WHO IS E*TRADE?
According to research in South Africa E*TRADE was founded in 1982 and has its headquarters in Arlington, VA, United States. It has 30 retail branches across the United States.
Today, E*TRADE specialises in a first-class experience for the digitally inclined investor and trader, backed by personal professional guidance. The company has a high-tech custody platform for advisors and the industry’s top-rated stock plan administration platform.
In February 2020, E*TRADE was acquired by Morgan Stanley.
E*TRADE is regulated by top-tier regulators like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
You might also like: eForex Review
SAFE OR SCAM
One of the best benchmarks to measure the safety of a broker like ETRADE, is to establish which regulating authorities are watchdogs over its actions.
ETRADE E*TRADE is regulated by top-tier US regulators, like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) therefore clients are protected by an investor protection amount of $500,000 which includes $250 000 for cash. There is no negative balance protection.
E*TRADE does not provide negative balance protection.
E*TRADE is considered safe because it has a long track record, is listed on a stock exchange, has a banking background, discloses its financials and is regulated by top-tier regulators.
PRO AND CONS
|1. Low trading fees||1. Only US markets covered|
|2. User-friendly mobile trading platform||2. Slow account verification|
|3. Great research tools||3. No forex|
|4. Free stock and ETF trading||4. Higher fees for non-free mutual funds|
Leverage is a facility that enables you to get a much larger exposure to the market you are trading than the amount you deposited to open the trade. Leveraged products, such as forex trading, magnify your potential profit – but also increase your potential loss.
Leverage amount is expressed as a ratio, for instance 50:1, 100:1, or 500:1. Assuming that you have $1,000 in your trading account and you trade ticket sizes of 500,000 USD/JPY, your leverage will equate 500:1.
Margin is the amount of collateral to cover any credit risks that may arise during your trading operations. It is expressed as the percentage of position size (e.g. 5% or 1%), and you have to have funds in your trading account to ensure sufficient margin.
For example, on a 1% margin a position of $1,000,000 will require a deposit of $10,000. The margin level in a trading account needs to be equal or more than 100% to be able to open new trades, otherwise your trading account will be fully hedged.
E*TRADE does not give clear information on leverage ratios.
A forex account at E*TRADE is a trading account that you will hold and that will work similarly to your bank account, but with the difference that it is primarily issued with the purpose of trading on currencies.
Forex Islamic accounts are also known as swap-free accounts as they imply no swap or rollover interest on overnight positions, which is against Islamic faith.
Often, the number and type of accounts that a trader can open with a broker company differs depending on the country in which it operates and the regulation authorities under whose jurisdiction it falls.
ETRADE offers the following types of accounts:
Individual – The account is owned by a single individual.
Joint accounts – Two or more account owners.
Business accounts – Account is owned by a legal entity.
The retail brokerage branch of E*TRADE is available for US-based clients only.
The most popular market instruments available from most brokers for trading include:
Forex trading describes the currency exchange market which refers to the global, decentralised marketplace where individuals, companies and financial institutions exchange currencies for one another at floating rates.
Commodity markets offer many investment opportunities for traders. Soft commodities have been traded for centuries and plays a major role in portfolio diversification and risk management. Investing in contract-based tradable goods is a reliable way to mitigate risk during times of economic uncertainty.
Equity, or stock indices, are actual stock market indexes which measure the value of a specific section of a stock market. They can represent a specific stock market or a specific set of the largest companies of a nation.
The trading of gold and other precious metals, along with crude oil, copper or petroleum, are hard commodities that play a major role in the commodities market and are contract-based tradable goods.
The typical feature of energy prices is high volatility due to the influence of political and environmental factors, supply and demand, extreme weather conditions and global economic growth.
ETRADE offers the following:
You can trade with stocks on the following stock exchanges: NYSE, NASDAQ, AMEX, OTCBB, other OTCs.
E*TRADE has a good bond selection and you can trade with options only on CBOE exchange.
You can trade with futures on three exchanges: CME Group, ICE US, CFE.
E*TRADE’s forex trading offers only 9 currencies. You won’t trade actual currencies, only futures contracts. E*TRADE forex futures can only be traded a few months a year, too, depending on the currency.
Cost depends on different factors, like spread and margins, and ETRADE clients may also experience different fee structures according to their country or place of residence.
The spread of a currency pair is the difference between the bid and the ask rate. A pip represents the smallest increment that an exchange rate can move.
Margin is the amount of money required in your account in order to open a position. Margin is calculated based on the current price of the base currency against USD, the size (volume) of the position and the leverage applied to your trading account.
ETRADE offers low trading fees.
The commission for all E*TRADE stocks and ETFs is free due to the introduction of commission-free trading in the US at several brokers in 2019.
E*TRADE financing rate applies a base rate plus a premium/discount depending on the financed amount.
E*TRADE fund fees are generally high, $19.99 per trade. E*TRADE does not charge a commission for ca. 4,500 mutual funds. If you sell these no-transaction-fee funds within 90 days after the purchase, a $49.99 fee is charged.
E*TRADE charges no fee to trade stocks, ETFs and most mutual funds. Options contracts are an industry-standard $0.65. Futures contracts are $1.50 per side.
DEPOSIT AND WITHDRAWAL
Accounts usually requires a certain minimum initial deposit, which can be paid in several ways. Withdrawals can usually be done with the same ways, but sometimes differ.
In the case of ETRADE no minimum deposit is required for basic accounts and no withdrawal fees are charged.
US clients can use check, ACH, and wire transfers for deposit cash, while for non-US clients wire transfer and check are the available deposit options.
