E*TRADE is an online brokerage where you open an account, deposit money, and buy or sell stocks, bonds, mutual funds, and other investments

E*TRADE is a company that holds your money and executes trades on your behalf. You do not own E*TRADE; you own the investments inside your E*TRADE account. When you buy 100 shares of a company through E*TRADE, E*TRADE records that you own those shares, holds them in your account, and sends you statements showing what you own and what it is worth.

E*TRADE makes money by charging you fees — either per trade, per month, or through spreads (the difference between what they pay for an investment and what they charge you). Some accounts have no per-trade fees but charge monthly subscription fees for premium research or tools. Others charge nothing but make money when you trade frequently or when you borrow money to invest.

You access your E*TRADE account through their website or mobile app. You can see your holdings, place orders to buy or sell, set up automatic deposits, and view your account history. E*TRADE also provides research tools, stock screeners, and educational content, though the depth of these tools depends on which account type you have.

Key Takeaways

  • E*TRADE holds your money and investments in an account registered in your name, and you can withdraw your cash or sell your investments whenever you want.
  • You pay E*TRADE through trading fees, monthly subscription fees, or spreads, depending on your account type and how often you trade.
  • E*TRADE is a brokerage, not a bank — your deposits are not FDIC-insured the way a bank account is, though cash held in certain money market funds may have some protection.
  • You can open an E*TRADE account online in about 10 minutes, but you will need to verify your identity and link a bank account to fund it.
  • E*TRADE is owned by Morgan Stanley as of 2020, though it operates as a separate brand and you do not need a Morgan Stanley relationship to use it.

How you fund an E*TRADE account and move money out

When you open an account, E*TRADE assigns you an account number and gives you instructions for linking a bank account. You can transfer money from your personal checking or savings account into E*TRADE using ACH (Automated Clearing House), which usually takes three to five business days. Some E*TRADE accounts also accept wire transfers, which are faster but may carry a fee.

Once money is in your E*TRADE account, you can use it to buy investments immediately. If you want to move money back out, you can request a withdrawal to the same bank account you linked during setup. Withdrawals typically take three to five business days to appear in your bank account. If you sell an investment, the cash from that sale lands in your E*TRADE account first, and you then withdraw it to your bank if you want it out.

E*TRADE also offers a debit card linked to your account, which lets you access your cash without formally withdrawing it. The debit card works at ATMs and merchants, though E*TRADE may charge fees for out-of-network ATM use.

What types of investments you can buy through E*TRADE

E*TRADE lets you buy individual stocks, bonds, exchange-traded funds (ETFs), mutual funds, and options. You can also trade futures and forex (foreign currency), though these are more complex and carry higher risk. Most people starting out buy stocks or ETFs, which are bundles of many stocks in a single fund.

E*TRADE also offers retirement accounts — IRAs, Roth IRAs, and SEP IRAs — which have tax advantages but restrict when you can withdraw money without penalty. If you work for a company that offers a 401(k), E*TRADE does not manage that directly, but you can roll a 401(k) from a former employer into an IRA held at E*TRADE.

The investments you can buy depend partly on your account type. Some accounts have access to fractional shares (pieces of a stock), while others require you to buy whole shares. Some accounts have access to after-hours trading, which lets you trade when the stock market is closed.

Fees and costs you should know about

E*TRADE charges no commission on stock or ETF trades, meaning you do not pay a per-trade fee when you buy or sell. However, you may pay other costs. Mutual funds sometimes carry internal expense ratios (annual fees charged by the fund itself, not by E*TRADE). Options trades may carry a per-contract fee. Margin accounts (accounts where you borrow money to invest) charge interest on borrowed funds.

E*TRADE also charges inactivity fees on some account types if you do not trade or deposit money for a set period — usually 12 months. The fee amount and the trigger vary by account type. Some premium accounts charge monthly subscription fees for access to research, advanced tools, or dedicated support.

