TD Ameritrade vs ETrade

When I turned 13 I was fortunate to learn about investing money.  Back in 1986, I received 10 stock shares of Exxon which was worth about $150. These 10 shares are now worth about $750. The lessons I learned about the stock market with a few shares of stock have helped me tremendously.

Earning money for yourself is critical but investing those labors is how you build wealth.

I want to share with you some information about a couple of places where you can get started if you haven’t already. I’ve had over a dozen different brokerage accounts. Today I want to focus on just two.

What Made Me Open a TD Ameritrade and an ETrade Account?

It turns out both my accounts were opened through acquisition. A long time ago I created a Rollover IRA at Scottrade. This was one of the original online brokers when Internet trading started taking off. This Scottrade account would eventually be bought by TD Ameritrade.

When I started working for myself I opened a ROTH IRA account at a place called Sharebuilder. This site allowed you to create portfolios with minimal commissions. I would contribute so much every month and let it grow. Sharebuilder was then bought out by Capital One and finally in 2018, ETrade snapped up this part of the business from Capital One.

It’s now my turn to share what I’ve learned about these two big online trading companies.

Let’s Look at the Big Boys

Today, online stock exchanges rule the trading world. Much of the busy work is still done on the NYSE floor, but websites like TD Ameritrade and E*Trade allow everyone to buy and sell stocks from the avid day-trader down to the casual observer.

These companies (for the most part) bank on small commissions for each trade to generate profit. If only casual trainers traded once or twice a month, the sheer volume of trades passing through each site could be worth billions of dollars. When you factor in the ardent traders who buy and sell consistently throughout the day and the companies trading at very high volumes, the profits grow exponentially for each company.

Luckily, most websites find a balance between paying their executives millions of dollars and turning some of their profits back around into creating valuable tools for the traders. Just like any other marketplace, innovation has its pros and cons.

TD Ameritrade and E*Trade are no different, but we can compare the two for some insight.

Resources for Traders

E*Trade offers a comprehensive video to welcome new traders and help them get the ball rolling. The online Knowledge Base also gives account holders information through articles and videos from experts in the field. Each account gets a dedicated trader service team, which helps with technical issues, advice, and most needs traders might encounter

TD Ameritrade has many of the same tools and resources as other trading websites with the addition of one incredible asset for everyone, the paper account. Account holders with TD Ameritrade vs. E*Trade and most other sites have access to their real-life trading platform but can practice with “fake” money. It lets traders test strategies before ever investing a penny.

Trading Platforms

E*Trade offers two trading platforms for online traders each with a mobile app to run in tandem. The Power E*Trade” platform is more intense and meant for the active trader. It has a wealth of tools for monitoring trends and catering to day-traders who might trade dozens of times based on the platform’s movements.

For the more casual trader looking to build a portfolio or plan for retirement, the website offers the original E*Trade service platform which is easier to read, provides more insight from expert analysis, and helps set longer-term goals. This is also an excellent starting point for new investors.

TD Ameritrade has a similar, intense platform called “Think or Swim.” As the name might suggest, this is an unforgiving platform the moves extremely quickly meaning traders need to be familiar with their strategies and confident in their trading before opening the platform. Fortunately, TD Ameritrade understands this is a daunting task, which is why the practice, “paper” accounts exist.

The company also offers the Web Platform. This is a much lower stress trading option. You still have the ability to buy and sell at a moment’s notice, but you can more easily view analysis of a stock and read articles or watch videos with news of the day. Again, this lower key platform is a better starting point for new traders.

Cost Per Trade

E*Trade offers a set price of $6.95 per trade. Anyone who trades more than 30 times per month receives a $2 discount on their trade costs. The $4.95 per trade for high volume traders makes it one of the lowest in the marketplace.

TD Ameritrade doesn’t offer the same discount for high volume traders, but the flat $6.95 fee is still extremely low compared to others. Both websites can offer bonuses just for signing up, and TD Ameritrade has some of the best incentives such as free trades for the first three months. Sign-up bonuses are certainly a contributing factor when deciding between E*Trade vs. TD Ameritrade.

The three significant differences listed above only account for a small list of pros and cons for TD Ameritrade vs. E*Trade. For the best results, consult with each company to find the best fit for your plans. Once you have all the details pertaining to what you want to do with your money, the last step is to pull the trigger and set your plan in motion!

UPDATED – 10/3/2019 – I just got an email from both TDAmeritrade and ETrade telling me that all equity trades are now commission-free.  This includes stocks, options, and other assets. It seems like RobinHood, which I don’t use currently set the trend years ago and now has some big followers. The young people are putting their money to work in a free-based system. If I was just starting out that is what I would do. Remember my story above.

So, why are these big boys doing this? Great question. I’m sure there is something coming down the line. I’m thinking of a fee-based service or something that will piss a few people off. These commissions were big for these companies. To make that revenue up will take something. I’ll update you as soon as I find out.