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ETrade vs. Robinhood: Which Brokerage is Best For You?

If you are just starting out to get into stocks, it may be difficult to discern which broker is the best for you. Two popular brokers are Etrade and Robinhood. With Etrade being an established broker and Robinhood being a fast growing new player, it can be difficult to discern which is the best for you. This article will help shed some light on both brokers and provide information for you to determine which one may be a better fit.  

Introduction to ETrade

ETrade is one of the largest American stock brokerages. It is referred to as one the “big four” brokerages. The platform was established back in 1982, in Palo Alto, California, as the first fully electronic trading platform. As technology advanced, so too did ETrade’s popularity. While legacy banks delayed their online trading segments as long as possible, ETrade thrived as a true trailblazer in the digital era. In 2020, ETrade was acquired by Morgan Stanley for $13 billion, marking the largest acquisition by a U.S bank since the financial crisis as of 2020. 

As of February 2020, Etrade has over 5 million customers with the typical account just under $70,000.

Introduction to Robinhood

Robinhood (NASDAQ:HOOD) is an online and mobile-based trading platform that has rapidly gained popularity over the past couple of years. The company was founded by Vlad Tenev, and his Co-CEO Baiju Bhatt. The two met at Stanford and created Robinhood in 2013 as a way for smaller, retail investors to have more access to investing tools. Robinhood went public on the NASDAQ exchange in July of 2021, just months after the platform was at the center of the Reddit-fueled meme stock short squeeze of GameStop (NYSE:GME) and AMC (NYSE:AMC). 

As of March 2021, Robinhood had over 13 million users and the average user has approximately $241 dollars

Summary Comparison

OfferingsETrade/CommissionsRobinhood/Commissions
StocksYes/ $0.00 per shareYes/$0.00 per share
Fractional SharesYes but only through dividend re-investment or robo-advisor portfolio.Yes/$0.00 per trade
OTC/Penny StocksYes/$6.95 per trade or $4.95 if you execute more than 30 trades per quarterNo
OptionsYes/$0.50 to $0.65 per contractYes/$0.00 per contract
CryptoNoYes/$0.00 per trade
BondsYes/$1.00 per bondNo
FuturesYes/$1.50 per contractNo
Mutual FundsYes/$0.00 per tradeNo

Major Features Comparison

User Experience Design for ETrade

ETrade was the pioneer for electronic trading platforms and it has had over forty years to mold and shape the product. ETrade is well known for its user-friendly layout and intuitive platform that can be customized to the user’s preferences. ETrade actually offers two different web-based applications: ETrade Web and Power ETrade.

  • ETrade Web is geared more towards the casual investors with an easy to use stock screener and even educational courses for investors to take. 
  • Power ETrade is for more advanced and active traders and provides technical analysis tools, as well as in depth options trading access. 

ETrade offers users both a desktop and mobile app for its platform, and both are relatively easy to learn to use. The ETrade mobile app is available for both Android and iOS systems. ETrade’s downloadable desktop software includes features for the advanced trader. This program provides plenty of trading tools for active users, and is fully customizable as well. 

Trading on either the desktop or mobile app is simple and straightforward, even for those who are not tech savvy. Even if you are looking for more advanced features such as stock options, the order screen for ETrade’s apps are easy to use.

User Experience Design for Robinhood

As a mobile-first trading platform, Robinhood is surprisingly simple to use after installing it on your smartphone. It’s difficult to beat just how simple Robinhood has made investing, they have gamified the user interface to make the app very easy to use and understand. While it lacks a bit in customization for advanced trader preferences, Robinhood wins in being an easier app that almost anyone can pick up and immediately use.

Robinhood also has a web-based version of the app if you find you are sitting at a computer. The layout and usability is nearly identical to the mobile app, so the only advantage on a computer is a larger screen to look at. At its core, Robinhood is a mobile application. There are no real charting or technical analysis tools on the mobile app, aside from the basic company fundamentals and a scrolling news feed. 

Which is More Beginner Friendly: ETrade or Robinhood?

Both ETrade and Robinhood have put out two relatively simple trading apps to use on the market. ETrade provides more customization and features than Robinhood for advanced traders, but if we are choosing which platform can be picked up and used by anyone regardless of experience, it would have to be Robinhood. 

Types of Accounts You Can Open

ETrade

Brokerage Account: The standard investing account that allows users to trade stocks, ETFs, and options. Stock and ETF trades are free, while options trades will cost between $0.50 and $0.65 per contract.

Core Portfolios: These accounts are for people who simply do not have the time to put into researching stocks. Core Portfolios are run by ETrade experts who will invest your money according to your financial goals. The annual fee is 0.30% of your total Core Portfolio value, and one can be started for as low as $500.

Premium Savings Account: A standard higher interest savings account that users can seamlessly integrate with their investing accounts. There is no minimum deposit, and the interest is 0.05% APY. 

Traditional IRA: The standard retirement account which can provide nice tax breaks with no annual fees, and the ability to trade stocks, ETFs, options, and mutual funds. 

Roth IRA: The Roth IRA allows for after tax money and investments to continue to grow completely tax-free. For more advanced investors who are willing to add a little risk to their retirement portfolio.

Rollover IRA: These can be used to consolidate a previous 401K from another employer. Add any other 401K accounts into one Rollover IRA account and make that money work for you.

Cryptocurrency: There is currently no direct way to buy cryptocurrency on Etrade. 