Credit/debit cards and electronic wallets are not provided for.
Withdrawals take two business days and you can only withdraw money to accounts in your name.
The forex trading platform provided by ETRADE to its clients is in essence the software to carry out their trades. Some brokers provide only one, others quite a few platforms.
A multi-asset trading platform is one that allows clients to trade forex as well as other asset classes. The decision about which platform to choose will usually depend on what a client would like to trade.
ETRADE provides two trading platforms which differ in the tradable products and the clients they are best for: E*TRADE and Power E*TRADE. There is also a desktop trading platform, called E*TRADE Pro.
The E*TRADE web platform is the default trading platform, and available in English and Chinese.
E*TRADE’s mobile trading platform is very easy to use and offers a lot of features.
HOW TO OPEN AN ACCOUNT
Similarly to a bank, to register a forex trading account with ETRADE for the first time, you will be required to go through a basic “know your customer” process, which will allow ETRADE to ascertain that your submitted details and ensure the safety of your funds and account details.
With ETRADE the process is user-friendly and fully digital for US clients. For non-US clients, E*TRADE offers a paper-based application process, which takes longer.
Potential traders need to make sure the broker company they chose will offer sufficient support whenever they need it.
In the case of ETRADE customers can reach the support team via live chat, phone and email.
E*TRADE support team is available 24/7.
Before starting to trade, potential clients of ETRADE should avail themselves of all possible information and trading skills needed to be successful in the world of forex and commodity trading.
ETRADE offers Platform tutorial videos, general educational videos, webinars, and quality educational articles that cover a wide range of topics.
To be able to trade with confidence, traders should do as much as possible research about this kind of speculative trading before commencing, but also preceding every daring deal to ensure that they don’t lose money unnecessarily and trade as profitable as possible.
With ETRADE they have access to research tools both on E*TRADE and on Power E*TRADE web trading platforms.
E*TRADE provides trading ideas and recommendations for stocks, ETFs and mutual funds, fundamental data, and basic performance and rating metrics.
E*TRADE has good charting tools and a news feed that is easily readable and provides good visual information.
Being an awarded company instils extra confidence by traders. ETRADE can show several awards accumulated during its years in business, including the following:
Kiplinger’s Best Online Brokers of 2019 – Best online broker and Best for Mutual Fund Investors.
In Investopedia’s 2020 Best Online Brokers Awards – E*TRADE earned “Best for Ease of Trading” and “Best for Beginning Options Traders”.
In Barron’s comprehensive 10-firm survey, E*TRADE earned “Best for Mobile Traders” and “Best for Investment-Oriented Traders” distinctions.
In StockBrokers.com’s 2020 Online Broker Review, E*TRADE received the Mobile Trading, Options Trading, and Web-Based Platform Awards and nine Best in Class distinctions: Mobile Trading, Options Trading, Education, Research, Beginners, IRA Accounts, Futures Trading, Active Trading, and Overall.
In the Human Rights Campaign’s Corporate Equality Index, E*TRADE was recognised as “Best Places to Work for LGBTQ Equality.”
In Glassdoor’s Employees’ Choice Award, E*TRADE was named one of the Best Places to Work in 2020.
E*TRADE Core Portfolios was named one of the Best Robo-Advisors for Beginners in Investopedia’s Best Robo-Advisors for 2019 awards.
In Benzinga’s 2019 Global Fintech Awards, E*TRADE was named Best Brokerage for Options Trading.
E*TRADE is one of the biggest US stockbrokers regulated by top-tier regulators.
E*TRADE introduced zero commission on stock and ETF trades. E*TRADE’s research functions are high-quality and offer a lot of tools.
ETRADE warns potential customers that Forex and CFDs trading always carries a high risk and may not be suitable for all investors.
Before deciding to trade with ETRADE, potential traders are advised to carefully consider their investment objectives, financial situation, needs and level of experience before investing money they cannot afford to lose.
ETRADE warns that margin trading involves the potential for profit as well as the risk of loss and that movements in the price of foreign exchange and commodities are very unpredictable, hence ETRADE cannot guarantee a maximum loss that a trader may suffer, according to research in South Africa.
You might also like: EFG Hermes Review
ETRADE AT A GLANCE
|Headquartered||Arlington, United States|
|Regulating Authorities||Financial Industry Regulatory Authority, Inc. (FINRA)|
|Countries not accepted for trade||Not indicated|
|Islamic Account (Swap Free)||No|
|Maximum Leverage||Not indicated|
|Platform Types||Power E*TRADE
E*TRADE web platform
E*TRADE’s mobile trading platform
|OS Compatibility||Web Based, iPhone App, Apple Watch, Android App,|
|Tradable Assets||Stock, ETF, Fund, Bond, Options, Futures|
|Languages supported on Website||English|
|Customer Support Languages||English, Chinese|
|Customer Service Hours||24/7|
Frequently Asked Questions
Is ETrade a fake or scam?
No, Etrade is regulated by the top-tier regulatory financial authorities – Securities and Exchange Commission and the Financial Industry Regulatory Authority in the US.
How many instruments can I trade with ETrade?
Trade different instruments with ETrade, incl:
Which platforms are supported by Etrade?
ETRADE provides the following popular trading platforms:
- Power E*TRADE
- E*TRADE web platform
- E*TRADE’s mobile trading platform
Does Etrade have demo account?
No demo account option is available.
How long will it take to get my money from Etrade?
If the money was transferred electronically it can take up to 3 business days, by cheque – up to 5 business days, by wire transfer – you will receive it the same business day if Etrade receives it beofre 6p.m. ET.
Featured SA Shares Writer and Forex Analyst.