TradeKing and E-Trade both present the potential and current investor with a solid trading platform. However, choosing between the two isn’t as simple as a Mac vs. PC argument. Like Robinhood and North America-based TD Ameritrade, there are plenty of alternatives that may take the focus away from either of them. Knowing how they rank against each other and these alternatives can help you make the best data-driven decision in a market where intuitive experience matters most.
TradeKing is Now Ally Financial Inc.
Hey, where did TradeKing go? Wasn’t this supposed to be comparing TradeKing and E-Trade? Sorry if we are the ones to break the news to you, but Ally Financial Inc. purchased TradeKing back in 2016. The company has successfully rebranded the self-directed trading platform and has geared its services towards the Millennial generation.
Morgan Stanley’s Purchase
Surprise, more news! America’s Wall Street giant Morgan Stanley purchased E-Trade for $13 billion in 2020. As Ally looked to change TradeKing’s audience, Morgan Stanley looks to use E-Trade to cater to small businesses and mom-and-pop shops. However, unlike TradeKing, E-Trade’s name hasn’t changed.
Comparing Online Brokers: E-Trade — Ally Invest
Ally Invest and E-Trade are popular brokerage firms that have helped many people invest wisely and improve personal finance.
As mentioned before, Ally Invest, which started in 2005, purchased TradeKing in 2016. Since the acquisition, Ally has expanded the platform and has been performing consistently well with it. E-Trade has been around since 1982, and the Morgan Stanley merger means that customers now have equity research services.
Usability: Where Ally Invest Can’t Keep Up
Ally Invest offers one of the most user-friendly platforms in the market and for traders, opening an account is super easy. Just like E-Trade, Ally Invest has invested in a platform that supports multiple functions that include the customization function on “InvestLIVE.”
E-Trade’s two platforms, E-Trade and Power E-Trade support all trading and the functionalities transfer to the mobile application. For investors, there’s no barrier to effective trading and customization features.
However, some aspects of the platform Ally Invest offers limits its potential, including the lack of syncing between the app and the web platforms. An investor can trade in mutual funds and trade equities on the mobile app, but they cannot complete the same functions on the website. The mobile app equally lacks watch lists and an account holder can’t trade in conditional orders.
Beating Ally Invest in Customer Expectations and Service
Brokerage platforms thrive when they maximize positive customer experience but among the two, Ally Invest falls short on various aspects. On Ally Invest, the mobile app doesn’t support every asset, a negative factor that demands the user to shift to the web service. Also, Ally’s standard web platform requires manual refreshing for quote updates, an aspect that limits active trading.
On the flip side, trading on E-Trade provides users with seamless integration between PC and mobile versions. A common factor with either broker is that they have open customer service lines to connect investors with experts on various trading options. One limitation with Ally Invest is that it restricts foreigners from opening accounts, reserving them for US citizens only.
Cost Goes to Ally Invest
A price comparison reveals that Ally Invest might be more affordable. First, both Ally Invest and E-Trade offer stock trades at $0 per trade with a $0 maintenance and inactivity fee. However, while Ally doesn’t have a minimum, E-Trade has a $500 minimum deposit, no maintenance fee, and no inactivity fee.
Compared to Ally Invest, E-Trade’s charges are high, with a per contract option fee of $0.65 and $25 for a live brokerage account. E-Trade also charges $19.99 to investors trading outside the No-Transaction-Fee Program.
An advantage of E-Trade is that it gives customers the freedom to move their cash for higher interest rates. Ally Invest doesn’t share its returns with customers and doesn’t allow movement of cash to high return money markets.
Verdict: E-Trade Looks Better Than Ally Invest
Despite sharing many similarities, E-Trade seems to be the better option. While Ally Invest is an affordable discount broker, the usability of its web and mobile platforms is low.
Is Robinhood Better?
Now that we have a first-round winner let’s compare E-Trade to Robinhood.
Robinhood attracted investors who loved the platform’s easy trade-in options, stocks, cryptocurrencies, and ETFs with its commission-free investment model. Since 2013 it’s given competitors a run for their money.
You don’t have to closely follow global finance to have heard about Robinhood. Earlier this year, Robinhood temporarily suspended users from trading GameStop stocks. The volatility in GameStop was due to an effort by a group of Reddit users who wanted to essentially take advantage of the stock market like the big guys do and beat them at their own game. They were incredibly successful—it was also a bit funny—and it levelled the playing field in a lot of ways.
Robinhood was made out to look like the bad guy, but in reality, they had no choice to suspend trading because of clearing firm costs.
Usability—It’s a Tie
Investing in the digital era is all about finding a trading platform that supports the right functionalities. E-Trade has been around for at least 40 years, a period it has used to learn the best ways to reach traders. Both its platforms support PC and mobile trading. Another perk is the enhanced customization features that make it possible to watch particular trades closely.
While Robinhood lacks customization features, its mobile and PC platforms are easy to navigate. Robinhood’s site is simple to use even for newbies, a feature that makes it super-efficient to find various asset classes. The smooth experience is true for both PC and mobile platforms.
Customer Expectations and Service
Both online brokerage platforms are dedicated to meet customer expectations. With constant improvements, the gaps between them keep narrowing. Yet, despite the parity, Robinhood falls short of E-Trade’s strengths in some instances.
