E*TRADE vs. Interactive Brokers

When it comes to big-name investment platforms, E*TRADE and Interactive Brokers are two of the best. They both have long-standing histories and serve as full-featured investment platforms. Neither seems to be slowing down any time soon, but are they the right online brokerage for you? This is what to consider when weighing E*TRADE vs. Interactive Brokers for your new account.

A financial advisor can help you determine an investment strategy for your portfolio going forward.

Overview of E*TRADE vs. Interactive Brokers

When comparing E*TRADE vs. Interactive Brokers, both are popular low-fee brokerages. Both have experience in the field but specialize in different areas.

Many new investors have utilized E*TRADE over the years to enter the investment world. Its user-friendly interfaces simplify the process of making an investment strategy. It has a similar range of asset classes to its competitor, Interactive Brokers.

Although it serves retail investors, Interactive Brokers is known for accommodating high-volume traders. Its system reflects a sophisticated user base of advanced investors who require high-quality tools at their disposal.

E*TRADE vs. Interactive Brokers: Fees

Both E*TRADE and Interactive Brokers do not require account minimums, making them accessible to a larger pool of people. They also offer $0 commissions for ETFs and stock trading, although E*TRADE extends this to also include mutual funds. Both charge up to $0.65 per options contract.

They differ in their futures trading, though. E*TRADE charges $1.50 to trade futures, whereas Interactive Brokers has a $0.85 charge. However, Interactive Brokers offers some discounts to high-volume traders in order to ease the sting.

Interactive Brokers offers two pricing plans for its U.S. futures and options trading. There is fixed pricing, which charges a single flat rate per contract, plus applicable fees ($0.85 and $0.65, respectively). There is also volume-tiered pricing, where the more you trade, the less you pay in broker commissions. Rates range from $0.25 to $0.85 for futures and $0.15 to $0.65 for options. These prices may vary, depending on your location and trading market.

Investors can enjoy free trading with the IBKR Lite account. IBKR Lite is designed for retail traders and comes with no fees for stocks and ETFs. All other assets come with either fixed or tiered pricing.

E*TRADE vs. Interactive Brokers: Services & Features

When comparing E*TRADE vs. Interactive Brokers, both are full-service online brokerages. Therefore, they offer the most popular trading asset classes, including stocks, bonds, ETFs, options, mutual funds and futures. Interactive Brokers offers a similarly full range of trading classes. However, it slightly differs with its access to forex, or foreign exchange currency, and trades in international markets.

Interactive Brokers stands out for its Trader Workstation. Without this feature, trading through Interactive Brokers would be much like E*TRADE. Instead, Trader Workstation offers a complex desktop product that provides you with sophisticated trading tools. It mostly benefits the high-volume trader with its alerts, customizable dashboard and available data. It also offers fundamental analysis, which many systems lack.

You do not get access to the Trader Workstation with IBKR Lite. However, this may be for the best as many beginner investors may be overwhelmed by Trader Workstation’s advanced tools.

IBKR offers a simulated trading account so newer investors can engage in paper trading. This allows you to try different investing strategies in a simulated environment using real market conditions.

In comparison, E*TRADE offers Power E*TRADE. It comes equipped with its own complicated set of tools that benefit the sophisticated investor. The Power platform allows for increased customization, real-time data and better data analysis.

E*TRADE also comes with a great tool for beginner investors. Like Interactive Brokers, E*TRADE offers a paper trading feature that allows you to practice trading with fake money. It is an extra tool to help new investors achieve success with their investments.

E*TRADE vs. Interactive Brokers: Online & Mobile Experiences

E*TRADE is the more efficient of the two, although they both have their share of complicated tools. E*TRADE’s target demographic, the active day trader, takes a bigger priority than they do with Interactive Brokers. Although the latter has the IBKR Lite program, it serves as more of a financial opportunity than a technological one.

