Nobleea, a regular reader here, posted a comment about being a user of E*Trade (now iTrade) Canada. Since I’ve never used E*Trade before, I thought it would be great to get a review from a long time user. Thanks Nobleea!

Frugal Trader asked me to do a review of E*Trade (i-trade), as I am a customer. I will try and follow the same format as he has used for previous brokerage reviews. I have been a customer of E*Trade since 2003, when I deposited a small $1100 cheque to fund my account.

Account types

Like most online brokerages, they offer several account types:

  • Cash (both US and CAD). This is the basic account for trading stocks and mutual funds.
  • Registered. For self directed RSP users.
  • Savings. E*Trade has a Cash Optimizer savings account with a pretty high interest rate. 4.15% at the moment I believe.
  • Options. For trading and creating options on popular stocks.
  • Margin. Trading on margin.

The Application Process

  • The last two accounts are a little bit more complicated. I have had a cash account since 2003 and have just opened a registered account. You can trade US equities and funds in a CAD currency account, but you obviously get hit with the forex (>1% each way) for each trade. You can have both CAD and US cash accounts simultaneously.

Commissions on Equity Trading, there are two price levels:

  • $19.99/ trade for 1000 shares (2c per share thereafter for shares over $1, $19.99 flat for shares under $1) for accounts with less than 30 trades/quarter or less than $50K in account assets (for US equities it is $19.99 flat regardless of equity price or amount of shares)
  • $9.99 flat fee/trade for accounts with more than 30 trades in the previous quarter or more than $50K in account assets.
  • There is no difference in price for limit or market orders. They also offer Trailing Stop Orders which allows you to enter a stop order with a trigger price that changes with the market. E*Trade does dividend reinvestment, but will only purchase whole shares, with the remained being deposited as cash.

Real Time Quotes

  • Real time quotes are available for US and CAD equities. Real time Level II information is also available on CAD equities (not sure about US equities). This is helpful when you are placing an order to see what the spread is like and if any iceberg orders exist.

Mutual Funds

  • Access to over 3200 mutual funds. E*Trade charges nothing for mutual fund trades as long as you hold the fund for at least 90 days.
  • Otherwise, they charge a fee of $38.88 or 1%, whichever is greater. I have not bought any mutual funds through E*Trade.
  • ETFs are also available.

Funding

  • You can set up E*Trade as a biller in order to fund your account. This takes 3-5 days for the money to show up in your E*Trade account.
  • A better option is sign up for the automatic debit system where you can transfer cash back and forth between bank and brokerage in a day. Sometimes in can be done the same day if the timing is right. The good thing is that as soon as you initiate a transfer from your bank account to E*Trade, you can use the money immediately to buy stocks, even if the actual money has not been transferred yet.

Security

  • E*Trade offers a key fob security device which increases the security of your password by creating a new password every 60 seconds. You enter your regular login and password and then add on the 6 digit security code from the key fob which changes automatically every minute. The key fob is free if you have more than $50K in account assets or $30 if you have less. I received mine a week ago.

Concerns

  • Broker assisted trades over the phone will cost you extra, $35, I believe. Their telephone operators do not appear to be of the highest caliber, but are generally helpful. I have to exercise some warrants before the end of the month, so we’ll see if they can handle that.

Final Thoughts

  • E*Trade Canada is good if you qualify for Power E*Trade, which is the cheaper price level once 30 trades/quarter is achieved (or $50K in account assets). Otherwise, there are better deals available. It is best for frequent traders who have a good grasp on what they are doing.
  • If you are interested in stock trading, check out some of the free stock trading tools that I use.

Thanks again for the review Nobleea. If you guys want to see how E*Trade stacks up against other discount brokerages, check out my Canadian Discount Brokerage Comparison article.

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