Robinhood vs. E*TRADE 2024 (2024)

Originating in 1982, E*TRADE was one of the first online discount brokers with the goal of providing an online platform for retail investors to trade without broker assistance. Since being acquired by Morgan Stanley in 2020, E*TRADE now offers more options for self-direct investing. Robinhood was formed in 2013 with the purpose of leveraging technology to provide working Americans with accessible trading opportunities without high trading commissions. Robinhood and E*TRADE are popular choices for investors who prefer mobile and online trading. However, they have some differences that we will discuss to help you determine the best broker for your investing needs.

Usability

E*TRADE offers multiple trading platforms to meet the needs of investors with various levels of trading experience. Investors have access to desktop, website, and mobile platforms. The website has a detailed offerings layout and user-friendly functionality. Investors can access real-time streaming stock quotes, stage orders for later entry, and trade directly from price charts on each platform. Additionally, investors have a wide range of customization options on each platform. Robinhood’s website is more streamlined. Robinhood has partnered with NASDAQ to provide investors with access to real-time streaming stock quotes on both platforms.Robinhood offers website and mobile app platforms, both of which have similar layouts. While both platforms are customizable, the options pale in comparison to those offered by E*TRADE.

Although all E*TRADE’s trading platforms contain a wide range of information and tools for investors, the desktop platform may be a bit overwhelming for new investors. E*TRADE has multiple investing offerings and a robust collection of analysis tools and resources, while Robinhood provides more simplistic platforms and resources. E*TRADE is a better option for more active traders, while Robinhood is a satisfying option for new and passive investors.

Trade Experience

Desktop Trade Experience

Robinhood and E*TRADE both offer investors different trading experiences through their various trading platforms. E*TRADE offers investors the E*TRADE website platform and a downloadable desktop platform, Power E*TRADE. The layouts of these two platforms are smooth and have user-friendly functionality. Robinhood offers a website platform with user-friendly functionality but lacks the amount of information, tools, and resources that E*TRADE provides. E*TRADE offers multiple order types on the website and desktop platforms. One difference to note here is that investors can trade more assets on E*TRADE’S website platform than they can on the desktop platform. This is where Robinhood has the advantage in offering investors access to trade the same amount of assets on its website and mobile app platforms. Investors have the ability to route their own orders and can backtest their trading strategies in E*TRADE’S desktop platforms.

While Robinhood’s desktop platform is more suitable for passive and new investors, E*TRADE’s platforms are suitable for investors at any level. Robinhood has made recent strides to improve its trading experience; however, many years of powerful enhancements by E*TRADE in this area have it leading comfortably.

Mobile Trade Experience

While Robinhood’s mobile app platform doesn’t have the number of diverse features that E*TRADE’s mobile platforms have, it is a popular choice for investors who prefer mobile investing. E*TRADE did something smart in offering investors a mobile app as a companion to each of its desktop platforms. Investors who use the E*TRADE website also have access to the E*TRADE Mobile app, and Power E*TRADE users have access to the Power E*TRADE app.

Investors can access real-time streaming stock quotes on E*TRADE’s and Robinhood’s mobile platforms. Robinhood’s users can access real-time streaming stock quotes on the mobile and website platforms simultaneously, but E*TRADE doesn’t offer this feature to investors.

Robinhood announced the rollout of its customizable advanced charts tool in August 2022. The advanced charts tool has seven technical indicators and is available on the mobile and website platforms. A disadvantage of Robinhood’s charting tool is that it doesn’t have a drawing tool for the mobile platform. However, E*TRADE offers a drawing tool in their mobile platforms’ charting tool. Portfolio reports are available in both Robinhood’s and E*TRADE’S mobile platforms. While E*TRADE offers screeners in its mobile platforms, Robinhood does not offer screeners in either of its platforms. Although Robinhood is responding to customers’ feedback and working to enhance its research and trading tools, E*TRADE is the clear leader in providing the best mobile trading experience for investors of all trading experience levels.

Range of Offerings

Robinhood only offers stocks, Exchange-Traded Funds (ETFs), options (3 legs), and cryptocurrencies assets. Robinhood offers fractional shares trading for stocks and ETFs and offers fractional crypto trading. Additionally, Robinhood’s customers can choose to have their dividends from stocks and ETS automatically reinvested (DRIP). Short selling is not allowed on Robinhood. E*TRADE offers customers several asset classes including stocks, ETFs, mutual funds, bonds, CDs, options (4 legs), futures, currencies, penny stocks, and OTCBB. E*TRADE customers can only sell fractional stock and ETF shares; they cannot buy fractional shares. E*TRADE offers short sales. Although E*TRADE doesn’t offer direct crypto trading, but customers can trade BTC-CME Bitcoin Futures.

