E*TRADE vs. TD Ameritrade

TD Ameritrade and E*TRADE are both very large brokerage firms that have been in the online trading business from its early days. E*TRADE was formed in 1982 as an online broker, while TD Ameritrade was founded in 1975 and began online brokerage operations in 1994. Both companies offer commission free stock and ETF trading, and both brokers have multiple robust platforms for traders and investors to choose from. While TD Ameritrade and E*TRADE have many things in common, we will look at some of the differences between them to help you determine which one is the best fit for your investment and trading needs.

Usability

Both TD Ameritrade and E*TRADE make it easy for investors and traders to access the markets, consume news and information, and conduct fundamental and technical analysis on markets. Both brokers have multiple offerings to cater to each account owner’s preferences and style, including a web based interface, a more dynamic and customizable desktop platform, and two mobile solutions to replicate the web and desktop interfaces. The E*TRADE and TD Ameritrade interface options are strong offerings, with options available for conditional orders and multi-leg options strategies such as butterflies and condors.

Similarly, all of the mobile offerings make it easy to find what you are looking for and to execute trading strategies at the more basic or more advanced level based on the selected app. The desktop and web offerings are comparable between E*TRADE and TD Ameritrade. Both broker trading platforms are easy to navigate and highly customizable. You can set the display to see account balances, watchlists, streaming news, and events. Overall, usability is a tie, as both companies have multiple platforms that are excellent for their target user.

Trade Experience

Desktop Trade Experience

TD Ameritrade and E*TRADE have solid basic websites with streaming quotes, an ability to obtain research and fundamental information on securities, and trading functionality that is fine for more passive investors. More serious traders and those that want deeper analytical tools will be using the Power E*TRADE or TD Ameritrade’s thinkorswim platform. These desktop solutions offer significant customization as well as strong options analysis tools, contingent orders, and paper trading for less experienced traders to practice before putting their capital at risk. Thinkorswim takes their offering a step further with the capabilities to set up customized trading signals and backtest your trading strategies against historical data.

Both desktop applications from TD Ameritrade and E*TRADE are strong offerings, but we give higher marks to TD Ameritrade because it offers customized trading triggers, back testing of strategies, and better options analysis tools.  

Mobile Trade Experience

E*TRADE and TD Ameritrade have taken identical paths for providing a solid mobile trading experience. Both brokers have two mobile offerings, one more basic and one more robust, and they are all excellent for the trading needs of the intended audience. The more basic mobile apps mirror the website trading platforms. Combined with smart, streamlined design, this actually makes it easier to execute basic trades on the mobile apps compared to the website platforms. The tradeoff is that the mobile apps have more basic charting and other trading tools. 

In contrast, Power E*TRADE mobile and TD Ameritrade’s thinkorswim mobile app are packed with the features found on their respective desktop solutions. The trader focused apps from these two brokers have more robust charting and a wider selection of conditional orders. All trading vehicles are available on the mobile apps, with the exception that thinkorswim mobile does not support bond trading. TD Ameritrade’s mobile platform still has the edge on E*TRADE because it contains more features and stronger analytics for options, as well as the ability to save charts in trading journal entries. We chose TD Ameritrade’s thinkorswim mobile as the best self-directed mobile trading app and, accordingly, give TD Ameritrade higher marks for their mobile app. That being said, E*TRADE’s mobile offerings are also quite good and compare favorably with most every other broker’s offering.

Range of Offerings 

The offerings at TD Ameritrade and E*TRADE are virtually identical, and include futures, options on futures, and Bitcoin futures in cryptocurrency markets (but not direct crypto). One difference between the two is that TD Ameritrade offers foreign exchange trading in 73 currency pairs, while E*TRADE does not offer foreign exchange trading. TD Ameritrade also provides traders access to the exchange in Canada, and E*TRADE does not. On the other side, TD Ameritrade does not support fixed income trading on its mobile apps, while E*TRADE does. While many investors and traders may not care about the Canadian exchange or FX trading, TD America gets the edge for offerings because of these additional trading vehicles. Active fixed income investors, however, would likely prefer E*TRADE for supporting fixed income on its mobile apps.

