Navigating the world of online investing can feel like stepping into a labyrinth, especially when it comes to understanding costs. If you're considering ETRADE, a popular platform from Morgan Stanley, you're probably asking: "How much does it cost to make a trade on ETRADE?" Let's break it down in detail, so you can trade with confidence and clarity.
Ready to demystify ETRADE's trading costs? Let's dive in!*
Understanding E*TRADE's Pricing Philosophy
E*TRADE, like many leading online brokers, has largely embraced the trend of commission-free trading for many popular asset classes. This is fantastic news for individual investors, as it means you can often buy and sell a wide range of investments without paying a per-trade commission. However, "commission-free" doesn't always mean entirely free. There can be other fees lurking, depending on what you're trading and how you're trading it.
Step 1: Discovering the Core of Commission-Free Trading
The good news for most everyday investors is that E*TRADE offers $0 commission for a significant portion of its offerings.
Online US-listed Stocks: That's right, whether you're buying 10 shares of a tech giant or 100 shares of a burgeoning startup, if it's a US-listed stock traded online, you'll generally pay no commission. This is a huge benefit for active stock traders and long-term investors alike.
Exchange-Traded Funds (ETFs): ETFs have soared in popularity for their diversification and low costs. E*TRADE also offers commission-free online trading for US-listed ETFs. This makes building a diversified portfolio with ETFs incredibly cost-effective.
Mutual Funds: Many mutual funds, especially ETRADE's "No Fee Index Funds," can be traded online with zero commission. However, it's crucial to remember that mutual funds always have internal expense ratios, which are ongoing fees charged by the fund itself, not ETRADE. Always check the fund's prospectus for these details.
Online Options Trades (Base Commission): While there's a per-contract fee (which we'll cover next), E*TRADE generally charges a $0 base commission for online options trades. This means you won't pay a flat fee just to open the trade, but rather a small amount per contract.
So, for your everyday stock, ETF, and many mutual fund trades, ETRADE is effectively commission-free when placed online!*
Step 2: Unpacking the Nuances: Where Other Fees May Apply
While the headline "commission-free" is appealing, it's essential to understand where other costs might come into play. These typically relate to specific types of investments or how you choose to place your trades.
Sub-heading 2.1: Options Trading - The Per-Contract Fee
Options contracts are a different beast. While E*TRADE doesn't charge a base commission, there's a per-contract fee.
Standard Options Contract Fee: The standard fee is $0.65 per contract.
Volume Discount: If you're a more active options trader and execute at least 30 stock, ETF, and options trades per quarter, this fee drops to $0.50 per contract. This can add up significantly for frequent options traders.
Sub-heading 2.2: Futures Trading - A Different Structure
Futures contracts operate on a different fee structure.
Per-Contract, Per-Side Fee: For most futures trades, you'll pay $1.50 per contract, per side. "Per side" means you pay the fee when you open the position and again when you close it.
Cryptocurrency Futures: For cryptocurrency futures trades, the fee is slightly higher at $2.50 per contract, per side, plus exchange fees.
Additional Fees: Be aware that additional fees, such as applicable futures exchange fees and National Futures Association (NFA) fees, will also apply. These are not set by E*TRADE and can vary.
Sub-heading 2.3: Fixed Income (Bonds & CDs) - Transaction Costs
Trading bonds and Certificates of Deposit (CDs) often involves a different pricing model.
US Treasury and New Issue Bonds: These are typically commission-free.
Online Secondary Market Bonds: For bonds traded on the secondary market online, there's a commission of $1.00 per bond, with a minimum of $10 and a maximum of $250.
Sub-heading 2.4: Broker-Assisted Trades - The Human Touch Comes at a Price
While online trading is often free, if you prefer to speak to a broker to place your trade, there's a service charge.
Broker-Assisted Trade Fee: This fee is typically $25 per trade. This applies when you call E*TRADE and have a representative execute a trade for you.
Sub-heading 2.5: Over-the-Counter (OTC) Securities and Foreign Stocks - Exclusions Apply
The $0 commission generally applies to US-listed securities.
OTC Securities: These are typically subject to commissions.
Foreign Stock Transactions: Trading stocks listed on international exchanges will also likely incur additional fees and commissions.
Large Block Transactions: Trades requiring special handling for large blocks of shares might also have different pricing.
Sub-heading 2.6: Managed Portfolios - Advisory Fees
If you opt for ETRADE's managed portfolio services, such as ETRADE Core Portfolios, you'll pay an advisory fee, not a per-trade commission.
Core Portfolios Advisory Fee: This is typically 0.30% annually of the assets under management. This fee covers the professional management and rebalancing of your portfolio.
