Published in: Buying Stocks | Jan. 21, 2019

E*Trade vs. TD Ameritrade: Which Online Brokerage Is Best?

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E*Trade and TD Ameritrade are two of the biggest discount brokerages on the block. Here’s how they compare on prices and the features that matter most to investors.

A hand drawing a scale with PRICE on one said and VALUE on the other.

Image source: Getty Images

As some of the oldest online discount brokers with more than 18 million accounts between them, E*Trade and TD Ameritrade are two of the largest discount brokerages in existence, and for good reason: Both offer features common of the best brokerage accounts, including low commissions, low (or no) minimum deposit requirements, and long lists of mutual funds you can trade on their platforms.

Below, we'll look at a head-to-head comparison of E*Trade vs. TD Ameritrade on every make-or-break feature and product offering to help you decide which is better for how you trade and invest.

Commission prices

Trading costs are just one of many things to consider. TD Ameritrade and E*Trade both offer $0 online stock trades and are priced very similarly for most other types of trades, making the difference perhaps less important than other factors.

Broker Stocks and ETFs Stock options Mutual funds
E*Trade $0 per trade $0.65 per contract $19.99 (thousands for free)
TD Ameritrade $0 per trade $0.65 per contract $49.99 (thousands for free)


Of course, determining exactly how much you'll pay isn't as simple as looking at the standard commission schedule. These two brokerages diverge when it comes to active investors and traders, as E*Trade charges a reduced commission on options trades ($0.50 per options contract) when you place more than 30 trades per quarter.

But rest assured that you don't have to churn your account to score discounts. Both E*Trade and TD Ameritrade have a select list of mutual funds and ETFs that you can trade without paying a commission or transaction fee, which can substantially reduce your average trading cost over time.

Mutual fund selection and commission-free choices

E*Trade and TD Ameritrade have a lot to offer the fund investor, as both provide thousands of mutual funds and ETFs that you can buy and sell without paying a commission. This table summarizes the differences between these brokers' fund freebies:

Fund type E*Trade TD Ameritrade
Total mutual funds More than 9,000 More than 13,000
No-transaction-fee mutual funds More than 4,400 More than 4,100
Commission-free ETFs More than 250 More than 300

 

Minimum deposit requirements

Neither TD Ameritrade nor E*Trade have any minimum deposit required to open an account. 

Having said that, the practical consideration is that you'll need enough money to buy at least one share of a stock, an ETF, or a mutual fund in order to actually invest your money. For this reason, the practical minimum deposit for any no-minimum broker is probably closer to $100, if not more.

Trading platforms

TD Ameritrade and E*Trade are designed to fit the needs of long-term investors and frequent traders alike. Both brokers offer basic web browser-based platforms for long-term investors as well as fully-featured platforms for high-activity traders.

TD Ameritrade offers web browser, mobile app, and desktop platform capabilities. Its desktop platform, thinkorswim, is a favorite among investors who trade most actively. The thinkorswim platform is free to use and doesn't require a minimum balance for access, which also makes it one of the most accessible platforms offered by any discount broker. That you can deposit as little as $1 and get immediate access to a top-shelf trading platform is a big advantage for TD Ameritrade customers.

The fully-customizable thinkorswim platform offers hundreds of charting tools, powerful options strategy builders, and an impressive earnings report tool to show you how a stock has performed in the days leading up to and after an earnings release, just to name a few of the key features that users love.

E*Trade also offers web browser, mobile app, and desktop platform trading capabilities. Its Power E*Trade desktop platform is a favorite among active traders. It's certainly an impressive piece of software, although the minimum activity and minimum balance requirements price out new investors and less-active investors.

Those who trade stocks and stock options may find E*Trade’s free browser platform to be perfectly suitable. The browser platform carried over from OptionsHouse, which E*Trade acquired and merged into its platform in 2017. It remains a favorite among options traders, given its easy-to-use format and quick profit and loss calculators to find interesting options trading ideas. It's safe to say that options traders may actually prefer the free OptionsHouse platform to the E*Trade Pro platform.

And as far as mobile trading goes, it's a toss-up between E*Trade and TD Ameritrade, both of which rank among the top for trading on the go. From conditional orders to complex option trades, both brokers have iOS, Android, and Windows apps that offer desktop-platform tools and functionality on smaller devices. E*Trade gets a slight edge in mobile trading, though, as it offers mutual fund trading by mobile device, whereas TD Ameritrade does not. Of course, mutual funds are meant to be held for the long haul, so that small distinction may not matter to traders rather than investors.

International stocks and ADRs

When it comes to international stocks, E*Trade and TD Ameritrade stick with the pack and offer trading only on U.S. tickers. Thus, investors can invest in foreign companies by way of American depositary receipts (ADRs), or by purchasing shares of companies with dual listings on domestic exchanges, but neither brokerage will route orders to international stock exchanges.

The truth is that a minority of online brokers offer the ability to send orders over international borders. If you want to transact directly on a foreign stock exchange, you may want to consider Charles Schwab and Fidelity, both of which feature electronic trading on international exchanges.

Research reports and commentary

In the earliest days, discount brokers were nothing more than a portal to the stock markets. They offered little more than just a way to place a trade, and as a result, discount brokers could charge lower commissions than their full-service rivals.

Over time, though, discount brokers have beefed up their research offerings as a value-add to their paying customers. For example, TD Ameritrade customers get access to nearly 50 different daily market reports and stock analysis from multiple third parties (CFRA, Credit Suisse, Market Edge, and more), as well as time-sensitive commentary on major events like earnings reports and economic releases.

Likewise, E*Trade offers a compelling research suite that includes reports from the likes of Moody's, Thomson Reuters, Morningstar, and more. In addition, the company provides daily market commentary from Morningstar, major financial publications, and more, completely free, on all of its platforms.

I've barely scratched the surface here. If you wanted to read up on your portfolio and watch list around the clock, both brokers are chock full of content to keep you busy. Plus, both brokers, like all discount brokers, also offer a wealth of scanners and screeners in which you can sort the market for stocks and funds that meet specific parameters (dividend yields, price-to-earnings ratios, earnings growth, and so on).

The best online brokerage: E*Trade vs. TD Ameritrade

These two brokers are so close on so many things -- prices, fund selection, and research -- that picking a winner of the two largely comes down to a few "make-or-break" features.

TD Ameritrade has the clear advantage for investors who want in-person help as it has a much larger branch network than E*Trade. It also has a slightly better ATM access feature, since customers can use TD Bank's ATM network for free. On the other hand, E*Trade could be the better choice for investors who want to buy mutual funds that aren't on the NTF list, or for active options traders. 

It’s also worth mentioning that in November 2019, Charles Schwab agreed to buy TD Ameritrade. Once the purchase is complete, it’s likely that Schwab and TD Ameritrade eventually will merge into one super-broker (for better or worse). Although this will take years, you may want to keep this in the back of your mind when choosing a broker.

Using the wrong broker could cost you serious money

Over the long term, there's been no better way to grow your wealth than investing in the stock market. But using the wrong broker could make a big dent in your investing returns. Our experts have ranked and reviewed the top online stock brokers - simply click here to see the results and learn how to take advantage of the free trades and cash bonuses that our top-rated brokers are offering.

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