E*TRADE vs. Interactive Brokers: Which Is Right for You? | The Ascent by Motley Fool (2024)

Both of these brokers have relatively low commissions across the board. Both have commission-free stock and ETF trading, and charge no more than $0.65 per contract for options trades, with lower rates for customers who trade higher volumes of options.

E*TRADE has eliminated commissions on all mutual funds that don't have a sales charge (load). Interactive Brokers bases its mutual fund commissions on a percentage of the trade amount, capped at $14.95, but offers plenty of mutual funds with no transaction fees.

E*TRADE doesn't offer cryptocurrency trading, but Interactive Brokers does, with a rather low commission range of 0.12% to 0.18% of the trade. And finally, it's worth noting that Interactive Brokers has somewhat of a complex commission structure in a few ways, such as different commissions, including small stock and ETF commissions for "IBKR Pro" accounts, and tiered commissions for futures, currencies, and more.

Both of these brokers offer a wide variety of investment products. Both offer stock and ETFs, as well as options. They also offer bonds and futures trading through their platforms, as well as plenty of mutual funds.

Having said that, there are a few important differences. E*TRADE is one of the few major brokers that still doesn't allow for fractional share trading of stocks and ETFs, while Interactive Brokers allows investors to trade fewer than one share at a time. E*TRADE also doesn't offer cryptocurrencies or foreign currency (forex) trading, while Interactive Brokers facilitates trading in a few cryptocurrencies and is one of the most popular forex platforms.

Both of these brokers offer all of the major investment account types. Both allow you to open joint accounts, and both offer margin trading. For investors who want to put their portfolio on autopilot, they both have robo-advisory services -- for example, E*TRADE offers E*TRADE Core Portfolios.

For retirement, both offer traditional and Roth IRAs, just like most brokers. But E*TRADE has a few additional options for self-employed investors, such as SIMPLE IRAs and Solo 401(k)s.

E*TRADE could also be the better choice if you prefer to do your banking and investing with the same institution. Because it is owned by Morgan Stanley (which is a chartered bank), it offers checking and savings account products to its customers. To be sure, Interactive Brokers offers a fantastic yield on cash balances held in its brokerage accounts, but it isn't a true bank account replacement.

The various mobile apps and trading platforms offered by both E*TRADE and Interactive Brokers are a strong point.

E*TRADE offers an easy-to-use and feature-packed web trading platform that should meet the needs of most investors, as well as the E*TRADE Mobile app that facilitates easy trading on the go. In addition, there's the Power E*TRADE platform that is a high-powered trading interface, designed for sophisticated stock and options traders. And unlike some others that offer high-tech platforms, the Power E*TRADE platform comes in app form as well.

Interactive Brokers offers a similar mix of platforms. The IBKR Desktop platform is the newest, and is designed to make it easy for beginners to buy and sell stock, as well as for experienced investors to place complex trades. For more sophisticated investors, the IB Trader Workstation (TWS) is a desktop trading platform that is packed with features, analytical tools, and trading capabilities. There's also the IBKR Mobile app-based platform that is great for experienced traders, as well as the IBKR GlobalTrader app that is an easier-to-use mobile platform.

The bottom line is that both offer a variety of ways to trade from home and on the go. But generally speaking, E*TRADE is the more beginner-friendly broker of the two.