Webull is one of a new class of investment apps that aims to make commission-free stock trading easy and convenient. While Robinhood is the most well-known app in this category, Webull offers a handful of features that make it worth considering.
In this Webull review, we’ll dig into the details and explain who will benefit the most from using the app.
What is Webull?
Webull is a mobile brokerage app (which also has a desktop version) that offers zero-commission trading of individual stock and exchange-traded fund (ETF) shares. There are no fees to open an account, no account maintenance fees, and no software platform fees.
The company was founded in 2016 and the Webull app debuted in 2018. Webull is owned and operated by the Chinese firm Hunan Fumi Information Technology Co., and is a registered broker-dealer with the SEC as well as a member of FINRA and SIPC.
Webull’s platform has appeal beyond its commission-free trades. Both the desktop version and app version offer a robust suite of useful tools, including:
- Analyst ratings
- Financial calendars
- News and press releases
- Real-time market data
- Revenue data
- Stock screeners
- Technical research tools
- Watchlists and alerts
Robinhood aims to help beginning investors get into the stock market, and as a result its app is simple and streamlined. On the other hand, Webull provides access to a ton of technical information (much of which you would normally have to pay for) that will appeal to intermediate and advanced investors.
With that said, novice investors might also want to check out Webull. The platform offers free trading courses, as well as a trading simulator (aka “paper trading”) that allows you to test out strategies and learn how the market works without actually risking your money.
If you can use the platform without becoming overwhelmed by the wealth of available data and features, these educational tools can offer valuable learning opportunities.
Getting Started With Webull
In order to open a Webull account, users must be at least 18-years-old and have a valid Social Security number. There’s no minimum deposit for a regular trading account, but for margin trading you must maintain a balance of at least $2,000.
Signing Up For an Account
Joining Webull is quick and easy. As part of the process, you’ll be asked a few questions to help determine your level of investing experience and financial goals, including how long you plan to invest, what you would do if you lost 10% of your portfolio, and how important liquidity is to you.
(Note that “liquidity” refers to how easily you can convert a given asset into cash. For example, shares of Walmart have high liquidity because there’s always someone who will buy them.)
Next, you’ll have to provide a government-issued ID number and upload a photo of that ID. Once you’ve provided the necessary information, you’ll wait for your account to be verified. The process can take up to a few days, but often happens within just a few minutes. Once approved, you’ll link a bank account from which to fund your Webull account.
Be sure to use this link to create your account: if you do, you’ll receive a free stock valued at up to $250 when you open your account within 24 hours of beginning the process. You’ll then receive another share — this one valued at up to $1,000 — once you deposit at least $100 as a lump sum within 30 days of account opening.
Webull Tools and Features
First, let’s state what should be obvious: you can use Webull to buy and sell individual shares of U.S. stocks on demand and free of charge.
Not too loing ago, that would have been a revolutionary concept. But today, there are an increasing number of commission-free trading platforms available.
What sets Webull apart from the pack is its terrific suite of analysis tools and extra features.
Full Extended Hours Trading
Webull offers full extended hours trading, both pre-market (4 A.M. to 9:30 A.M. Eastern) and after hours (4 P.M. to 8 P.M. Eastern). Access to extended trading hours lets investors react immediately to news and events that happen outside of regular trading hours, such as earnings filings.
There are thousands of stocks, and access to a good stock screener can help narrow down your investment options. A good screener can help you identify stocks that you were unlikely to find on your own, which can help you diversify your portfolio.
Webull’s stock screener allows you to filter for basic company information like EPS (earnings per share), P/E ratio (price to earnings) and market cap, as well as more complex technical indicators.
Good screeners usually cost at least a few dollars per month, so having a solid one built right into the platform is a valuable benefit.
Trading Simulator/Paper Trading
Paper trading, or simulated trading, lets investors practice buying and selling stocks without risking actual money. This is great for new investors but also useful for experienced investors looking to test out new strategies.
While paper trades don’t involve real money, you can win real prizes when you participate. From time to time Webull holds competitions. Recently, there was a weekly trading competition with Amazon gift card prizes totaling $10,800 (shared among those with the top 10 most profitable weekly paper trade portfolios).
The winners at the end of the four-round competition were eligible to participate in the grand prize round, where the prize was a Tesla Model 3 or $40,000 to pay off their student loans.
Webull Margin Accounts
Webull also offers investors margin accounts. Let’s start this section by making one thing clear: if you’re new to investing, then you should not be using margin. Investing with margin can amplify your gains but can also multiply your losses.
When you buy stocks on margin, you’re essentially buying shares of stock with borrowed money while using the cash in your Webull account (or shares of stock you previously bought with cash) as collateral. Webull offers up to 4X day-trade buying power and 2X overnight buying power, which I’ll explain below.
Webull Margin Leverage
Webull’s 4X and 2X margin leverage is a bit complicated, but here’s a simplified explanation.
If you have a $2,000 account balance (the minimum for a margin account), you can buy up to 4X that amount — in this case, $8,000 — worth of stock for day trading.
The overnight leverage is only 2X. That means that if you have $2,000 of your own money invested, you can buy up to 2X that amount — in this case, $4,000 — worth of stocks to hold indefinitely.
If you use the 4X leverage and fail to sell those shares before the end of the trading day, your account will be subject to a “margin call” — which means that you’ll need to either deposit more money or sell some of your own assets.
Short Selling With Webull Margin
Investors can also use their Webull margin accounts for short selling. Again, if you’re not sure what this is, don’t do it!
Short selling is when an investor borrows shares of a stock from another investor and sells them immediately, with a promise to return them at a certain date in the future.
The point of short selling is that you think the stock in question will go down in value within that time period. If it does, you can buy the shares back at the new (lower) price, return them to the lender, and keep the difference.