E*TRADE has always focused on new traders, helping them start their investment journey, so it is slightly easier to navigate, and the overall design does a great job of prioritizing important information without flooding users with data. E*TRADE’s mobile app allows you to check your balances and investment history. There is also the option for mobile check deposit.

Interactive Brokers offers many of its desktop features across its web and mobile platforms, providing extra versatility to suit different investment styles. Its focus is to offer comprehensive, real-time data that can help with sophisticated trades during periods of market volatility. However, this can make it difficult for newcomers to navigate the platform.

E*TRADE vs. Interactive Brokers: Account Types & Minimums

When deciding between E*TRADE vs. Interactive Brokers, one of the most important factors is the type of accounts they offer. Both of these brokerages support a wide range of accounts, but they differ in breadth and specialization.

E*TRADE offers many taxable brokerage accounts, but it is a fantastic choice when you are specifically looking for an individual retirement account (IRA). E*TRADE offers more options than most brokerages, including traditional IRAs, Roth IRAs, rollover IRAs, inherited IRAs and the E*TRADE Complete IRA for investors 59 ½ and older. There are even custodial accounts for minors.

E*TRADE also offers specialized accounts, such as small business retirement plans, including SEP IRAs and SIMPLE IRAs, and managed portfolios for those who prefer professional management. Importantly, there are no account minimums required for standard brokerage accounts, although certain accounts may require higher balances.

Interactive Brokers also supports individual taxable brokerage accounts, joint accounts, custodial accounts and margin trading. Several types of retirement accounts are available – more than E*TRADE – with traditional and Roth IRAs, as well as rollover IRAs, SEP-IRAs and Simple IRAs.

The Interactive Brokers platform is especially attractive for international investors and institutional investors because it supports trust accounts, family office structures and even corporate accounts. Like E*TRADE, Interactive Brokers has no minimum balance requirement for most individual accounts, but there may be some exceptions for advanced margin accounts or specialized entity accounts.

For beginners, the lack of minimums makes both platforms accessible when you only have a little money to invest. However, more advanced traders are likely to appreciate IBKR’s ability to accommodate trusts, business accounts and global investors.

Deciding Between E*TRADE and Interactive Brokers

E*TRADE has been around for a while, and it shows in its efficiency. The platform’s interfaces are relatively easy to navigate, and even its Pro platform allows for customization.

It is optimal for active traders, as well as beginners, thanks to its relatively low costs. On top of that, its paper trading feature is particularly useful for newcomers still learning the system.

Interactive Brokers serves a more varied user base. One key advantage is its integration of the forex market. Therefore, traders interested in foreign currency have more options when using Interactive Brokers.

However, despite its IBKR Lite program and low costs, Interactive Brokers still leaves some interface gaps. The density of information can overwhelm beginners who may not understand every tool and appreciate a gentler approach.

Bottom Line

E*TRADE and Interactive Brokers are two of the best brokerages, offering a wide array of account options designed to diversify your portfolio. Individually, they offer a full range of asset classes, as well as certain specialized accounts.

Really, the decision between E*TRADE vs. Interactive Brokers all depends on your investment experience and preferences. Those just starting out may feel more comfortable with E*TRADE or opt for Interactive Broker’s IBKR Lite program. More experienced investors are likely to appreciate Interactive Brokers’ in-depth tools. Whichever brokerage you choose, both platforms will give you the tools you need to create an investment portfolio that is right for you.

You can consider asking a financial advisor for guidance on how to build a diversified portfolio that lowers your risk while growing wealth over time.

Tips on Investing

Investing is more than the platform you use. It requires a careful strategy and a narrow focus on your financial goals. While planning may be hard, you don’t have to do it alone. A financial advisor can help you through the steps. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Whether you’re considering getting started with investing or are highly experienced, an investment calculator can help you figure out how to meet your goals. It can show you how your initial investment, frequency of contributions and risk tolerance can all affect how your money grows.