Interactive Brokers vs. E*TRADE

Interactive Brokers (aka “IBKR”) and E*TRADE are full-service online brokers that have been around for decades. IBKR boasts low costs, excellent trading tools, superior trade execution, and a vast lineup of trading assets. E*TRADE has positioned itself as one of the best online brokers for options trading since acquiring OptionsHouse in 2016—and integrating top-notch OptionsHouse tools into the E*TRADE Power platform. Although IBKR and E*TRADE have a lot in common, we’ll compare the two to help you decide which may be a better fit for your trading and investing needs.

Usability

IBKR’s onboarding process has gotten easier in recent years, but it’s still complicated, and you might need help from customer service to complete the application. Overall, we found it’s easier to open and fund an E*TRADE account, which you can do from a mobile device or computer.

IBKR and E*TRADE offer robust desktop and mobile platforms designed for active traders and investors, with news, watchlists, research, advanced charting, and flexible order entry interfaces. IBKR offers streaming real-time quotes for free regardless of account size. With E*TRADE, you need to maintain an account balance of at least $1,000 to avoid fees.

Overall, we found E*TRADE’s platforms are very intuitive and easy to navigate, while IBKR has a much steeper learning curve. Still, active traders—and especially those who want to trade international markets—may find a better fit with IBKR and its Trader Workstation (TWS) platform.

Trade Experience

Desktop Trade Experience

IBKR and E*TRADE offer solid trading platforms that make it easy to check on positions, track the markets, research trades, and place orders. IBKR’s Trader Workstation and Power E*TRADE—the brokers’ “pro” level software—have feature-rich charting, drawing tools, technical indicators, advanced order types, and paper trading. With either broker, you can stream quotes on multiple devices simultaneously, select a tax lot before placing an order, stage orders for later entry, and enter multiple orders at the same time. 

IBKR edges out E*TRADE for trading tools and market research, but the caveat is that it takes longer to learn the platform. E*TRADE wins for ease-of-use, and it will appeal more to beginner and casual investors and traders because of this. E*TRADE also wins for options trading: with the recently integrated tools from OptionsHouse, the platform won our Best Broker for Beginning Options Traders category for 2021. Additionally, from a purely aesthetic perspective, E*TRADE takes the lead with a more contemporary look and feel.

Mobile Trade Experience

IBKR and E*TRADE both offer well-designed mobile apps that are reasonably easy to use and navigate. With either broker, you get streaming real-time quotes, charting, and news, and you can trade the same asset classes and order types across platforms.

According to user ratings, E*TRADE’s app is more popular. IBKR Mobile has 3.0 stars from about 1,200 reviews on the App Store, while E*TRADE has 4.6 stars from 139,000 reviews. Overall, we found E*TRADE’s app intuitive and easier to use, while IBKR’s seemed a bit buggy.

Range of Offerings

A notable difference between IBKR and E*TRADE’s product offerings is that IBKR offers access to Forex and 125 exchanges in 31 countries worldwide. Otherwise, they both offer all the usual suspects you’d expect from a large broker. IBKR has added cryptocurrency as of this year, giving it another notable edge.

Order Types

IBKR is a bit more versatile than E*TRADE when it comes to order types. There’s a flexible array of order types on IBKR’s client portal and app, plus 100+ order types and algorithms on Trader Workstation. E*TRADE offers a decent selection of order types, including all the basics plus trailing stops and conditional orders. The gap between the two brokers is small from the perspective of most individual investors, but active traders will value the additional flexibility IBKR offers over E*TRADE.

Trading Technology

IBKR’s order execution engine routes orders to achieve optimal execution, maximize rebates, and attain price improvement. The company does not provide execution speed statistics on its website; however, it reports an average net price improvement of $0.0047 per share. IBKR receives payment for order flow. The amounts vary by market center but range from $0 to $0.29 per share for equity trades and $0.12 to $0.52 per options contract.

E*TRADE’s order routing technology uses both spray and sequential routing, and it sends most orders to market makers. The router looks for a combination of execution speed and quality. According to its July 2021 execution quality report, orders are filled in 0.10 seconds, on average. E*TRADE reports an average net price improvement of $0.007 per share, and it receives less than $0.0020 in payment for order flow for equity trades and less than $0.47 per options contract.

While both companies offer some type of backtesting, only IBKR has strategy automation capabilities. Without IBKR’s execution speed statistics—and with payment for order flow figures that vary—it’s tough to call a clear winner here. 