Webull acts as the middle-man in this process. When you place a short sell order, Webull borrows the shares from an investor and sells them on your behalf. When you close your short position, Webull buys the shares back and returns them to the lender.
Webull only offers a limited selection of stocks for short selling, and the list changes daily.
When you short sell with Webull, you pay the same margin fee as noted in the table below, as well as a short-selling fee, which varies by day and stock. (The fee is largely dependent upon how hard the shares in question are to borrow.)
Webull offers a lot, but there are some limitations.
- No option to buy or sell cryptocurrencies.
- No Good ‘till Canceled (GTC) order support. GTC is an order an investor places to buy or sell a stock that remains active until filled (or until the investor cancels it). Note that stop-limit orders are supported.
- No fractional shares. Fractional investing lets investors buy a portion (a fraction) of a share of stock, making it a valuable option for beginning investors who don’t have a lot of money to invest but who still want to hold a diversified portfolio.
- No Over The Counter (OTC) Stocks. OTC stocks are those that are not listed on a major exchange like the NYSE or NASDAQ.
Commissions and Fees
All trades with Webull have $0 commission, and there is no fee to open or maintain an account. But there are fees that the SEC and FINRA charge (1 cent per sale for most transactions).
There are also fees for using margin, which range from 3.99% to 6.99% (the larger the dollar amount, the smaller the fee).
If you fund your account via ACH bank transfer, there’s no fee to deposit money. Domestic wire transfers cost $25 and international transfers are $45.
WeBull vs. Robinhood
Robinhood has positioned itself as an app for beginner investors who don’t have a lot of money to invest. It’s intuitive and easy to use, and makes buying and selling stocks easy.
But it doesn’t provide much in the way of research and analytical tools, which makes it a less-than-ideal choice for more experienced investors seeking to conduct a more in-depth technical analysis. Those tools are where Webull shines, and the main difference between the two platforms.
Aside from that, it bears noting that Robinhood is a well-funded American company founded and run by two prominent investment professionals who are well-known in the industry. Initially, there was skepticism about a trading platform that didn’t charge a commission, so Robinhood faced and overcame a lot of scrutiny about its business practices.
Webull, on the other hand, is owned and operated by a Chinese holding company and has a much more opaque public presence. It’s also newer than Robinhood and hasn’t faced the same public scrutiny. However, both platforms are registered and regulated according to American standards, and are as financially-safe as any other broker. The nature of Webull’s ownership is more noteworthy from a privacy and data-collection perspective.
Aside from all this, the biggest difference between the two platforms will be felt by active traders. Robinhood offers instant provisional settlement after you sell a stock, but Webull does not. When you sell stock via Webull, it takes a few days (typically two), to process the transaction. Robinhood credits the sale to your account instantly, which allows you to use that money to make additional investments.
Comparison Table: Webull, Robinhood and M1 Finance
|Stock Trading||Yes — free||Yes — free||Yes — free|
|Options Trading||Yes — free||Yes — free||No|
|Cryptocurrencies||Not available||Yes||Not available|
|Margin Cash Minimum||$2,000||$2,000||$10,000|
|Margin Leverage||4X for intra-day, 2X for overnight.||2X for all trades.||35% of your portfolio.|
|Margin Cost||Free to access, then 3.99% to 6.99% per year (billed monthly).||$5 per month for first $1,000, then 5% per year (billed monthly).||3.5%|
|Extended Hours Trading||4 A.M. to 9 P.M.||9 A.M. to 6 P.M.||None.|
|Cash Management Account|
|Dividend Reinvestment Plan (DRIP)||No||No||Yes|
Frequently Asked Questions
Yes, Webull is a broker-dealer and as such is regulated by FINRA, which means the money in your account is protected by SIPC insurance.
FINRA (the Financial Industry Regulatory Authority) is an organization authorized by Congress to protect American investors. It oversees the broker-dealer industry to make sure it operates fairly and legally. SIPC (the Securities Investor Protection Corporation) is like the FDIC for the money in accounts with brokerage firms.
The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash.
There are no commissions, but Webull must legally charge the SEC and FINRA fees (typically, one cent per transaction), and there are interest fees if you choose to use margin.
Webull is a legitimate trading platform subject to the same rules and regulations as any other. However, it’s a relatively new company that is based in China, so its data protection practices have not been subject to the same scrutiny as older companies like Robinhood.
As far as investing goes, some of Webull’s features come with some risk, especially the 4X leverage on margin accounts and the option to short sell — two things the average investor should stay away from.
Yes, but day traders on any platform are subject to the pattern day trader rule as established by FINRA. The rule states that if an investor makes four or more day trades in a five-day period, the customer will be considered a pattern day trader and must maintain a minimum account balance of $25,000. Note that these day trading rules do not apply if you strictly use a cash account.
Simply navigate to the homepage or main mobile app screen, select “Withdrawal,” enter the amount, and select “Transfer to my bank.” The money will be transferred in two business days.
Webull offers paid subscriptions that give investors access to enhanced trading features not offered in the free version of the Webull platform.
The company also makes money on the margin fees it charges, and it sells “flow order securities.” This means that when other firms can’t process all of their buy and sell orders, they pay Webull to do so. Plus, Webull invests the cash sitting idle in user’s accounts, placing it in things like money market accounts.
Webull Review – Final Thoughts
With it’s commission free trading, Webull is an excellent platform for those looking to invest in individual stocks. But therein lies the downside. The fact is, most individuals should not be buying and trading stocks frequently. Very, very few people win with such a strategy over the long-term.
On the other hand, if you’re interested in investing 5-10% of your total investment assets in companies you believe in (and are not expecting to get rich quick) Webull is certainly a legitimate and wise option.