E*TRADE is the clear winner in this category because of the number of asset classes available to customers. One disadvantage is that all the asset classes are not available in all trading platforms. Another disadvantage is that customers can only sell fractional shares. Robinhood is the best option for investors on a budget or looking to test the investing waters because of the ability to trade fractional shares of all available asset classes on both trading platforms.

Order Types

Robinhood doesn’t offer nearly as many order types as E*TRADE. Robinhood offers different order types for each asset class. For cryptocurrencies, limit and market orders are available on Robinhood. For options, limit and stop limit orders are available. For stocks, market, limit, stop, stop limit, and trailing stop orders are available. Some stocks can be placed as Good-for-Day (GFD) or Good-til-Canceled (GTC) orders. E*TRADE offers various order types, but not all order types are available on each trading platform. The standard order types are available including market, limit, stop limit, and trailing stop. E*TRADE is the clear leader in order types because of the larger selection across all platforms.

Trading Technology

Robinhood is showing its customers that it is willing to make their experiences better by continuing to provide new and enhanced trading tools. Both Robinhood and E*TRADE disclose information publicly about how they make money, and their order execution processes. Both brokers receive payment for order flow (PFOF), and both brokers have proprietary order routing systems. Many of E*TRADE’s orders are spray-routed, and customers can direct orders to desired venues. E*TRADE routes orders to various markets to obtain the best execution. Robinhood routes orders to markets that will result in the best execution, and orders are executed at the National Best Bid and Offer (NBBO) or better. E*TRADE and Robinhood both offer portfolio margining.

E*TRADE offers backtesting for trading strategies. Both E*TRADE and Robinhood offer dividend reinvestment programs (DRIP) and fractional shares trading. However, E*TRADE customers can only sell and not buy fractional stock and ETF shares. Robinhood offers fractional shares trading for all available asset classes on both trading platforms. Robinhood customers can create price alerts for stock lists and get weekly market updates on both trading platforms. Another feature that both E*TRADE and Robinhood offer is stock lending. Investors who participate in stock lending can earn interest on the stocks they own and maintain ownership until they decide to sell loaned shares. One of the features of Robinhood’s stock lending program is that Robinhood finds the borrowers for investors. Under E*TRADE’s stock lending program, customers are given cash collateral for loaned assets, and the cash is FDIC insured up to $250,000.

Both Robinhood and E*TRADE publicly disclose their order execution processes and how they make money. We believe that because E*TRADE has had 40 years to continue to improve their execution process, they offer more advanced order routing systems.

Costs

Both Robinhood and E*TRADE offer commission-free (base commission) trading for U.S. listed stocks, ETFs, and options. E*TRADE also offers commission-free trading for U.S. treasuries bonds and no-load mutual funds. E*TRADE charges $0.65 per contract for up to 29 trades per quarter and $0.50 per contract for more than 30 trades per quarter. E*TRADE charges a base commission fee of $6.95 (under 30 trades) and $4.95 (over 30 trades) for OTC and OTCBB securities such as penny stocks. E*TRADE charges $1.50 per contract per side plus additional fees for futures, and $2.50 per contract per side plus additional fees for cryptocurrency futures.

Robinhood’s margin rate is 11.75% (7.75% for Gold members) as of May 23 2023. E*TRADE’s margin rates are based on stocks, ETFs, and options balance tiers. For instance, balances up to $10,000 have a 11.20% margin rate. Investors should be aware that the brokers can change margin rates at their discretion. E*TRADE provides cost savings for investors seeking no-load mutual funds and U.S. Treasuries bonds. Although they don’t have a vast number of offerings like E*TRADE, Robinhood is the overall leader in cost savings for trading.

Research Amenities

Robinhood’s research tools are quite limited in comparison to E*TRADE’s offering of research tools. While E*TRADE offers customers access to free proprietary research and third-party research, Robinhood doesn’t offer proprietary research but offers its Gold subscribers third-party research for a fee. Robinhood’s Gold subscribers have access to third-party research from Morningstar and Nasdaq Level II Market Data. E*TRADE’s customers have access to multiple third-party research sources including Moody’s, Argus Research, and Morningstar. Robinhood doesn’t offer screeners, but E*TRADE offers screeners for stocks, ETFs, mutual funds, options, fixed income, and crypto assets.