Both E-Trade and Robinhood run self-directed investment services, but their customer service levels vary immensely. E-Trade supports a customer service phone number that customers can use to get help 24/7. For a long time, Robinhood only relied on email, which is slow for customer contacts and undermined the service. Only recently did Robinhood make it possible to access company representatives through calls.
Robinhood brands itself as the saviour for small investors, and this aspect emerges in the costs it charges. Whether you are trading in crypto, options, trade stocks, or ETFs, you can do it for free on Robinhood. The only demerit is that when Robinhood loans out customer stock, it takes the entire share of returns, unlike its competition which shares revenue with customers.
Verdict: E-Trade Holds Over Robinhood
Using the criteria detailed above (even with the tie), E-Trade is a different and slightly more advanced brokerage firm than Robinhood. E-Trade’s PC and mobile apps offer customizable features, and in customer service expectations, E-Trade checks all the right boxes. But it’s not all bad news for Robinhood, as its zero fees make it the more affordable option.
Which is Better TD Ameritrade or E-Trade?
Will our round-two winner make it past its third component? Let’s find out.
In the world of online brokerage companies, TD Ameritrade and E-Trade are giants whose expertise stems from a rich history of trading. Founded in 1975 and 1982, respectively, TD Ameritrade and E-Trade compete on almost all levels. To serious investors, they could be two sides of the same coin.
But in a market where platform allegiance is determined by access to investment options, there’s a need to know just who’s on top.
Usability—It’s a Tie
When websites are difficult to use, people are distracted, and they might leave before they finish transactions. While both TD Ameritrade and E-Trade have invested heavily in an attractive website and mobile app to support mobile trading, they are not equally accessible.
On E-Trade, investors can open accounts easily. A newcomer might have trouble selecting an account type on TD Ameritrade.
Nevertheless, TD Ameritrade makes up for its weaknesses through a great range of educational content that most newbies find useful. TD Ameritrade has educational content on stocks, options, ETFs, Retirement, and Fixed Income that investors might utilize as they start trading.
Therefore, both sites match in their usability, with their fully functional web and mobile platforms appealing to customers.
Customer Expectations and Service
Customers who use online brokerage firms want to gain a trading advantage. But for this to happen, the platform needs to be on point. Both TD Ameritrade and E-Trade meet and exceed expectations.
Though on both websites, users can feel intimidated by the two-level menus that highlight all the services promoted by the platforms, both firms make up for the complexities through order type and quality customization. This feature makes it easier to track specific stocks.
On the customer service front, both E-Trade and TD Ameritrade give investors access to customer service through 24/7 phone support and chat. Using E-Trade, customers can access professional financial consultants, traders, and human representatives. Sound great? It gets better.
TD Ameritrade takes the customer service expectations to a new level through its chatbots on social networking platforms, on its app, and a virtual client service agent.
Costs—It’s a Tie
Both TD Ameritrade and E-Trade appear to adopt criteria that match each other. They charge $0 for regular stock trades and options trading. Also, options contracts attract a $0.65 price tag with $25 for broker-assisted trades on both platforms.
Another significant comparison is that both brokers support moving cash to money market funds for higher interest earnings. The only major difference is that while both brokers earn interest incomes from customer balances and earnings on idle cash, E-Trade shares its earnings. With E-trade, you can also gain revenue by lending stocks in your account to hedge funds on a short-term basis.
TD Ameritrade doesn’t share its income with customers. Still, this is not enough of a difference to demerit it since it’s not an uncommon practice.
Verdict: TD Ameritrade Takes the Title
While E-trade is competent across all metrics, TD Ameritrade is the overall better brokerage company. TD Ameritrade offers more investment options and education for beginners who benefit from its superior market research.
Still, E-Trade has better mobile trading apps and cash-backs to customers and remains an attractive trading platform.
Is E-Trade Really Free?
It seems suspicious that an investment company would offer its services for free. But, for the sake of “free” in this context, yes, E-Trade is free. It only costs you your money.
As a brokerage firm, E-Trade offers free services to customers who can enjoy its most attractive offers. Using its two trading platforms, E-Trade and Power E-Trade, E-Trade doesn’t charge customers any balance minimums or for trade activity. Also, E-trade doesn’t charge per month or for inactivity on all of its IRA accounts. These features mean that the trading platform is virtually free to customers—for regular trading.
If you want options contracts, it’ll be $0.65 a trade with an additional $25 for broker-assisted trades.
Does E-Trade Have Any Hidden Fees?
As a firm that operates on transparency, E-Trade doesn’t hide any fees for both IRA and non-IRA accounts. With its operation model that requires 0 annual and custodial fees, IRA is easily one of the most reliable partners in the market.
How Does E-Trade Make its Money?
So, if E-Trade doesn’t earn from customer fees and setup, how does it make money? E-Trade takes advantage of its order flow that is monetized to money markets. Since firms or hedge funds seek short-span loans, E-Trade earns its income by boosting the order flow. Another income pathway for E-trade comes from the interests gained when customers borrow to buy stocks or short them.
Also, remember that Morgan Stanley, a multinational, Fortune 500 company worth many billions of US dollars, now owns E-Trade.
Now, Ally may not be our first choice out of the options listed here, but it is still a good choice for someone. It is a basic and affordable platform with plenty of great features and potential.
Still, we can’t help but give E-Trade the prize of the day. Even when E-Trade earns money, it manages to share part of its revenue with customers. It is generally more efficient, thorough, and customer service-oriented.