Interactive Brokers vs E*TRADE Range of Offerings | ||
---|---|---|
Asset | Interactive Brokers | E*TRADE |
Short Sales | Yes | Yes |
No-Load, No-Fee Mutual Funds | 8,300 | 4,533 |
Bonds | Yes | Yes |
Futures/Commodities | Yes | Yes |
Futures Options | Yes | Yes |
Complex Options | 4+ legs | 4+ legs |
Robo Advisory | Yes | Yes |
Cryptocurrency | Yes | Bitcoin futures only |
International Exchanges | 135 | 0 |
Forex | Yes | No |
Fractional Shares | Yes | Yes |
OTCBB and Penny Stocks | Yes | Yes |
Order Types
IBKR is a bit more versatile than E*TRADE when it comes to order types. There’s a flexible array of order types on IBKR’s client portal and app, plus 100+ order types and algorithms on Trader Workstation. E*TRADE offers a decent selection of order types, including all the basics plus trailing stops and conditional orders. The gap between the two brokers is small from the perspective of most individual investors, but active traders will value the additional flexibility IBKR offers over E*TRADE.
Trading Technology
IBKR’s order execution engine routes orders to achieve optimal execution, maximize rebates, and attain price improvement. The company does not provide execution speed statistics on its website; however, it reports an average net price improvement of $0.0047 per share. IBKR receives payment for order flow. The amounts vary by market center but range from $0 to $0.29 per share for equity trades and $0.12 to $0.52 per options contract.
E*TRADE’s order routing technology uses both spray and sequential routing, and it sends most orders to market makers. The router looks for a combination of execution speed and quality. According to its July 2021 execution quality report, orders are filled in 0.10 seconds, on average. E*TRADE reports an average net price improvement of $0.007 per share, and it receives less than $0.0020 in payment for order flow for equity trades and less than $0.47 per options contract.
While both companies offer some type of backtesting, only IBKR has strategy automation capabilities. Without IBKR’s execution speed statistics—and with payment for order flow figures that vary—it’s tough to call a clear winner here.
Costs
Compared to many online brokers, IBKR’s pricing schedule is complicated. Stocks and ETFs are $0 per share on the IBKR LITE Plan or $0.0005 to $0.0035 on the IBKR PRO Plan. Options range from as low as $0.15 to $0.65 per contract. Futures range from as low as $0.25 to $0.85 per contract, depending on the market and how much you trade. Broker-assisted trades for large orders (10,000 share/100 contract minimum) cost between $95 and $300, depending on the market. For smaller positions, broker-assisted trades cost $30 and are limited to closing orders.
E*TRADE’s costs are much more straightforward. The broker doesn’t charge commissions for online equity, options, and ETF trades for U.S.-based customers (there’s a per-contract option fee of $0.65). You’ll pay $19.99 to trade mutual funds outside the No Transaction Fee program, and its live broker fee is $25 per trade across asset classes.
Still, IBKR is the clear winner for costs overall because of its margin interest rates, which are among the lowest in the industry. You’ll pay 1.56% with an IBKR PRO account and 2.56% with IBKR LITE for a $100,000 balance. By comparison, E*TRADE’s margin rate for the same balance is 7.45%.
Account and Research Amenities
IBKR and E*TRADE have robust stock, ETF, mutual fund, fixed income, and options screeners, including those that filter based on ESG/SRI factors. And both have numerous (equally valuable) tools, calculators, idea generators, and professional research.
Still, IBKR comes out ahead in the account and research amenities department for its vast news offerings—dozens of real-time news sources available on all platforms—and its long list of in-house and third-party market reports. IBKR is also the better choice if you want to build your own screens as E*TRADE offers only “canned” versions.
Portfolio Analysis
IBKR and E*TRADE clients have access to real-time buying power and margin information, plus real-time unrealized and realized gains and losses. With either broker, you can calculate the tax impact of future trades and view tax reports and combined holdings from outside your account. However, only IBKR calculates your internal rate of return (IRR).
IBKR has enhanced its portfolio analysis tools to appeal to more casual investors and traders (instead of just the pros). A feature called Portfolio Checkup lets you assess your portfolio’s health by comparing its performance to one of about 200 global benchmarks. IBKR also has one of the more comprehensive trading journals out there. Overall, we found that these features give IBKR a slight edge in an otherwise close race.
Education
IBKR and E*TRADE offer decent lineups of educational content, but IBKR’s materials are suitable for a more advanced audience. Its Traders Academy is a structured, rigorous curriculum—complete with quizzes and tests—intended for students, investors, and financial professionals. Videos, a glossary, and daily webinars round out its educational offerings.
E*TRADE’s Learning Center offers a good variety of educational content, including articles, videos, and webinars. New traders can check out the Getting Started section and move on from there to get more comfortable with investing concepts. There’s a daily product webinar with tips for using the trading platforms, and the company holds about 30 live events a year.
Overall, the brokers’ educational offerings are too close to call a winner. Still, keep in mind that IBKR’s content is better suited for experienced traders and investors, while E*TRADE is geared toward beginners.
Customer Service
E*TRADE wins in customer service. It offers 24/7 phone line support with access to brokers, retirement specialists, financial consultants, active trader consultants, and product specialists. You can chat online with a human representative, and mobile users can access customer service via chat. IBKR doesn’t have the same flexibility. It offers 24-hour weekday phone support with callback service, a secure message center, and 24-hour weekday online chat. Both companies report longer-than-usual wait times due to the Covid-19 pandemic.
Security
The security features at IBKR and E*TRADE are up to industry standards. Both offer two-factor authentication, biometric recognition, and security guarantees. E*TRADE leads with its excess Securities Investor Protection Corporation (SIPC) insurance, which has an aggregate limit of $600 million. IBKR’s excess SIPC insurance provides each client with $30 million worth of protection (including $900,000 for cash), up to an aggregate limit of $150 million.
The Identity Theft Research Center reported no significant data breaches for either company during 2020. Investors can have confidence in the security standards at either of these brokers.
Our Verdict
E*TRADE and Interactive Brokers are powerhouses in the industry that offer full menus of trading products, customizable platforms, functional trading apps, and low costs. As always with two very competitive brokers, we find that it comes down to the type of investor/trader you are. When we compare the two, IBKR is the clear choice for professionals, high-volume traders, and anyone who wants access to international markets. At the same time, E*TRADE is a better choice for beginner and casual investors and traders—especially those who trade options. While both can serve the other’s niche competently, choosing the one that matches your particular investing style and experience unlocks the real strength of these two powerful platforms.
Methodology
Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on its platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting thousands of data points that we weighed into our star-scoring system.
In addition, every broker we surveyed was required to fill out an extensive survey about all aspects of its platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of its platforms at our offices.
Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.