Step 3: Beyond Trading: Other Potential Account-Related Costs
While not directly "per-trade" costs, these are important to consider for the overall expense of using E*TRADE.
Sub-heading 3.1: Account Maintenance and Inactivity Fees
Brokerage Accounts: Generally, E*TRADE does not charge inactivity fees or annual account maintenance fees for standard brokerage accounts.
Bank Accounts: For certain banking products, like the Max-Rate Checking account, there might be a monthly account fee (e.g., $15) that can be waived if you maintain a certain average monthly balance (e.g., $5,000).
Sub-heading 3.2: Transfer and Account Closure Fees
Outgoing IRA Full Account Transfer: If you decide to transfer your entire E*TRADE IRA to another institution, there's typically a $75 fee.
Partial Transfer Out: For partial transfers, a fee of $25 may apply, though this is often waived if the remaining account balance is above a certain threshold (e.g., $5,000).
Paper Statements/Copies: Opting for paper statements or requesting copies of past statements may incur small fees (e.g., $2 for a mailed paper statement, $5 for a duplicate statement copy).
Sub-heading 3.3: Regulatory and Exchange Fees
It's important to remember that all brokers are subject to certain regulatory and exchange fees that are passed on to the investor. These are usually very small and apply to almost every trade, regardless of the broker.
SEC Fees: A small fee charged by the U.S. Securities and Exchange Commission on sell transactions.
FINRA Trading Activity Fee (TAF): Another small regulatory fee on sell transactions.
Exchange Fees: Depending on the exchange where your trade is executed, there might be minor exchange-specific fees.
Step 4: Accessing E*TRADE's Official Pricing Information
The most accurate and up-to-date information will always be directly from E*TRADE.
Visit the E*TRADE Pricing Page: E*TRADE maintains a comprehensive pricing and rates section on its website (typically
etrade.com/pricing Review Account Agreements and Disclosures: When you open an account, you'll receive various agreements and disclosures that detail all applicable fees and charges. It's always a good idea to review these documents thoroughly.
By understanding these various categories, you can get a clear picture of the true cost of trading on ETRADE.*
Final Thoughts on E*TRADE Trading Costs
E*TRADE has positioned itself as a highly competitive brokerage in terms of trading costs, especially for online stock and ETF transactions. The move to $0 commissions for these popular asset classes has made investing more accessible for millions. However, remember to factor in per-contract fees for options and futures, commissions for bonds and OTC securities, and potential charges for broker-assisted trades or managed portfolios. Always be aware of the specific asset class you're trading and how that impacts the cost.
Knowledge is power in investing, and understanding your costs is a critical piece of that puzzle!
10 Related FAQ Questions
How to find E*TRADE's official pricing schedule?
You can find E*TRADE's complete and up-to-date pricing schedule on their official website, typically under a "Pricing" or "Rates & Fees" section, often found at
How to avoid commissions on E*TRADE?
To avoid commissions on E*TRADE, primarily trade US-listed stocks, ETFs, and certain mutual funds online, as these are generally commission-free.
How to reduce options trading fees on E*TRADE?
You can reduce options trading fees on E*TRADE by executing at least 30 stock, ETF, and options trades per quarter, which drops the per-contract fee from $0.65 to $0.50.
How to understand futures trading costs on E*TRADE?
Futures trading on E*TRADE incurs a per-contract, per-side fee of $1.50 (or $2.50 for crypto futures), plus additional exchange and regulatory fees.
How to identify if a mutual fund on E*TRADE has transaction fees?
E*TRADE clearly labels "No Fee Index Funds," which are commission-free. For other mutual funds, you'll need to check the fund's prospectus for any transaction fees or loads, in addition to its expense ratio.
How to know if I'll pay a fee for trading foreign stocks on E*TRADE?
Yes, online US-listed $0 commission typically does not apply to foreign stock transactions. You will likely incur additional fees or commissions for trading foreign stocks.
How to avoid broker-assisted trade fees on E*TRADE?
To avoid the $25 broker-assisted trade fee, always place your trades online through E*TRADE's website or trading platforms.
How to waive monthly account fees for E*TRADE banking products?
For certain E*TRADE banking products like the Max-Rate Checking account, you can typically waive the monthly account fee by maintaining a specified average monthly balance (e.g., $5,000).
How to transfer an IRA out of E*TRADE and what are the costs?
Transferring a full IRA out of E*TRADE to another institution typically incurs a $75 fee. Partial transfers may also have a smaller fee, sometimes waived if a minimum balance remains.
How to factor in regulatory fees when trading on E*TRADE?
Regulatory fees like SEC and FINRA TAF are very small, pass-through fees that are charged on sell transactions and are unavoidable regardless of the broker. They are typically minor and automatically applied.