Costs

Compared to many online brokers, IBKR’s pricing schedule is complicated. Stocks and ETFs are $0 per share on the IBKR LITE Plan or $0.0005 to $0.0035 on the IBKR PRO Plan. Options range from as low as $0.15 to $0.65 per contract. Futures range from as low as $0.25 to $0.85 per contract, depending on the market and how much you trade. Broker-assisted trades for large orders (10,000 share/100 contract minimum) cost between $95 and $300, depending on the market. For smaller positions, broker-assisted trades cost $30 and are limited to closing orders.

E*TRADE’s costs are much more straightforward. The broker doesn’t charge commissions for online equity, options, and ETF trades for U.S.-based customers (there’s a per-contract option fee of $0.65). You’ll pay $19.99 to trade mutual funds outside the No Transaction Fee program, and its live broker fee is $25 per trade across asset classes.

Still, IBKR is the clear winner for costs overall because of its margin interest rates, which are among the lowest in the industry. You’ll pay 1.56% with an IBKR PRO account and 2.56% with IBKR LITE for a $100,000 balance. By comparison, E*TRADE’s margin rate for the same balance is 7.45%.

Account and Research Amenities

IBKR and E*TRADE have robust stock, ETF, mutual fund, fixed income, and options screeners, including those that filter based on ESG/SRI factors. And both have numerous (equally valuable) tools, calculators, idea generators, and professional research.

Still, IBKR comes out ahead in the account and research amenities department for its vast news offerings—dozens of real-time news sources available on all platforms—and its long list of in-house and third-party market reports. IBKR is also the better choice if you want to build your own screens as E*TRADE offers only “canned” versions.

Portfolio Analysis

IBKR and E*TRADE clients have access to real-time buying power and margin information, plus real-time unrealized and realized gains and losses. With either broker, you can calculate the tax impact of future trades and view tax reports and combined holdings from outside your account. However, only IBKR calculates your internal rate of return (IRR).

IBKR has enhanced its portfolio analysis tools to appeal to more casual investors and traders (instead of just the pros). A feature called Portfolio Checkup lets you assess your portfolio’s health by comparing its performance to one of about 200 global benchmarks. IBKR also has one of the more comprehensive trading journals out there. Overall, we found that these features give IBKR a slight edge in an otherwise close race.

Education

IBKR and E*TRADE offer decent lineups of educational content, but IBKR’s materials are suitable for a more advanced audience. Its Traders Academy is a structured, rigorous curriculum—complete with quizzes and tests—intended for students, investors, and financial professionals. Videos, a glossary, and daily webinars round out its educational offerings.

E*TRADE’s Learning Center offers a good variety of educational content, including articles, videos, and webinars. New traders can check out the Getting Started section and move on from there to get more comfortable with investing concepts. There’s a daily product webinar with tips for using the trading platforms, and the company holds about 30 live events a year. 

Overall, the brokers’ educational offerings are too close to call a winner. Still, keep in mind that IBKR’s content is better suited for experienced traders and investors, while E*TRADE is geared toward beginners.

Customer Service

E*TRADE wins in customer service. It offers 24/7 phone line support with access to brokers, retirement specialists, financial consultants, active trader consultants, and product specialists. You can chat online with a human representative, and mobile users can access customer service via chat. IBKR doesn’t have the same flexibility. It offers 24-hour weekday phone support with callback service, a secure message center, and 24-hour weekday online chat. Both companies report longer-than-usual wait times due to the Covid-19 pandemic.

Security

The security features at IBKR and E*TRADE are up to industry standards. Both offer two-factor authentication, biometric recognition, and security guarantees. E*TRADE leads with its excess Securities Investor Protection Corporation (SIPC) insurance, which has an aggregate limit of $600 million. IBKR’s excess SIPC insurance provides each client with $30 million worth of protection (including $900,000 for cash), up to an aggregate limit of $150 million.

The Identity Theft Research Center reported no significant data breaches for either company during 2020. Investors can have confidence in the security standards at either of these brokers.

Our Verdict

E*TRADE and Interactive Brokers are powerhouses in the industry that offer full menus of trading products, customizable platforms, functional trading apps, and low costs. As always with two very competitive brokers, we find that it comes down to the type of investor/trader you are. When we compare the two, IBKR is the clear choice for professionals, high-volume traders, and anyone who wants access to international markets. At the same time, E*TRADE is a better choice for beginner and casual investors and traders—especially those who trade options. While both can serve the other’s niche competently, choosing the one that matches your particular investing style and experience unlocks the real strength of these two powerful platforms.