How to take profit on eTrade, explained

E*TRADE, one of the pioneers of online brokerage services, has a history that dates back to the early days of digital financial technology. Founded in 1982 by William A. Porter and Bernard A. Newcomb, the company began as a technological solution to democratize stock trading by allowing individual investors to trade directly on financial markets. Initially operating under the name TradePlus, the firm developed software that enabled retail investors to place trades electronically, bypassing the traditional reliance on brokers for executing transactions.

Porter and Newcomb’s vision was to make investing more accessible and affordable for individuals, leveraging emerging digital technologies. By 1983, TradePlus had executed its first electronic trade, a revolutionary achievement at a time when the stock market was largely dominated by institutional investors and physical trading floors. The company’s innovative approach attracted early adopters and helped lay the groundwork for the online trading boom that would emerge in the 1990s.

In 1991, the company rebranded as E*TRADE Securities and expanded its reach by launching its first online trading platform. The timing was ideal, as personal computers were becoming more prevalent in homes, and internet access was growing rapidly. E*TRADE capitalized on these trends, providing retail investors with a user-friendly platform to trade stocks, bonds, mutual funds, and other securities from the comfort of their homes. This approach disrupted the traditional brokerage industry, which had long relied on high fees and direct broker-client relationships.

The company went public in 1996, listing on the NASDAQ stock exchange under the ticker symbol “EGRP.” The initial public offering (IPO) raised significant capital, which E*TRADE used to enhance its platform, market its services, and expand its product offerings. The late 1990s and early 2000s were a period of rapid growth for E*TRADE, fueled by the dot-com boom and the increasing interest of individual investors in financial markets. The company became synonymous with online trading, attracting millions of customers drawn by its low fees and innovative technology.

As E*TRADE grew, it expanded its services beyond basic trading to include financial planning tools, educational resources, and access to a wider range of investment products. The company also invested in marketing campaigns to build its brand, including its iconic Super Bowl commercials that humorously emphasized the ease and empowerment of online trading.

The dot-com bust in the early 2000s posed challenges for E*TRADE, as the market downturn affected investor confidence and trading volumes. However, the company diversified its revenue streams by expanding into areas such as banking services, offering high-yield savings accounts and mortgage products. This diversification helped E*TRADE weather the downturn and remain a significant player in the online brokerage space.

In the years that followed, E*TRADE continued to innovate and adapt to changing market dynamics, incorporating mobile trading apps and advanced analytical tools into its platform. The company positioned itself as a leader in digital finance, catering to both experienced traders and new investors. Despite facing increased competition from other online brokers and the rise of commission-free trading platforms, E*TRADE maintained a loyal customer base by emphasizing ease of use, robust customer service, and technological advancements.

E*TRADE’s history took a significant turn in 2020 when it was acquired by Morgan Stanley in a $13 billion all-stock deal. The acquisition marked a major consolidation in the financial services industry, combining E*TRADE’s digital expertise and retail customer base with Morgan Stanley’s wealth management and institutional capabilities. This merger highlighted the growing importance of digital platforms in the financial sector and solidified E*TRADE’s legacy as a transformative force in online investing. Today, E*TRADE operates as a key component of Morgan Stanley’s broader strategy, continuing to serve millions of retail investors while benefiting from the resources and scale of one of the world’s leading financial institutions.

Taking a profit on E*TRADE involves selling an investment, such as a stock, bond, or other financial instrument, when its market value has increased beyond your purchase price. This process begins by logging into your E*TRADE account using your credentials and navigating to your portfolio, where all your current holdings are displayed. Each investment in your portfolio will typically show key details such as the number of shares you own, the purchase price, the current market price, and the unrealized profit or loss.

To take profit, you need to select the investment you wish to sell. This involves choosing the specific security from your portfolio and opening the trade execution window. In this window, you will have the option to sell the desired number of shares or, in the case of other instruments, the appropriate unit. You can decide to sell all your shares or just a portion, depending on your profit-taking strategy and financial goals.

Once you’ve determined the quantity to sell, you will need to choose the type of order to execute the trade. Common order types include market orders and limit orders. A market order allows you to sell your shares at the current market price, ensuring the sale is executed quickly, but without control over the exact price. A limit order, on the other hand, lets you specify the minimum price at which you are willing to sell, providing more control but with the risk that the trade may not execute if the market does not reach your specified price.

After selecting your order type and entering the necessary details, you will review the order to ensure accuracy. This includes verifying the number of shares, the order type, and any applicable prices or conditions. Once satisfied, you confirm and submit the order. The platform will process the trade, and you will receive a confirmation once the sale is executed.

The proceeds from the sale, representing your realized profit (or loss), will be deposited into your E*TRADE account. These funds can be used to make additional investments, transferred to your bank account, or held as cash within your brokerage account. It’s important to consider any transaction fees or commissions associated with the sale, although many brokers, including E*TRADE, now offer commission-free trading for most securities.

When taking profit, it’s also crucial to consider the tax implications. Selling an investment at a gain may result in a taxable event, where you owe capital gains tax on the profit. The tax rate depends on whether the gain is short-term (held for one year or less) or long-term (held for more than one year). Reviewing your tax situation and consulting a tax professional can help you plan for these obligations.

Taking profit on E*TRADE is a straightforward process that requires thoughtful decision-making, attention to detail, and awareness of market conditions and tax consequences. By carefully managing your trades, you can effectively capture gains while aligning your actions with your broader financial objectives.