If you hold cash in your E*TRADE account without investing it, that cash may earn interest through a money market fund or sweep account. The rate changes based on market conditions and E*TRADE's current offerings.

How E*TRADE protects your money

E*TRADE is a broker-dealer registered with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). This means E*TRADE follows rules about how it handles your money and what it can do with your account.

Your investments — the stocks, bonds, and funds you own — are held in your name and are legally yours. If E*TRADE goes out of business, your investments do not disappear; they are transferred to another brokerage. Cash held in your E*TRADE account is protected up to $250,000 per account type through the Securities Investor Protection Corporation (SIPC), which is similar to FDIC insurance for banks but covers investment accounts instead.

E*TRADE uses encryption and multi-factor authentication to protect your login. If someone gains unauthorized access to your account and trades without your permission, E*TRADE has a process for investigating and potentially reversing fraudulent trades, though the speed and outcome depend on the circumstances.

E*TRADE versus other brokerages

E*TRADE competes with Fidelity, Charles Schwab, Interactive Brokers, and others. The main differences are in fees, research tools, account minimums, and user experience. E*TRADE has no account minimum and no commission on stock or ETF trades, which matches most competitors. Where E*TRADE stands out is in its educational content and mobile app design, though this is subjective and depends on what you value.

Charles Schwab owns TD Ameritrade and recently merged it with Schwab, so if you had a TD Ameritrade account, it has moved to Schwab. Fidelity offers similar services but has a different interface and different research partnerships. Interactive Brokers is cheaper for frequent traders but has a steeper learning curve.

The best brokerage for you depends on how often you trade, what types of investments you want to buy, whether you value research and education, and whether you want to use a mobile app or desktop platform. Most people starting out find E*TRADE, Fidelity, and Schwab equally suitable.

How to open an E*TRADE account

You can open an account on E*TRADE's website in about 10 minutes. You will need to provide your name, address, Social Security number, employment information, and annual income. E*TRADE verifies your identity using this information and may ask you to confirm a small deposit to your linked bank account.

After your account is open, you link a bank account for deposits and withdrawals. You can then transfer money in and start buying investments. E*TRADE offers several account types — individual brokerage, joint, IRA, and others — and you choose which one during signup. If you are not sure which type you need, E*TRADE's website has descriptions, or you can call their support line.

Once your account is funded, you can place your first trade immediately. E*TRADE's website walks you through the process of searching for a stock or fund, entering the number of shares you want, and confirming the order.

Frequently Asked Questions

Is my money safe at E*TRADE?

Your investments are held in your name and are legally yours. Cash in your account is protected up to $250,000 through SIPC. E*TRADE is regulated by the SEC and FINRA. However, if you lose money because an investment's value drops, that is not E*TRADE's fault — it is the risk of investing. E*TRADE does not may provide returns.

Can I lose more money than I deposit?

If you only buy stocks and funds with cash you deposit, you can lose at most what you put in. If you use margin (borrowing money from E*TRADE to invest), you can lose more than your deposit because you owe back the borrowed money plus interest. Most beginners should avoid margin until they understand the risk.

What happens if E*TRADE goes out of business?

Your investments would be transferred to another brokerage. Your cash would be protected up to $250,000 through SIPC. E*TRADE is owned by Morgan Stanley, a large financial institution, so the risk of closure is very low, but the protection exists regardless.

Do I have to pay taxes on my E*TRADE investments?

Yes. When you sell an investment for a profit, you owe capital gains tax. When a fund pays you a dividend, you owe tax on that dividend. E*TRADE sends you a tax form (1099) each year showing your gains and dividends. Tax-advantaged accounts like IRAs let you defer or avoid some of these taxes, but regular brokerage accounts do not.

Can I set up automatic investing through E*TRADE?

Yes. E*TRADE lets you set up automatic transfers from your bank account and automatic purchases of specific stocks or funds on a schedule you choose. This is called dollar-cost averaging and is a common way to invest regularly without having to remember to do it manually.