Self-directed investors have more online brokerages to choose from than ever. Two of the more popular services are E*Trade and OptionsXpress. We recently reviewed them both and determined that, when compared side-by-side, OptionsXpress is a better choice for low-volume traders, while E*Trade remains the online brokerage standard for experienced traders who make frequent transactions.

OptionsXpress Brief Overview

OptionsXpress, part of the Charles Schwab Corporation, was founded in 2000 and is headquartered in Chicago. It serves customers worldwide as an online broker for stocks, options, ETFs, bonds, futures and mutual funds.

E*Trade Brief Overview

E*Trade, meanwhile, was founded in the early 1980s, making it a pioneer in the field. Based in New York City, it too is an online discount stock brokerage service for those comfortable with doing their own trading.

Cost Comparison

The two online brokerage firms are among the more affordable, with OptionsXpress costing $8.95 and E*Trade $9.99 per ETF, stock or option transaction. However, E*Trade charges more per mutual fund transaction ($19.95 versus $14.95 through OptionsXpress). Neither company charges an inactivity fee, although E*Trade does charge a maintenance fee, surcharges on penny stocks and IRA setup and annual IRA fees.

Deals: Right now, E*Trade is offering free trading for 60 days when you sign up. When you sign up for OptionsXpress right now, you get 50 free trades.

OptionsXpress Pros

  • Brokerage Review rated OptionsXpress one of the Best Discount Brokers of 2013 and recommended it over E*Trade in part owing to its free virtual trading for new investors, which  allows them to hone their trading skills without risking actual money.
  • Daily Markets gave OptionsXpress 4.9 out of 5 stars in a recent review. The review author cited the company’s wireless trading app as among its more appealing features. The OX Mobile application allows trading through any mobile device.
  • Other reasons OptionsXpress scored such a high rating were its free broker-assisted trading and comprehensive education materials. Most brokerage firms, online or traditional, charge a fee when customers want to speak to a broker. E*Trade, for instance, charges as much as $45 for live assistance. Through OptionsXpress, brokers offer free answers to general trading and strategy questions as well as technical questions.
  • No minimum account balance is required.
  • The OptionsXpress education reference section is free to all account holders. It offers information on nearly any investment topic a customer might be interested in learning about.

OptionsXpress Cons

  • The brokerage does not offer international or FOREX trading.
  • There is no single platform available with which to combine all available tools.
  • Customer service, while excellent when it is available, is not available 24 hours a day for all products.

E*Trade Pros

  • For experienced traders, E*Trade is an excellent choice. The company offers access to a vast range of mutual funds and foreign markets through a relatively simple platform, leading reviewers such as Barron’s and Smart Money to bestow multiple awards on the company over the years.
  • With more than 2.3 million people using E*Trade, customers can be confident they have chosen a leader in the industry. Throughout its decades in the business, the company has learned a great deal about operating an online brokerage.
  • The brokerage offers banking services, including high interest savings accounts, mortgage accounts and checking accounts.
  • The E*Trade platform lends itself to customization for an individual investor’s unique needs.
  • For those who make more than 150 trades per quarter and who prefer a wide variety of investment products, E*Trade is an excellent choice.

E*Trade Cons

  • Investors who make fewer trades on a regular basis pay relatively high commissions. The lowest options and stock trade fees are only available to high-volume customers.
  • Although it offers 24-hour customer service by telephone, E*Trade does not offer a live chat feature.

To learn more about E*Trade, click here. To learn more about OptionsXpress, click here.