Planning on entering online trading? Some of the mot popular choices for brokers are E* Trade and Interactive Brokers? What should you go for?
Which is Better?
We found Interactive Brokers to be better than E* Trade because it has a more advanced trading platform, low margin rates, and low share pricing. Moreover, it is now offering IBKR Lite that offers commission-free ETFs and stocks trades.
‘Best for’ Cases
Interactive Brokers is best for sophisticated, active traders and institutional traders. On the flip side, E*Trade is suitable for individual traders and investors. Read on and get conversant with the features of both E*Trade and Interactive Brokers.
Usability
E*Trade has been in the online trading business for approximately four decades. Over the years, they have developed very easy-to-navigate and intuitive platforms. E*Trade has web platforms: power E*Trade and E*Trade. Additionally, it has mobile apps that offer services similar to those of web platforms.
Traders can download the apps from E*Trade platforms. Moreover, advanced traders can customize E*Trade Pro. Nevertheless, traders can easily fund or open their E*Trade accounts using a computer or a mobile device.
Interactive Brokers also has numerous trading platforms: web, desktop, and mobile version (abbreviated as IBKR Mobile). The mobile app offers similar functions to those of the web platform. But it is not as effective as Trader Workstation, abbreviated as TWS, which is the main flagship trading platform.
The Interactive Broker onboarding process is easy. Moreover, traders can open their accounts without funding them. But the company will deactivate your account if you fail to fund it within three months.
Both brokers offer effective mobile and web platforms. Investors and active traders can easily use them for watch lists, streaming real-time news, quotes, and research. Nevertheless, the TWS in Interactive Brokers contains a steeper learning curve. As a result, you will spend less time custom-building a personalized trading experience.
Experience
Below is a comparison of interactive broker and E*Trade trade experiences that you may encounter:
Desktop Experience
E*Trade has web platforms that contain basic tools that traders and investors can use to track the markets, research investments, and place trades. Moreover, the Power E*Trade contains more advanced options: technical indicators, feature-rich charting, and drawing tools. Such options enable users to place and track orders visually or stage orders.
Interactive Brokers’ portal enables clients to place trades, have a real-time view of their accounts and check on positions. In addition, it has a trader workstation that enables investors and active traders to trade quickly and effectively. It also allows clients to stage orders in a batch or one at a time, and to manage, place and modify orders from the chat.
Mobile Experience
Both Interactive Brokers and E*Trade have well-designed and easy-to-navigate mobile apps. You can use your mobile to trade except if you have E*Trade single name bonds. Although it is easy to chat, stream real-time news and quotes in both, it is overall a bit smoother with Interactive Brokers.
Nevertheless, you cannot use both platforms at the same time for data streams in real life.
Overall, Interactive Brokers is more suitable when using the mobile app. Clients can access all order types as if using the web platform.
Trading Technology
E*Trade has an order routing technology that uses sequential and quick routing to send orders to market makers. The router combines quality and speeds to enable the company to perform exceptionally in the market. You can get an E*Trade routing report on the website, which the company updates quarterly.
Interactive Brokers uses its engine reroutes to improve its price, maximize potential rebates and achieve optimal execution. The order routing algorithms can execute block orders by uncovering dark pools, the hidden order flows. Clients using IBKR Pro can get back their payment for order flow.
Although both companies provide backtesting capabilities, Interactive Brokers has a more advanced trading technology.
Broker Fees
Interactive Brokers and E*Trade both allow $0 account minimums. This feature enables many people to access them. Moreover, the two have $0 commissions for stock trading and ETFs. The two also charge $0.65 for the options contract.
The major difference is in futures trading. Interactive Brokers charge $ 0.85 to trade futures, while E*Trade charges $1.50. Nevertheless, E*Trade will knock down the charges to $0.50 per contract if you make 30 trades per quarter.
Interactive Brokers offers two pricing structures for future options trading. It has a single fixed flat rate plus volume-tiered pricing and applicable fees. In this case, the more you trade-in, the less the broker commission.
Nonetheless, the prices will vary depending on the market the client is trading in and where they reside. An IBKR Lite account has zero fee commission trading. It is a good option for retail traders due to the $0 ETF and stock fees.
Security
When trading with E*Trade, your money is highly secure because It’s regulated with numerous authorities. Also, E*Trade is a member of FINRA that maintains integrity in the NY stock exchange.
It is also a member of SIPC that has a federal mandate to protect investors’ money in case of bankruptcy or fraud. E*Trade allows public trading. It is also among companies listed on NASDAQ. Therefore, it is safe to conduct online trading with E*Trade.
On the other hand, Interactive Brokers is also a member of FINRA. The company is under the US Security Exchange Commission. It is also under SIPC, whereby it guarantees $250,000 in case of fraud and bankruptcy.
Interactive Brokers also offers FDIC that protects investors’ money up to $2.5 million. Just like E*Trade, the company offers public trading. Additionally, it is amongst the companies under IEX. Both E*Trade and Interactive Brokers are secure, but the latter has more security features.
The Winner
Both E*Trade and Interactive Brokers are good options depending on what you are looking for and features that suit your individual needs. Nevertheless, Interactive Brokers is a slightly more suitable option, especially for day traders.
As a matter of fact, Investopedia recognized it as the best online broker company suitable for day trading. Moreover, Interactive Brokers is a good option for high-volume traders or investors who would like to access international markets. E*Trade is a good option for less-frequent traders and individual investors.
Which is The Best for Buyers?
Both Interactive Brokers and E*Trade are powerhouses in online trading. After comparing the two, we recommend investors make their decision depending on the following:
E*Trade is a good option for traders and individual investors. It earns it’s stripes as a highly efficient online broker. Moreover, it has interfaces that are easy to navigate and customize. It is also a good option for beginners and active traders due to its relatively low costs. Its paper trading feature enables new users to learn the system quickly.
On the flip side, Interactive Brokers has a crucial advantage over its competitor due to its ability to access the FOREX market. Therefore, investors who would love to venture into foreign currency and markets have an exceptional opportunity when using Interactive Brokers.
Although beginners might take time to get conversant with the IBKR Lite program, it is a cheaper option, so it’s great for starters. Sophisticated firms and advanced traders can easily flourish with Interactive Brokers.
Interactive Brokers is an ideal option for day traders, option trading, casually used margin accounts, and advanced traders. If planning to venture into online trading, you can sign up for Interactive Brokers today. All you have to do is fill in your personal information, feed-in regulatory information and fund your account!
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