Order Types

Both TD Ameritrade and E*TRADE support all primary market order types, including limit orders, stops, and trailing stops on all platforms, and tax lots can be selected when closing positions. The two also support the ability to stage orders and to simultaneously enter multiple orders. Both brokers also support conditional orders, such as one-triggers-other (OTO), one-cancels-other (OCO), and one-triggers-a one-cancels-other (OTOCO) orders. Traders should note contingent orders are only available on TD Ameritrade’s thinkorswim platforms and E*TRADE’s mobile app does not support all of the conditional orders available on the desktop platform. Both brokers offer excellent flexibility on order types across platforms, but TD Ameritrade gets a slight edge for having more conditional order types available on its mobile app.

Trading Technology

E*TRADE and TD Ameritrade both have good trading technology, including portfolio margining, stock lending, trading scanners, and the ability for traders to route their own orders if they prefer to not use the brokers’ proprietary order routing algorithms. It is surprising that neither company offers fractional shares in any standard accounts; fractional shares are only available for robo-portfolios and dividend reinvestment programs (DRIP). 

As mentioned, TD Ameritrade offers the ability to backtest trading strategies on thinkorswim and thinkorswim mobile, while E*TRADE does not offer backtesting. TD Ameritrade also allows automated trading based on a set of specific conditions, a feature unavailable at E*TRADE. TD Ameritrade’s thinkorswim has trading analytics and options analysis tools that are better than E*TRADE’s offering and, while both platforms allow trade journaling, only TD Ameritrade allows pictures and graphs to be added.

E*TRADE’s order routing technology results in average fill times for orders of approximately 0.35 seconds, and price improvement of $0.0007 per stock or ETF share and $3.38 per option contract. TD Ameritrade’s routing for 90% of their orders results in fills in just 0.05 seconds and price improvement of $0.0175 on stocks and ETFs, but did not disclose price improvement data for options. Both brokerage firms receive payment for order flow (PFOF), with TD Ameritrade receiving $0.0012 per share for equities and ETFs and $0.55 per options contract, while E*TRADE receives less than $0.002 and less than $47 cents, respectively, for the same categories.

While both companies have strong trading technology, TD Ameritrade edges out E*TRADE because they fill orders more quickly and provide better price improvement, along with better options analysis tools, trade journaling, and automated trading strategies.

Costs

E*TRADE and TD Ameritrade are both commission free for stocks and ETFs. TD Ameritrade charges $0.65 per options trade, while E*TRADE charges $0.65 with a price break down to $0.50 for traders making more than 30 trades per quarter. While free at other brokers, both E*TRADE and TD Ameritrade both charge $6.95 for OTC trades, with E*TRADE again offering a discount to $4.95 per trade for active traders. Bond fees at E*TRADE are $1 per bond bond, with a  $10 minimum and $250 maximum, while TD Ameritrade does not charge commission for US Treasuries at auction but all other bond fees are netted out with the price so you don’t know how much you are charged. Foreign exchange at TD Ameritrade also works on a net price basis. 

Futures commissions at E*TRADE are $1.50 per side plus fees for everything but Bitcoin futures, which are $2.50, while you pay $2.25 per side plus fees for all futures contracts at TD Ameritrade. Margin rates are lower at E*TRADE at all break points; E*TRADE charges 8.70% for accounts with balances of $10,000 vs. TD Ameritrade’s rate of 9.25%; 8.45% vs. 9.00% on $25k balances; 7.95% vs. 8.00% at $50k; and 7.45% vs. 7.75% for $100,000 accounts. Mutual fund trades outside of the no transaction fee program cost $19.95 at E*TRADE and $49.95 at TD Ameritrade. Neither company charges for inactive accounts or minimum balances, but TD Ameritrade charges $2 per paper statement for accounts with low balances.

Costs at E*TRADE are better than TD Ameritrade’s for having lower options commission for more active traders, lower futures commissions for most contracts, lower margin rates, and more transparent bond prices. Those interested in currency trading, however, would have to look at TD Ameritrade since E*TRADE doesn’t offer FX trading.

