How Does E-Trade Work?

Introduction

1. One of the most recommended brokers today is E-Trade. This broker is often rated highly by such business publications as Forbes, Smart Money and Business Week. E-Trade was originally an online discount stockbroker that only executed trades, but it has evolved into a full-service brokerage firm. As a broker, E-Trade buys and sells individuals stocks for your account. Experts and customers like the many services and features that E-Trade offers its customers. E-Trade is best for the active and more experienced investor because the commissions are lower the more you trade.

How E-Trade Works

2. To become a customer with E-Trade, you must open an account. Once you have read all the legal information that E-Trade provides, you submit the application and make a deposit. The minimum to open an account with E-Trade is $1,000. Once the money has been received, you can start using the services. Once you have an account, you get an account page. Here you place your own buy and sell orders, see your order and account status, real-time quotes and other important information on one page. For each order, there is a commission rate ranging from $6.99 to $9.99 for market orders. The rate you get is determined by the amount of money in your account or how often you trade in a three-month period. To get the lowest commission rate, you need to do at least 1,500 trades in a quarter. If you have less than $50,000 in your account, you get the highest commission. E-Trade also imposes various fees. If you do not make one trade in a three-month period, there is a $40 maintenance fee for that quarter. But you can avoid this fee if you have at least $10,000 in your account. With E-Trade you can buy and sell not only stocks, but also bonds, mutual funds, options and futures.

Services and Products of E-Trade

3. E-Trade offers its customers products and services usually found with well-known full-service brokers like Morgan Stanley. E-Trade now provides banking services complete with a savings account with no minimums. E-Trade offers retirement planning, online trading seminars and quote and charting services. There are also unpublicized and free services such as financial planning and asset allocation advice. E-Trade offers research tools to its customer that includes stock charting and stock analyst research from independent research companies. With E-Trade, you also have the option of going into any of its branch offices for in-person service or advice. There are now branches in 16 states and the District of Columbia.

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