Robinhood

Robinhood Instant: This is the default or standard account type that new users are given when they sign up with Robinhood. This account provides extended hours trading, instant deposits up to $1,000, as well as the ability to trade options if approved. Note that Robinhood Instant does not allow margin trading, but is a margin account from a regulatory perspective due to their instant deposit feature. 

Robinhood Gold: A step up from Robinhood Instant, the Gold account allows for margin trading and larger deposit amounts. This includes all of the other features from the Robinhood Instant account, but requires an extra $5.00 per month charge.

Robinhood Cash: Robinhood Cash is the simplest account that is a downgrade from Robinhood Instant and Gold. It does not allow instant deposits, or trading with unsettled funds. 

Robinhood Crypto: As its name suggests, Robinhood Crypto is an account for trading in cryptocurrencies. Currently, Robinhood offers the ability to trade popular cryptos such as Bitcoin, Ethereum, DogeCoin, Litecoin, and others. However, there is no current way to send crypto from one wallet to another. 

Order Types

ETrade

ETrade offers the full range of order types for its users. With both the mobile and desktop apps users can enter market orders, market on close, limit, stop on quote, stop limit on quote, and trailing stop orders by both dollar amount and percentages. For advanced traders, ETrade also allows various conditional orders such as OTO (one-triggers-other), OCO (one-cancels-other), and OTOCO (one-triggers-a-one-cancels-others). Although it’s worth noting the mobile app will only allow contingent and OTO trades. 

Robinhood

As with most other features, Robinhood offers a bit more of a slimmed down order type offering. With stocks, users are able to execute market orders, limit orders, stop orders, stop limit orders, and trailing stop orders. With cryptocurrencies, users can execute market and limit orders, and with options, users can execute limit orders and stop limit orders. These all work in either the mobile or desktop apps.

Research and Education Provided

ETrade

ETrade has built up its platform over the past few decades. In doing this, ETrade has offered its users a wide range of research tools that are directly integrated into both the mobile and desktop apps. Users can enjoy an extensive stock screener that allows up to 47 different search criteria. If you are using Power ETrade, the stock screener is even more advanced with over 100 pre-defined screens that you can apply. 

ETrade also offers mutual fund and ETF screeners, options screeners, and fixed income screeners for those investors who are looking at more than just stocks. In addition to this, ETrade offers full technical analysis charting tools that are developed by Chart IQ. Users can set up and draw charts with custom indicators, which includes a pattern recognition tool and risk-reward analysis. 

Finally, ETrade also offers an up to the minute news feed, as well as access to research sites like Moody’s, Thomson Reuters, Morningstar, MarketEdge, Trefis, Argus, and Tipranks. Since it was acquired by Morgan Stanley, Etrade offers Morgan Stanley equity research reports for certain stocks.  

Robinhood

On the other hand, Robinhood does not have any built in screeners for any assets on its platform. Robinhood does offer limited charting abilities, but they are not customizable and fairly unspectacular. The site does provide up to the minute news from Morningstar, as well as WSJ Markets, Reuters, Barron’s, CNBC, and even provides its own in-house podcasts, newsletter, and video series, called Snacks. 

Sign Up Access

ETrade

At this time, ETrade as it is known now is only available in the United States. In years past, ETrade was available in countries around the world, but the company has since sold off those international subsidiaries and is focussing on the United States.

Robinhood

Like ETrade, Robinhood is also only available to residents of the United States and there does not seem to be any immediate plans to make the platform available internationally. 

Minimum Balances

ETrade

ETrade has no minimum balance for users who want to start a new account. This means you can deposit as little or as much as you would like to start trading.

Robinhood

Robinhood also does not require a minimum balance to open an account.

Customer Service

ETrade

ETrade has you covered no matter what medium you prefer. The company offers 24/7 telephone and live chat service for users, as well by email. If you are so inclined, there are also 30 brick and mortar locations of ETrade located around the country. 

Robinhood

Robinhood has a more limited customer service option, with in app chat bots. You can also leave your phone number if you wish to be called directly, but there is no posted number to contact Robinhood. For those that like to call and be able to reach someone live, Robinhood 

When You Should Use ETrade

ETrade is a great option for those who want deep research, an abundance of features and trading options, technical analysis and charting, and access to passive investing like mutual funds, then ETrade is certainly the platform for you. ETrade can be as simple or as complex as you make it with a fully customizable app that provides a full and robust trading experience. If you are on a laptop or desktop computer, Etrade is the better option.

When You Should Use Robinhood

Robinhood is the ideal brokerage platform for casual investors who want to simplify trading stocks. The costs are lower, but there are also far less features in the app which some investors may actually prefer. Some advantages of Robinhood is that you can trade cryptocurrencies, as well as immediately begin trading on margin if you are approved. If you like trading on your phone, Robinhood is the better option.

Conclusion

There is no right answer when choosing which online brokerage is a better fit. Everyone has their own investing style and preferences that they would like to have. ETrade aims to provide an all in one trading experience and is widely seen as a leader for electronic stock trading. Robinhood has truly managed to redefine investing into a couple of button clicks and has eliminated most trading fees for its users. 

More experienced traders will love all of the features and customization that ETrade offers in both its desktop and mobile apps. ETrade is definitely geared more towards experienced investors, with its premium features that allow for more research to be done and a more customized approach. Robinhood on the other hand appeals to younger traders who are looking for a fast way to get started into the market. Robinhood also offers cryptocurrencies, which may appeal more to investors looking for direct exposure to this relatively new asset class. 

Both platforms can serve the purpose of more than adequate online brokerage, so choose the site that best matches your investing style!

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