E-Trade for Beginners: How to Start Online Trading

Before you place your first trade, you must select an account structure that aligns with your goals. E*TRADE offers several options with no account minimums [1]:

• Brokerage Account: Best for general investing. This is a standard taxable account where you can deposit funds and trade stocks, ETFs, and options. There are no maintenance fees or minimums to open.
• Retirement Accounts (IRAs): Ideal for long-term saving. You can choose from Traditional, Roth, or Rollover IRAs. These offer tax advantages but come with withdrawal restrictions before age 59½.
• Core Portfolios: If you prefer a hands-off approach, this is E*TRADE’s robo-advisor service. It builds and manages a diversified portfolio for you based on your risk tolerance for a small annual advisory fee.

For those looking to diversify beyond equities, it is worth exploring how different asset classes behave. Check out our Beginner’s Guide to Commodity Trading to see how raw materials can fit into a broader investment strategy.

Opening an account typically takes about 10 minutes online [3]. You will need your Social Security number or ITIN and employer information.

Funding Methods

Once approved, you must fund the account before trading. According to E*TRADE’s funding guidelines, you have several choices:

• Electronic Transfer (ACH): The most common method. Funds usually appear within 3 business days [4].

• Wire Transfer: The fastest method. If received before 6 p.m. ET, funds are typically available the same business day.

• Mobile Check Deposit: Using the E*TRADE app, you can snap a photo of a check. This may take up to 5 business days to clear.

E*TRADE offers two primary ways to trade via your browser, and choosing the right one depends on your experience level:

E*TRADE Web

This is the standard interface designed for investors who prioritize research. It features a clean layout, easy-to-read charts, and a comprehensive “Knowledge” section. This is where most beginners should start their journey [1].

Power E*TRADE

Rated as one of the top web trading platforms for over a decade [2], Power E*TRADE is built for active traders. It includes advanced charting tools, technical patterns that auto-populate, and a “Strategy Builder” for options. As you grow more comfortable, this platform helps you visualize risk/reward probabilities before committing capital.

Understanding how technology has democratized these professional tools is essential for modern traders. We explore this further in The Innovator’s Dilemma: How New Tech is Changing Trading.

When you are ready to buy a stock or ETF, you will fill out a “Trade Ticket.” Beginners often make the mistake of only looking at the price, but the Order Type is just as important [1]:

• Market Order: Executes immediately at the best available current price. Use this for highly liquid stocks when you want to get in right away.
• Limit Order: You set a specific price (or better) at which you are willing to buy. This is safer for beginners as it prevents you from accidentally buying a stock during a sudden price spike.
• Stop Order: Often used to sell, this triggers a market order once a stock hits a certain price, helping to “stop” your losses if the market turns against you.

ETRADE was a leader in the move toward zero-commission trading. Currently, the platform offers:

• $0 commission for online US-listed stocks, ETFs, and mutual funds [2].

• Options: $0 commission + $0.65 per contract (reduced to $0.50 for high-volume traders).

• Bonds:* Generally $1.00 per bond with a $10 minimum [3].

While stock trading is cheap, beginners should be wary of “hidden” costs like the bid-ask spread or margin interest rates if they choose to trade on borrowed money.

Many beginners on Reddit’s r/Daytrading community warn about the “Pattern Day Trader” (PDT) rule. Under FINRA rules, if you execute four or more “day trades” (buying and selling the same security on the same day) within five business days in a margin account, you are labeled a PDT [5].

Once labeled, you must maintain a minimum equity of $25,000 in your account to continue trading. If you fall below this, your account will be restricted. Beginners should stick to a “Cash Account” or swing trading (holding for more than one day) to avoid this requirement.

Action Plan for Beginners

1. Open a standard Brokerage Account to maintain flexibility without retirement withdrawal penalties.
2. Fund your account via ACH with an amount you are comfortable losing; investing always carries risk.
3. Use the E*TRADE Web platform initially to utilize the built-in educational videos and screeners.
4. Practice with Limit Orders instead of Market Orders to ensure you never pay more than intended for a stock.
5. Monitor your day trades carefully to ensure you do not inadvertently trigger the $25,000 PDT minimum requirement.

E*TRADE provides a powerful gateway to the markets, but the tools are only as effective as the strategy behind them. By starting with a long-term mindset and utilizing the platform’s robust research tools, you can move from a novice to a confident participant in the global economy.