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E-Trade

The New York, USA-based financial services company

E-Trade – An Overview

E-Trade is a financial services company that was founded in 1982 by William A. Porter and Bernard A. Newcomb, and it is headquartered in New York, United States. The company is one of the pioneers in the online brokerage industry, growing to over 30 branches across the United States over the years.

E-Trade provides an electronic trading platform for both beginner and experienced traders who want to buy and sell financial assets like common stock, preferred stock, future contracts, mutual funds, options, fixed income investments, and exchange-traded funds. It also offers banking products through the E-Trade Bank, an FDIC-registered federal savings bank, to help maximize the value of deposits generated in its brokerage business.

 

E-Trade

 

History of E-Trade

E-Trade’s predecessor, TradePlus, was founded in 1982 by two partners, William Porter and Bernard Newcomb. The partners injected a total of $15,000 in capital to facilitate the operations of the new company. In 1991, the two founders agreed to establish a new brokerage company, E-Trade Securities Inc., with capital raised from TradePlus. E-Trade experienced a high growth rate in its initial years, with $11 million in earnings in 1994, up from $850,000 in 1992. By 1996, the company’s quarterly revenues were at $15 million with the number of customers rising to almost 75,000.

In 1996, the financial services company went public through an Initial Public Offering. The IPO coincided with the launch of ETrade.com website where investors could buy and sell shares. In 2001, it acquired Web Street – an online brokerage firm with locations in San Francisco, Beverly Hills, Boston, and Denver – for $45 million. In 2005, E-Trade purchased Harrisdirect, a former brokerage service of Bank of Montreal. It also acquired Brown & Company, a former brokerage service of JP Morgan for $1.6 billion in cash. In 2016, E-Trade purchased the parent company of OptionsHouse for $725 million.

 

E-Trade Trading Platforms

E-Trade manages three main trading platforms that are available to the company’s clients. The trading platforms include:

 

#1 E-Trade Web

Registered users can access free streaming market data, live market commentary, free real-time quotes, news and charts and other market updates. Investors can use the platform to access investing tools to identify potential investment opportunities, make trades, create watch lists, and track the progress of their accounts.

 

#2 OptionsHouse

OptionsHouse is a robust trading platform that eTrade acquired in 2016. The platform’s been integrated into the E-Trade platform and is available for use by the company’s investors. It allows users to trade stocks, options, ETFs, and futures. OptionsHouse offers real-time data, 100+ technical studies, 30+ drawing tools, customizable options chains and idea generation tools.

 

#3 E-Trade Pro

The E-Trade Pro trading platform is a more advanced platform for its largest and most active customers. It is available to traders who maintain a brokerage account balance with at least $250,000 or that complete at least 30 trades per quarter. Traders get access to advanced features like strategy scanner and back-testing capabilities. Teh platform also offers customizable charting.

 

#4 Mobile Apps

E-Trade provides two free mobile apps that users can use to access their accounts and make trades. It comes in both Android and iPhone versions that include advanced features like real-time screeners and training videos. Through the mobile apps, users can get real-time quotes, place trades and manage their trades with ease. The OptionsHouse mobile app offers customizable options charts and interactive charts.

 

How to Open an Account with E-Trade

The E-Trade platform allows investors to start the registration process on the website and start trading without requiring physical interactions with the company’s staff. On the homepage, click the “Open an account” button to launch the registration process. On the next window, choose the type of account that you want from the choices given, whether you want a regular investment account or a retirement account.

The registration form will prompt you to provide your personal information including full names, physical address, date of birth, social security number, telephone number, email address, and other important information. On average, the registration takes 10 minutes.

After completing the registration process, the platform assigns you an account number that you can use to top up the E-Trade account and start trading. You can fund the account using wire transfer, check, or the company’s quick-transfer service that allows you to transfer funds from another account. The minimum balance for opening a brokerage account is $500.

E-Trade charges a commission of $6.95 per trade at the standard level whereas large traders benefit from tiered pricing that falls to $4.95 per trade for 30 or more trades per quarter. Traders who want more hands-on management can use the company’s robo advisor service that executes trades and adjusts portfolio holdings on their behalf. The service charges an annual advisory fee of 0.3% and the minimum investment is $5,000.

 

Related Readings

CFI is the official provider of the Financial Modeling and Valuation Analyst (FMVA)™ certification program, designed to transform anyone into a world-class financial analyst. To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below:

  • Fixed Income Trading
  • Options: Calls and Puts
  • Retail Bank Types
  • Retainer Fee

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes and training program!