ETrade Financial Corporation and Firstrade are both financial companies specialising in discount stock brokerage services. Both firms have headquarters in New York, but which is the best online stock broker?
In 1982, TradePlus was founded by William A. Porter and Bernard A. Newcomb in California. In 1991 Porter and Newcomb founded a new company, E-Trade Securities Inc. using start-up capital from TradePlus. E-Trade offered its trading services via America Online and Compuserve. In the mid 1990s, the firm restructured and started trading under the name E-Trade Group, with E-Trade Securities as its principal subsidiary. In August 1996, it went public and in 2003, changed its name to ETrade Financial Corporation.
In August 2005, the company acquired Harrisdirect, a former discount brokerage service of Bank of Montreal and Brown & Company, a former discount brokerage service of J.P. Morgan.
Firstrade Securities Inc’s history goes back to 1985 when it was founded by John C. Liu, as First Flushing Securities. First Flushing Securities provided investment services to the local area until 1997 when the company was renamed to Firstrade Securities Inc. and Firstrade.com was launched. Since it was created, the online discount brokerage website has undergone five revamps, with the latest in early 2011. In April 2010, the company signed a contract with Taifook Securities Company Limited, for cross-border securities trading business.
ETrade Financial Corporation and Firstrade are discount brokerage firms where investors can buy stocks, mutual funds, bonds, options, and exchange-traded funds. ETrade Financial also offers banking products including sweep deposits and savings products to retail investors.
Clients of ETrade can transact via electronic trading platforms or by phone, where as all Firstrade transactions are online.
When comparing margin rates between the two companies, it would appear that the best rate hugely depends on the client’s balance. For example, on 5 October 2014, a client of Firstrade with a balance of $1,000,000 or more would receive a margin rate of 4.50%, and a client of ETrade with the same balance would get a rate of 3.89%. However, a client with a balance of $10,000 would get a margin rate of 7.75% with Firstrade and 8.44% with ETrade.
Both Firstrade and ETrade take client security very seriously and have robust systems in place to prevent unauthorised activity. Both use 128 bit encryption and secure sites.
Firstrade offer The Firstrade Online Protection Guarantee – if unauthorised activity is conducted online on a client’s account, they will cover 100% of any losses due to that activity.
In the unlikely event that a User ID or password are compromised, ETrade have Security ID in place – a system that requires clients type in a 6 digit code each time they login.
Online stock broker reviews certainly don’t fault either on their customer service. Looking at the customer service options they offer, both offer their clients help and invite people to write to them, call their customer service team or use their live web chat tools.
In addition, Firstrade offers special services such as Chinese online trading sites and Chinese toll-free phone help.
Commission and fees
ETrade fees depend on the investor’s level of activity. Stock and options contracts are $7.99 if a minimum of 150 trades are made per quarter, or $9.99 if less than 149 per quarter. Options contracts are $7.99 or $9.99 plus $0.75 per contract.
Firstrade offers a flat rate of $6.95 per market or limit trade and $6.95 plus $.075 per contract for option trades.
Support and tools
ETrade allows investors to create their own strategy profile by price, investment, period of time, volatility and market outlook such as neutral or volatile. They also provide an options analyser, a probability calculator and an options screener.
Firstrade has an online resource centre with information on tax, investment guides, FAQs, a glossary and more. It also supports thought leadership by hosting a blog and publishing a regular newsletter.
Most services provide basic tools, but ETrade’s tools go a step further. With the option trade tool, investors can place basic, spread, buy-write, butterfly or condor orders with ease. They can then monitor their options positions and orders. ETrade also provides portfolio and risk analysers.
The Firstrade platform provides some good investment tools including X-Stream for monitoring multiple stocks, stock research from Standard and Poor’s as well as streaming news and portfolios, screeners and planning tools.
Awards – what does the industry think?
When it comes to awards, ETrade seem to have the edge. In 2013 they won second place in the StockBrokers.com 2011 Online Broker Review, earned four stars, Best Smartphone App, and Best Client Dashboard. In 2014, they fell to fourth place; however, they received a four and a half star rating and won best Smartphone App and best Client Dashboard again.
Meanwhile, in the same year, Firstrade came eleventh and earned three stars. In 2014, they fell one position to twelfth place but gained an improved three and a half star rating.
Firstrade’s site is accessible via mobile phone and trades can be made by phone as well. ETrade provides trading apps for iPhone, iPad and other mobile devices.
In a nutshell:
When it comes to stock trading, ETrade tools make transacting easy, even for complex orders. They also allow trading via the telephone.
ETrade seems to be more expensive than Firstrade and investors only get the lowest stock and options trade fees if they execute at least 150 trades per quarter.
Investors can trade for as little as $6.95 trades and have a wealth of support to assist them.
Transactions are online only.
Final thoughts – who is Trade King?
Although ETrade pricing is slightly higher than Firstrade, it is still fair for the support the investor receives. Firstrade offers a great fee schedule and the lowest commission, but ETrade seem to have the edge – the industry awards certainly think so too.
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