Robinhood doesn’t offer trading idea generators but does offer market research reports and charting tools. E*TRADE offers several trading idea generators such as TradeLab and the Social Sentiment Tool and offers market research reports and charting tools. E*TRADE far exceeds Robinhood in this category because of the diverse research amenities that are available for its customers.

Portfolio Analysis

Robinhood’s portfolio analysis tools are minimal and simplistic in comparison to E*TRADE’s portfolio analysis tools. E*TRADE has multiple portfolio analysis tools including TradeLab and LiveAction. Both Robinhood and E*TRADE have a sector allocation monitor, which allows investors to conduct portfolio tracking. E*TRADE customers can backtest their trading strategies and have access to life stage planning tools. E*TRADE is the top choice for investors who are more active and need more portfolio analysis tools.

Education

Robinhood’s educational resources focus on providing basic information for newer investors to develop a good investing foundation. Robinhood Learn is a library of investing education where you can learn about the basics of investing, various investing terms, financial literacy, taxes, entrepreneurship, and more. Educational content is in the form of articles, videos, and in-app course modules. Robinhood Snack is a three-minute newsletter that is emailed to subscribers weekly. The newsletter contains short paragraphs and bullet points about current business and financial news.

E*TRADE Insights is fully dedicated to providing educational content for investors of all experience levels. Educational content is provided through articles, videos, webinars, Virtual Learning Environments (VLEs), and in-platform education. An added bonus is that E*TRADE customers now have access to Morgan Stanley's Thought Leadership, which includes market analysis and research from Morgan Stanley’s experts.

The winner in the education category is E*TRADE. Because of the merger with Morgan Stanley in 2020, E*TRADE now has a more robust education platform to offer its customers.

Customer Service

Robinhood only offers customer support through its website or via the mobile app. Non-customers can access support through the website, which is mainly FAQs and a help center containing details about various topics. Robinhood customers can contact support directly after logging into their accounts on the website or mobile app platforms. E*TRADE provides support by telephone but informs customers that wait times are longer than usual and encourages customers to use their self-help options, including FAQs. E*TRADE branches are closed due to COVID-19, so customers cannot receive help in-person.

Neither Robinhood nor E*TRADE provides easy access to customer support. Robinhood does provide customers access to live customer support after logging into their accounts. Support is available through live chat, but telephone support only comes in the form of an in-app callback feature. Robinhood edges E*TRADE out in the category by providing a live chat feature for customers.

Security

E*TRADE and Robinhood offer two-factor authentication and encryption on all their trading platforms. Both brokers also offer biometric logins on their mobile app platforms. Robinhood experienced a highly publicized outage on both platforms in March 2020. On November 3, 2021, Robinhood experienced a data security breach. E*TRADE noticed unusual volumes in GME and AMC in January 2021 and decided to limit trading activity in these areas to prevent any outages and to continue providing services for all customers. E*TRADE has a dedicated security center where detailed information is provided about its security procedures for protecting customers’ accounts and assets. Robinhood and E*TRADE customers’ assets are protected by the SIPC for up to $500,000 for (including $250,000 for cash).

E*TRADE leads in providing public security disclosures and information. E*TRADE complies with the SEC’s Customer Protection Rule and provides additional security through its E*TRADE Complete Protection Guarantee.

Final Verdict

There are several benefits that both Robinhood and E*TRADE offer customers. However, E*TRADE is the front runner as a top choice for investors and traders. E*TRADE provides a more diverse collection of asset classes, trading tools, and research capabilities due to consistent enhancements and the 2020 acquisition by Morgan Stanley. Robinhood provides better trading cost savings and fractional shares trading, which may be more appealing for investors who have limited funds to invest. Robinhood is more popular with millennials, generation Z investors, and new investors in various age groups.

E*TRADE has had 40 years to improve its services and systems, which gives them an edge over Robinhood. Robinhood continues to stick to its original purpose of providing accessible trading opportunities for everyone while keeping costs low and leveraging technology to do so. Robinhood is making efforts to improve its educational content, charting capabilities, and transparency. Robinhood is also expanding on their account offerings beyond just an individual trading account, with the addition of IRA and Roth IRA retirement accounts to its platform in January 2023. These retirement accounts will pay a 1% match on funds, up to the federal contribution limit, if funds are deposited electronically and the assets remain in the account for at least five years Overall, though, E*TRADE is the top choice in this online broker comparison.