thinkorswim vs. E*TRADE: Which Is Best?

Investing is an ever-changing world. Online brokers are constantly looking for ways to improve the investment process for novices and experts alike. Both TD Ameritrade’s service, thinkorswim, and E*TRADE offer advanced trading software for active investors. While the two manage similar data, interfaces and overall power, there are differences between them. Even subtle changes in features can drastically shift a user’s experience, so it’s important to know how they compare. Here are a few main details about thinkorswim and E*TRADE. A financial advisor can help you pick a trading platform that fits your goals, budget and risk profile.

Overview of thinkorswim vs. E*TRADE

In a general overview, it might be easier to say what the two services share in common. Thinkorswim is a full-featured investment platform owned by TD Ameritrade, which Charles Schwab recently bought. Thinkorswim and E*TRADE, another brokerage with a day trading app, are powerhouses in the online financial investment field. They both come equipped with an array of tools that help you monitor the market, like charting, and stay informed. On top of that, both are part of the newer wave of online brokers that have free commission trading. Other similarities include options and broker assistance.

That’s not to say that the two platforms don’t have features that separate them from each other. Not all their costs match up, such as their mutual fund commission prices. You’ll also find that only thinkorswim has foreign currency trading (forex). In contrast, E*TRADE is better at futures contracts.

thinkorswim vs. E*TRADE: Fees

If you are interested in using a trading platform, it’s important to look out for the four types of fees you’ll typically run into.

• Trading Fees – Any fixed charge attached to each trade that you make. This can come in the form of a flat fee or what’s known as the “spread.” This is when your broker charges you based on the difference, if any, between the buying and the selling price of an asset.

• Trading Commissions – This is when a broker will charge you a percentage based on the volume or value of each trade.

• Inactivity Fees – Any fees that the broker charges you for not trading, such as for keeping money in a brokerage account.

• Non-Trading/Other Fees – Any form of fee for trading on this platform not covered above. For example, a brokerage might charge you for making deposits into your brokerage account, taking money out of it or signing up for additional services.

E*TRADE does not charge trading or commission fees for stocks and ETFs, which is relatively common among electronic brokers. This is similar to thinkorswim’s system, since the TD Ameritrade offshoot has also eliminated trading fees as well as inactivity fees and annual fees. The likenesses continue with their $1 bonds, $25 broker-assisted trades and options contracts’ costs. Both platforms charge $0.65 per options contract, a relatively industry-standard price, although E*TRADE lowers that to $0.50 for high-volume traders.

Another comparable cost is margin interest rates. Thinkorswim’s rate is 7.5% to 9.50%, while they range from 5.45% to 8.95% for E*Trade. In terms of futures contracts, there is a slight increase on thinkorswim’s side at $2.25 compared to E*TRADE’s $1.50. That difference continues with their respective mutual fund commission prices, with E*TRADE charging $19.99 versus $49.99 at thinkorswim to trade a no-load fund.

One service and cost that E*TRADE offers that you won’t find with thinkorswim is the company’s Pro platform, which has a three-tier system. This applies to people who have a balance exceeding $250,000. You can also have a professionally managed custom portfolio with a market value of $500 and an annual advisory fee of 0.3%.

Some specialized and niche fees may apply to both services.

thinkorswim vs. E*TRADE: Services & Features

Both services offer comprehensive investment brokerage experiences and tools. They each encourage portfolio customization and financial education through their online interfaces as well as their mobile applications. Along with that, their low to minimal costs to use those education services aim to improve financial and investment literacy among a wider group of people.

Thinkorswim does prioritize advanced investors more than E*TRADE, which is evident from its dense electronic system. However, it keeps the door open to new traders by hosting its high-quality investment tools for everyone. With E*TRADE, you do have tiered offerings as part of its Pro platform for individuals with at least $250,000 in a balance. E*TRADE Pro is the company’s desktop software, in comparison to its browser platform Power E*TRADE. The Pro system offers real-time data streaming and charting tools.

Thinkorswim comes with its own traits through its desktop, web browser or mobile applications. The desktop prioritizes the most range of data options and customizability, though they all insist on these two traits as their core foundation. Add-ons include news, analysis and Level 2 data.

One of thinkorswim’s most useful features is its full paper trading mode. Essentially, the service allows you to set up a fake or simulated account that comes with a minimum amount of fake money. It gives new users the opportunity to familiarize themselves with the program before they have to take any real risks.

Also remember that thinkorswim offers forex investing whereas E*TRADE does not.

thinkorswim vs. E*TRADE: Online & Mobile Experience

Both companies offer web and mobile options for investing and researching. E*TRADE offers two mobile apps: the E*TRADE Mobile App and the Power E*TRADE app. The former is designed to simplify investing and trading, whereas the latter is meant to provide more in-depth information.

E*TRADE’s mobile app investment options are appealing to the knowledgeable investor, with access to thousands of stocks, futures, bonds and more. Staying informed is also made easy through the app’s news and market analysis sections sourced from CNBC, MarketWatch and Morningstar.

The online brokerage also has a number of contact options for its userbase to access customer service, including e-mail, a telephone number and online chat. There is also a FAQ. That accessibility can improve the E*TRADE user’s experience a great deal, in comparison to many other brokerage options.

TD Ameritrade also has a trading app that brings its thinkorswim trading platform to the mobile stage. Its overall target audience is experienced investors, so the system is a little denser than some other options you might find. That comes with more tools at your disposal, though. You have profit and risk analysis at your fingertips, multi-touch charts, live news and insights and a support system as well.

Using thinkorswim’s support services, you have access to immediate help when you chat with specialists in real-time or visit chat rooms with fellow investors.

Who Should Use thinkorswim?

Thinkorswim works well for the advanced investor who wants an active, hands-on experience. The large amount of data the platform offers makes thinkorswim a near semi-professional interface, but that comes with a cost. Newer, passive or low-risk investors might find that the system is not suited to them.

Certain individuals might like thinkorswim’s overall functions but need something a little less complicated. Fortunately, TD Ameritrade’s standard desktop and mobile packages offer a more straightforward experience. So, you don’t have to miss out on a robust, well-supported business if you’re looking for something less complicated.

Who Should Use E*TRADE?

E*TRADE comes with a learning curve of its own, but the tools it offers are worth the time they take to understand. Their complexity makes them well-suited to experienced investors since that clientele is more likely to pursue complicated portfolios. In particular, the futures contracts might appeal to those looking for a sophisticated portfolio. Novice investors might not find the service too user-friendly; however, that’s not to say the platform’s tools aren’t worth learning. They might just require some patience.

Bottom Line

The right online investment program depends on the investor using it. Your level of experience, risk level and desired activity dictate whether a platform works for you. Overall, E*TRADE and thinkorswim are strong contenders for anyone looking for the right digital brokerage. However, E*TRADE’s interface is more forgiving for the new investor and might have a cost advantage. On the other hand, thinkorswim is a great platform for the investor interested in options and forex.

Users interested in either online broker have the option to explore their different platforms as well. While the E*TRADE’s Power interface might not work, the Pro may be the right choice. Finding the best system takes research and time, but both E*TRADE and thinkorswim offer top-notch choices for the active investor.

Investing Tips

• Neither E*TRADE nor thinkorswim can forecast future results, but there’s a tool that can give you a decent idea of how your portfolio will do, based on how much you invest and your time horizon. It’s an investment calculator, and it is free to use.

• If you’re not sure which trading platform to use consider working with a financial advisor. Finding one doesn’t have to be hard. SmartAsset’s matching tool quickly pairs you with local financial professionals in your area who help you make the best choice. If you’re ready, get started now.

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