Account and Research Amenities

Both E*TRADE and TD Ameritrade provide their customers with a number of great amenities for research, news, market updates, and scanners. They both have screeners for stocks, ETFs, and mutual funds with multiple criteria, the ability to screen on technicals, save screens for later use, and create watchlists. They also both have screeners for bonds in addition to options strategy builders. One significant difference between the two is that E*TRADE allows users to screen stocks, ETFs, and mutual funds both thematically and for socially responsible investing (SRI) and environment, social, governance (SRI/ESG) criteria, while TD Ameritrade does not offer thematic or ESG/SRI screening. Both platforms have stock and market data that goes back at least 35 years, but TD Ameritrade provides more than 35 years of implied and actual volatility data compared to just one year of this data at E*TRADE. Both companies provide charting that includes multiple studies, drawing tools, and indicators.

Despite the large amount of similarities, we give E*TRADE the edge on research and amenities because they have more preset screens and ESG/SRI criteria for screeners. This makes a difference for the growing share of investors that want to choose investments that are socially and environmentally responsible. 

Portfolio Analysis

Here again, both E*TRADE and TD Ameritrade have excellent portfolio analysis tools, including account performance and tax lot tools, and real-time reporting of realized and unrealized capital gains, margin, buying power, and account balance data. On both platforms, portfolio analysis is customizable and supports consolidation of outside accounts for reporting and analysis. E*TRADE provides the ability to calculate the tax impact of a future trade, while TD Ameritrade does not. Going in the other direction, TD Ameritrade provides internal rate of return (IRR) and/or time-weighted rate of return (ROR), while E*TRADE does not. 

E*TRADE and TD Ameritrade have a wide range of portfolio analysis tools that overlap, so we see this category as a tie.

Education

Both E*TRADE and TD Ameritrade have vast amounts of excellent educational content for beginners and seasoned traders. Both brokers feature extensive libraries and information on various topics, goals, and objectives. Both companies have a glossary, with E*TRADE’s being more extensive. TD Ameritrade, as our top rated broker for education, has an edge on E*TRADE through its use of technology to curate educational content for each individual customer based on criteria such as account holdings and history. 

Customer Service

TD Ameritrade and E*TRADE both have 24/7 telephone support, live chat with customer service, and the ability to speak with a live broker. TD Ameritrade allows clients to talk with a financial advisor, while you need to be a qualified customer at E*TRADE to speak with a financial advisor. Most importantly, TD Ameritrade’s average hold time for customer service is 43 seconds, while the large increase in trading during the pandemic has E*TRADE’s average wait times up 65% at more than 11 minutes. 

TD Ameritrade has the edge in customer service simply because it takes more than ten times longer on average to get someone on the phone at E*TRADE. 

Security

E*TRADE and TD Ameritrade both have two-factor authentication on all of their platforms, with fingerprint and facial recognition available for the mobile apps. Both brokers offer additional account protection above Securities Investors Protection Corporation (SIPC) coverage, and neither broker has had a data breach in the past four years. TD Ameritrade will also reimburse customers who lose cash or securities from unauthorized activity in their accounts.

TD Ameritrade and E*TRADE both encountered some login issues in 2020 because of the significant increase in activity volume during the Covid pandemic. Further, like many brokers, some E*TRADE and TD Ameritrade customers experienced difficulty placing orders during the market frenzy related to GameStop and other stocks in January 2021. 

While very close with their security offerings, we give a small edge to TD Ameritrade because of their customer reimbursement for unauthorized account activity. 

Our Verdict

E*TRADE and TD Ameritrade are both excellent brokers with very solid platform offerings that will cater to all investor types. We feel TD Ameritrade has the stronger offering, even though there are a couple of spots with higher commissions. We landed on this primarily because TD Ameritrade offers functionality currently unavailable at E*TRADE, such as backtesting and customized trading strategies. Further, TD Ameritrade’s options analytics are better than E*TRADE’s and their educational offerings provide another edge. Finally, their customer service is more than ten times faster in responding to support phone calls. 

On the flipside, E*TRADE is a better choice for fixed income because of more transparent fees and support for bond trading on its mobile app. E*TRADE is also the better choice for investors interested in ESG/SRI investing because it has more capabilities in this space. Obviously, it is extremely close when comparing brokers near the top of our ranking. Although we have given TD Ameritrade the edge in this comparison, most investors wouldn’t go wrong with either of these highly ranked brokers.