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Day Trading With Webull: Is It a Good Idea?

Webull Day Trading


Day Trading With Webull

Webull is an online brokerage founded in 2017 by Wang Anquan, an alum of Chinese smartphone maker Xiaomi and e-commerce giant Alibaba (BABA).

It is regulated by both the FINRA and the U.S. Securities and Exchange Commission (SEC) so traders should feel comfortable trusting them with your money.

The mobile-focused brokerage has taken off since it announced its app in 2018. Originally founded as a research platform, Webull increased its client-base tenfold in 2020 and it now boasts over 10 million users. Many of those new traders are millennial day traders who ditched rival trading app Robinhood.

Webull wanted its app to be accessible to everyone, and so they got rid of all commission fees on stock trading to keep up with the trend set by Robinhood and other major brokerages.

Before Robinhood disrupted the brokerage industry, any person who wanted to trade stocks would be charged a fee of between $5 to $10 a trade. Brokers also required traders have a minimum of $500 to open an account.

Can You Day Trade With Webull?

Yes, Webull allows clients to day trade – the act of buying and selling the same security within the same day – on its app.

However, there are two things that anyone looking day trade stock needs to know first: the PDT rule and order types.

PDT Rule

The Pattern Day Trader, or PDT rule is a designation from the SEC that compels you to maintain a minimum of $25,000 in your trading account if you want to day trade more than three times a week.

While the PDT rule is one the most frustrating things you will encounter when looking to day trade, there are some few ways to navigate around it and there is also ways you can work within the rule.

Order Types

Traders also need to learn about the various order types they will use while day trading with Webull and understand how to use them properly. This brokerage offers an array of order types on its platform.

The most common types of orders will find on the app are limit buy, limit sell, market buy, market sell, stop loss, buy stop, buy stop limit, sell stop limit, trailing stop limit order, and trailing stop loss.

Pros and Cons of Day Trading on Webull

Easy-to-use platform

New traders might be overwhelmed by the numerous screens, graphs, charts, and indicators available on Webull app, but someone with even a little bit of experience can quickly begin to figure it out thanks to its slick, fast, and easily manipulated interface.

The tools available on platform provide insights and information to help traders make more profitable trades. You can utilize them to perform both technical and fundamental analysis.

Zero commissions

Like all top discount brokerages, Webull charges zero commission for trading U.S.-listed stocks, options and ETFs on both its mobile and desktop platform. The zero commissions give new and inexperienced traders a way to play small ball and learn how to trade actively.

Paper trading simulator 

Webull also offers an advanced paper trading platform that allows new and inexperienced traders to practice trading using virtual currency. The broker hold daily and weekly competitions with monetary prizes on the platform, further proving its dedication to the budding trader.

But with pros come the cons be it whatever. The same applies to Webull. Here are some drawbacks of day trading with this broker.

Few technical indicators

Webull’s library of technical indicators is severely lacking and offers only ten of the most popular indicators, with several notables like relative strength index (RSI) and ADX missing.

The technical indicators currently available on its desktop platform are exponential moving average, simple moving average, Ichimoku cloud, Bollinger bands, Keltner channels, Volume, SAR, KDJ, VWAP, and MACD.

Inferior stock screener

A stock screener should provide you with a wide array of different information based on unique criteria and allow you to identify potential winners.

Webull’s stock screener has limited customization possibilities and a few filters. But it’s quite impressive considering Robinhood, Webull’s main rival, doesn’t offer any stock screening capabilities.

Lack of Hot Keys on App

One thing we always promote for day trading is use the use of hotkeys. They allow you to get in and out of a trade with the press of a button.

The Webull App does not have hotkeys, however, the Webull Desktop does.

Webull Fees

Even though Webull offers zero-commission on trades, you will have to pay with some FINRA and SEC fees.

  • FINRA fees: A trading activity fee of $0.000119 per share on stock sales only with a minimum of 1 cent and a maximum of $5.95.
  • SEC fees: A charge of $13 for a total of $1 million of principal on stock sales only, with a minimum of 1 cent.

When it comes to day trading on margin, Webull margin rates are almost the same as those of most other U.S. brokerages but are noticeably higher than Robinhood margin rates.

Basically, trading on margin means that you borrow money from the brokerage and can use the 0funds to buy more shares than you could with just your available cash balance.

However, you have pay back the loan with interest. The interest rate is known as the margin rate and it can account for a huge portion of your trading costs.

Day Trading Alternatives to Webull

As Webull alternatives go, the first online brokerage that comes into mind is Robinhood.

Robinhood revolutionized the way millennial traders can trade various financial instruments by getting rid of trading commissions and minimum. The app offers commission-free trades on stocks, options, cryptocurrencies, and ETFs.

If you want to leave Webull for an alternative online broker, another broker that is worth giving a shot is TD Ameritrade.

Founded in 1975, TD AmeriTrade boasts comprehensive learning resources – from videos with progress tracking to courses with quizzes – for the new people looking to jump into trading world.

As for trading fees, you will pay zero commissions when trading U.S. listed stocks, options, and ETFs. Nevertheless, options contracts will cost you 65 cents per contract.

With free trades and its intuitive desktop trading platform called Thinkorswim, TD Ameritrade is without a doubt one the best online brokers on the market.

Another platform we really like is LightSpeed.

They are one of the best brokers for day traders and is what Ross and Mike both use. They offer direct market access for quick executions, hotkeys, and much more.

Bottom Line

Webull is a good option for the undercapitalized active trader who only want to day trade stocks and options.

It could also be an excellent choice if you don’t have a lot of money to trade these securities because of there are no trading fees or minimum deposit requirement.

While this broker may not be suitable for highly active traders that need direct market access to because it lacks the ability to create sophisticated keyboard macros, it offers an easy to use trading platform and a unique community experience that will appeal to most day traders.