Comparing Robinhood vs. E*TRADE: Which Is Better?

When it comes to online trading platforms, two of the most well-known names are Robinhood and E*TRADE. Both platforms have built significant user bases and offer unique advantages to different types of investors. But how do they stack up against each other? In this comprehensive comparison, we will explore their features, fees, user experience, and more to help you decide which platform is better for your investment needs.

Overview of Robinhood

Robinhood made waves in the investment world by offering commission-free trades and an easy-to-use mobile app. Launched in 2013, Robinhood's mission was to "democratize finance" by removing the barriers to entry for new investors. Today, it has over 15 million active users, many of whom are first-time investors looking for simplicity and affordability.

Key Features of Robinhood:

• Commission-Free Trading: Robinhood is known for its $0 commissions on stocks, options, and ETFs. This makes it highly appealing to beginner investors.
• Cryptocurrency Trading: In addition to traditional stocks, users can also trade cryptocurrencies like Bitcoin and Ethereum directly on the platform.
• Mobile-First Experience: Robinhood's interface is designed with simplicity in mind, focusing on an easy mobile trading experience.
• No Minimum Account Balance: You can start trading on Robinhood with as little as $1, which is perfect for new investors with limited capital.

However, Robinhood’s simplicity comes with limitations. For example, it lacks advanced charting tools, educational resources, and in-depth research options. These features are essential for more experienced traders looking for detailed market insights.

Overview of E*TRADE

E*TRADE, on the other hand, has been a major player in the online brokerage space since the 1990s. It offers a more comprehensive suite of tools, features, and services designed to meet the needs of both beginners and advanced investors. E*TRADE boasts more than 5 million customers and is known for its robust trading platform, deep educational resources, and customer service.

Key Features of E*TRADE:

• Advanced Trading Tools: ETRADE offers powerful platforms like **Power ETRADE**, which includes professional-grade technical analysis, custom charting, and a variety of order types.
• Commission-Free Trades: Similar to Robinhood, E*TRADE also offers $0 commissions on stock and ETF trades, but options trading comes with a per-contract fee of $0.65.
• Research & Education: E*TRADE provides extensive research tools, including reports from top-tier firms like Morningstar and Credit Suisse, along with a library of educational resources for all levels of investors.
• Retirement Accounts: E*TRADE offers multiple retirement account options (IRAs) with a focus on long-term investment strategies.

While E*TRADE has many strengths, the platform is known for being more complex compared to Robinhood. Its abundance of tools can be overwhelming for new investors, making it better suited for experienced traders who can take advantage of the platform’s advanced features.

User Experience

Robinhood:

Robinhood shines in the realm of user experience, especially for novice investors. Its app is clean and intuitive, making it incredibly easy to navigate. Opening an account can be done in minutes, and trading stocks is as simple as a few taps on your phone. Robinhood is also mobile-first, meaning it is primarily designed for smartphone use, although it does offer a web platform.

However, this simplicity can be a drawback for more advanced traders who require detailed charts, technical indicators, and more data to make informed decisions.

E*TRADE:

ETRADE offers a much more detailed and comprehensive user experience. With two main platforms, **ETRADE Web** and Power E*TRADE, it caters to both beginners and seasoned investors. The learning curve for new users is steeper compared to Robinhood, but the platform’s depth is its greatest asset. For instance, Power E*TRADE offers customizable dashboards, advanced charting, and real-time data that are invaluable for serious traders.

In terms of mobile experience, E*TRADE also offers highly functional mobile apps, but they are more feature-rich and complex than Robinhood’s simple app.

Fees and Commissions

Robinhood:

• Stock and ETF Trades: $0 commission
• Options Trading: $0 per trade
• Crypto Trading: No commission, but there is a markup in the price
• Margin Trading: Requires Robinhood Gold ($5 per month), with 7.25% interest on amounts borrowed over $1,000.

One of Robinhood's biggest selling points is its low-cost structure. However, the lack of fees comes at the expense of fewer tools and research resources. For investors looking to keep costs to a minimum, Robinhood is hard to beat.

E*TRADE:

• Stock and ETF Trades: $0 commission
• Options Trading: $0.65 per contract (discounted to $0.50 for high-volume traders)
• Futures Trading: $1.50 per contract
• Margin Trading: Variable rates starting at 12.70% for balances under $10,000.

Although E*TRADE charges slightly higher fees for options and futures trades, the platform provides significant value with its range of research tools, data, and advanced trading features.

Investment Options

Both Robinhood and E*TRADE offer access to stocks, ETFs, and options trading. However, there are key differences:

Robinhood:

• Cryptocurrency: Robinhood allows users to trade cryptocurrencies directly within the platform, which sets it apart from many traditional brokerages.
• Fractional Shares: Robinhood enables users to buy fractional shares, making it easier for investors to diversify their portfolios with minimal capital.
• Limited Asset Classes: Robinhood does not offer mutual funds, bonds, or futures trading, limiting its appeal for more diversified investment strategies.

E*TRADE:

• Comprehensive Investment Choices: E*TRADE offers a wider range of investment products, including mutual funds, bonds, and futures, making it more appealing to long-term investors or those seeking diversified portfolios.
• No Direct Crypto Trading: While E*TRADE does not offer direct cryptocurrency trading, it provides access to cryptocurrency-related securities and funds.

Customer Support

Robinhood:

Robinhood has faced criticism in the past for its customer support. Initially, the platform only offered email support, but it has since improved by adding phone support. However, it still lags behind competitors in terms of accessibility and responsiveness.

E*TRADE:

E*TRADE excels in customer support with 24/7 phone, email, and live chat support. Additionally, the platform has physical branches in certain locations, allowing for face-to-face consultations—a rarity in the world of online brokerages.

Security and Reliability

Robinhood:

Robinhood has faced scrutiny over its outages during periods of high market volatility. However, it is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), which ensures that customer investments are protected up to $500,000.

E*TRADE:

E*TRADE has a stronger reputation for reliability, with fewer instances of service outages. It also offers higher SIPC protection, covering up to $1 million in cash claims, and is a member of FINRA and SIPC.

Which Platform is Right for You?

• Choose Robinhood if: You are a beginner looking for a simple, low-cost platform to trade stocks, options, and cryptocurrencies. Robinhood’s clean interface and zero commissions are ideal for those just getting started in investing.

• Choose E*TRADE if: You want access to a wider range of investment options, including mutual funds, bonds, and futures. E*TRADE’s robust tools and extensive research capabilities make it perfect for advanced traders and long-term investors.

Conclusion

Both Robinhood and ETRADE have distinct advantages depending on your investment goals and experience level. Robinhood is great for beginners due to its simplicity and commission-free trades, while ETRADE offers more advanced features, research tools, and investment options.

Now that you’ve learned more about these platforms, which one do you think suits your investment style best? Feel free to leave a comment below or ask any questions you may have about these two platforms!