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E-Trade

Ameritrade

When one thinks "stocks," E-Trade immediately comes to mind. Online investing is, fittingly, one of the largest sectors of the online financial services industry. Time is of the essence in the world's equity markets, and is therefore a precious commodity. Traditionally, an investor would call a stockbroker to place an order. The stockbroker would need to record the necessary information before the trade was made. Furthermore, orders placed with brokers were not placed immediately, but rather the broker would make large blocks of transactions at specified times of the day. Investing is about making money with money, and every dollar of investing fees takes away from investors' earnings.

Like Bank of America and Wachovia, E-Trade and Ameritrade rank third and fourth in the discount brokerage industry. They are pure online companies created from the ground-up. As a result, they have encroached on the earnings of traditional securities brokers such as Charles Schwab and TD Waterhouse. The veterans of the brokerage industry did not take these new companies lightly. Charles Schwab created CyberTrader, Inc., an independent company dedicated to online securities brokerage. TD Waterhouse responded in the way most traditional firms have: by adapting their existing services to the Internet.