E*TRADE is a brokerage firm where you open an account to buy and sell stocks, bonds, mutual funds, and other investments

E*TRADE is a company that holds your money and executes trades — buying and selling investments — on your behalf. You open an account with them, deposit cash, and then use their platform (a website or mobile app) to place orders. E*TRADE charges you a commission or fee when you trade, and they may charge account maintenance fees depending on your account type and balance. The company is owned by Morgan Stanley as of 2020, though it operates as a separate brand.

Think of E*TRADE as a middleman between you and the stock market. You cannot walk into the New York Stock Exchange and buy 10 shares of Apple yourself — you need a licensed firm to do it for you. E*TRADE is that firm. They also hold your cash and securities (stocks, bonds, etc.) in your account, similar to how a bank holds your checking account balance.

E*TRADE is not a bank, a financial advisor, and not a place where you earn interest on savings. It is purely a trading platform and custodian of your investments. If you want to park money and earn interest, you would use a savings account or money market account elsewhere. If you want someone to tell you what to buy, you would hire a financial advisor (E*TRADE does offer advisory services, but that is separate from the basic brokerage).

Key Takeaways

  • E*TRADE lets you open an account, deposit money, and buy or sell stocks, bonds, mutual funds, and exchange-traded funds through their website or app.
  • You pay a commission or fee each time you trade, and some account types charge monthly or annual maintenance fees.
  • E*TRADE holds your cash and investments in your account but does not manage them for you or offer investment information unless you pay for a separate advisory service.
  • Your account is insured by the Securities Investor Protection Corporation (SIPC) up to $500,000 in securities and $250,000 in cash, protecting you if E*TRADE fails.

How you open an account and deposit money

Opening an E*TRADE account starts on their website or app. You provide your name, address, Social Security number, and employment information. E*TRADE will ask what type of account you want — a standard individual account, a joint account, an IRA (Individual Retirement Account), or a business account. Each type has different tax rules and contribution limits, which E*TRADE's website explains during signup.

Once your account is approved (usually within one business day), you link a bank account and transfer money into E*TRADE. You can transfer from any U.S. bank account you own. The first transfer may take three to five business days to clear. After that, you can place trades using the cash in your E*TRADE account.

What you can buy and sell through E*TRADE

E*TRADE's platform lets you trade stocks (individual company shares), bonds (loans you make to companies or governments), mutual funds (baskets of stocks or bonds managed by a fund company), and exchange-traded funds or ETFs (similar to mutual funds but trade like stocks). You can also trade options (contracts that give you the right to buy or sell a stock at a set price) and futures (contracts on commodities or indexes), though these are more complex and riskier.

Each investment type has different costs and rules. A stock trade might cost $0 to $10 depending on E*TRADE's current pricing. A mutual fund purchase might be free or charge a load (a sales fee). An ETF typically costs $0 to trade. E*TRADE displays the fee before you confirm any trade, so you know the cost upfront.

How E*TRADE makes money and what you pay

E*TRADE charges you in three main ways. First, they take a commission on each trade — though many stock and ETF trades are now commission-free, some investments still carry a fee. Second, they charge spreads, meaning the price they offer you to buy is slightly higher than the price they offer you to sell, and they keep the difference. Third, they may charge account maintenance fees, though these are often waived if your account balance is above a certain amount or if you meet other conditions.

E*TRADE also makes money from the interest they earn on your uninvested cash sitting in your account. If you have $10,000 in cash waiting to be invested, E*TRADE lends that money out and keeps the interest. You do not earn that interest — E*TRADE does. This is standard practice across all brokerages.

The difference between E*TRADE and a bank

A bank takes your deposits and lends them out, paying you interest on savings accounts. E*TRADE does not pay you interest on cash in your account (though they may offer a money market sweep that does). A bank is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per account. E*TRADE is insured by the Securities Investor Protection Corporation (SIPC) up to $500,000 in securities and $250,000 in cash, which protects you if E*TRADE fails but does not protect you from investment losses.

A bank is regulated to keep your money safe and available. E*TRADE is regulated to execute your trades fairly and keep your account records accurate, but they are not responsible if you lose money on a bad investment. You bear the investment risk; E*TRADE bears the operational risk.

What SIPC protection covers and does not cover

If E*TRADE goes out of business or fails, the Securities Investor Protection Corporation (SIPC) protects your account up to $500,000 in securities (stocks, bonds, mutual funds, ETFs) and $250,000 in cash. This means if you have $300,000 in stocks and $100,000 in cash with E*TRADE and the firm fails, SIPC will return your securities and cash to you.

SIPC does not protect you from investment losses. If you buy a stock for $10,000 and it drops to $2,000, SIPC will not refund the $8,000 loss. SIPC only protects you if E*TRADE itself fails and cannot return your money or securities. SIPC also does not cover fraud by E*TRADE employees, though E*TRADE carries separate insurance for that.

E*TRADE's tools and research resources

E*TRADE provides research reports, stock screeners (tools that filter stocks by criteria you set), and educational content on their website and app. You can read analyst reports, watch market commentary videos, and use calculators to estimate returns. These tools are included with your account at no extra cost.

E*TRADE also offers live customer service by phone and chat, though wait times vary. Their website has a searchable knowledge base and FAQs. If you need help placing a trade or understanding a fee, you can contact them directly. Response times are usually faster during market hours (9:30 a.m. to 4 p.m. Eastern Time on weekdays).

Frequently Asked Questions

Is E*TRADE safe to use with my money?

E*TRADE is a regulated brokerage owned by Morgan Stanley, a major financial institution. Your securities and cash are insured by SIPC up to $500,000 and $250,000 respectively. However, safety here means E*TRADE will not lose your money due to the firm failing — it does not mean your investments are safe from market losses. If you buy a stock that drops in value, that loss is yours, not E*TRADE's fault.

Can I day trade with E*TRADE?

Yes, but there is a rule: if you make four or more day trades (buying and selling the same security within one business day) in five business days, the SEC requires your account to have at least $25,000. If your balance falls below $25,000, you cannot day trade until you deposit more. This rule applies to all brokerages, not just E*TRADE.

Does E*TRADE charge fees if I do not trade?

E*TRADE may charge account maintenance fees depending on your account type and balance. Many account types waive the fee if your balance is above a certain amount (often $25,000 or higher) or if you meet other conditions like setting up direct deposit. Check the account type details during signup to see what fees explore to you.

Can I transfer my investments from another brokerage to E*TRADE?

Yes. E*TRADE can receive a transfer of securities from another brokerage through a process called an ACAT (Automated Customer Account Transfer). You initiate the transfer from E*TRADE's website, and they handle the rest. The transfer usually takes three to seven business days. You do not have to sell your investments and rebuy them — they move as-is.

What happens to my account if E*TRADE is sold or acquired?

E*TRADE is already owned by Morgan Stanley as of 2020. If Morgan Stanley sells E*TRADE or merges it with another firm, your account and investments remain protected. The acquiring firm must honor your account and comply with SIPC insurance rules. You would receive notice of any major changes and would have the option to transfer your account elsewhere if you choose.