're stuck going back and forth between E*TRADE and TD Ameritrade, we've made your pros and cons list with our head-to-head comparison.

Fees and commissions

You won’t pay inactivity or annual fees at either broker. As for commissions, investors will sidestep them, as both E*TRADE and TD Ameritrade offer commission-free trading of stocks, options and ETFs. Options trades carry a per-contract charge of $0.65 at both brokers. E*TRADE, however, offers a tiered fee schedule that reduces costs for high-volume options traders: Investors who trade at least 30 times per quarter qualify for a reduced fee of $0.50 per contract. If you trade options and qualify for that discount, you’ll save money with E*TRADE.

One other thing worth noting: Mutual fund trade commissions are high at TD Ameritrade: $49.99. They’re more reasonable at E*TRADE, which charges just $19.99. Both brokers have a list of no-transaction fee funds (more on this below).

Winner: It's a wash, but options traders will prefer E*TRADE, due to its volume discount for options contracts.

Investment selection

Again, it’s pretty much a toss-up here, as both E*TRADE and TD Ameritrade offer access to a wide range of investments, including futures trading. But if we dial down to specifics:

  • Commission-free ETFs: Both brokers offer free trades of ETFs.

  • No-transaction-fee mutual funds: TD Ameritrade brings a larger number of these funds, with nearly 4,000 to E*TRADE’s 2,500. (As noted above, trade costs on funds outside of that fund list are higher at TD Ameritrade.) TD Ameritrade also offers a mutual fund Premier List, compiled by Morningstar and updated quarterly, with independent recommendations in over 45 different fund categories.

  • Futures: E*TRADE allows trading of over 200 futures products, while TD Ameritrade has just over 50. E*TRADE's per-contract fee is slightly more expensive at $2.99 to TD Ameritrade's $2.25.

  • Forex: TD Ameritrade offers forex trading, but E*TRADE discontinued its forex trading platform in September 2015.

Winner: TD Ameritrade wins here, as it does in our best brokers for mutual funds roundup, simply for its wider range of no-transaction-fee mutual funds and the availability of forex. But it’s a very close call, and futures traders will prefer E*TRADE. It’s worth noting that E*TRADE requires an account minimum of $10,000 to trade futures.

Research, tools and trading platforms

Both TD Ameritrade and E*TRADE offer browser-based trading platforms and more robust desktop platforms.

TD Ameritrade is known for its innovative, powerful trading platforms. Trade Architect, a web platform geared toward beginner traders, still has plenty of advanced features, including a market/options heat map, screening tools, streaming news and Trade Finder, which simplifies options trading for novice traders. The tool surfaces options trade ideas and helps investors build a trade strategy and analyze risk.

It’s basically akin to the advanced platforms offered by other brokers. But then TD Ameritrade takes it even further, with thinkorswim. Thinkorswim is professional-level: It includes comprehensive charting with hundreds of technical indicators, a Market Monitor tool that graphically displays the entire market via heat maps and graphs, Stock Hacker — which tracks down stocks headed up or down and displays information about their volatility and risk — and streaming CNBC. The platform is also packed with educational offerings, including onboarding tools (called “swim lessons”) for novice traders.

TD Ameritrade also offers mobile trading via two mobile apps, including Mobile Trader for advanced traders, with live-streaming news, full options order capabilities, in-app chat support and customization.

E*TRADE has three trading platforms — E*TRADE Web, Power E*TRADE and E*TRADE Pro. All are free and available to all customers, with no trade activity or balance minimums.

E*TRADE Pro offers robust idea-generating tools like Strategy Scanner, backtesting, a professional-level options screener and customizable charting. Power E*TRADE — part of the company's acquisition of OptionsHouse several years ago — is a web platform with real-time data, more than 100 technical studies, over 30 drawing tools, streamlined trade tickets, customizable options chain views and trading ladders. It's suitable for active, advanced traders.

E*TRADE is innovative in other areas as well. Its mobile app may be the best available from any online broker, with advanced features like stock and ETF screeners, options chain filters, educational videos, and real-time quotes, charts and CNBC Video on Demand. The company's web platform, E*TRADE Web, is designed for investors who want to take care of the basics: tracking their accounts, managing watch lists, viewing streaming data and, of course, making trades.

Both brokers offer free access to research and data, including independent research from S&P Capital IQ, Thomson Reuters, Market Edge and Morningstar. TD Ameritrade customers have access to analysis from a slightly larger number of third-party providers, as well as access to the company’s MyTrade social community and Social Signals, which pulls trading insight from Twitter. TD Ameritrade also offers paper trading so users can test strategies risk-free; E*TRADE doesn’t offer virtual trading capabilities.

Winner: TD Ameritrade has to take this portion. Platforms as advanced as thinkorswim are rarely offered to all customers free of charge with no account or activity minimums, and the company’s research offerings are top-notch and innovative. Those who do a great deal of their trading on the go may prefer E*TRADE, as its mobile app experience is slightly better.

Which one is right for you?

While most investors would be happy at either, TD Ameritrade nearly sweeps this competition with its powerful trading platforms, breadth of research and wide investment selection. The company shared easily appeals to both beginners and the most advanced traders.

Note that the exception is for active options traders, who will pay slightly less due to E*TRADE's volume discounts. NerdWallet’s online brokerage search tool can help you estimate your potential costs based on your trading frequency and investment preferences.

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