Robinhood and Webull are two investment companies that charge no commissions to buy and sell individual shares. You can also trade options for free using the apps. Given that they both offer similar services, which one is better?
In this review we compare Webull vs. Robinhood to see how each one stacks up so that you can pick the one that makes the most sense for you and your financial situation.
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Webull vs. Robinhood: Which is The Best Free Online Brokerage?
Webull and Robinhood are both free online brokerages that investors can use, but which one is more suitable for your needs?
What Is Webull?
Webull is an online brokerage that lets its customers trade stocks, ETFs and options. It is also in the process of rolling out cryptocurrency trading so you can buy and sell Bitcoin, Bitcoin Cash, Litecoin and Ethereum.
The company aims to offer an all-in-one investment platform by combining easy trades with powerful research tools and 24/7 customer service availability.
Webull has its own secure app which allows you to trade quickly while on the go. They frequently run specials such as Free Stocks with sign up. It is quick and easy. Just enter your phone number and they send you the app link.
How Does Webull Work?
To get started with Webull, all you have to do is open an account. Like any financial institution, Webull will need some basic info to verify your identity. Once you provide that information and provide your email address and a password, you’re good to go.
Webull offers both taxable brokerage accounts and Individual Retirement Accounts (IRAs). IRAs offer tax advantages when you use them to save for retirement. This makes it possible to do both your short-term and long-term investing on the same platform.
The company doesn’t charge any commission or other account fees, so you can use the platform for free if you wish.
However, Webull targets itself toward active traders who want access to research and margin. The company makes money by lending up to four times your account balance when you want to buy shares on margin.
If you’re interested in day-trading, the large margin availability makes Webull a solid choice.
Webull has several features that make it worth considering.
Desktop platform and research tools
Webull has a lot of market data available. Even if you don’t have an account, you can check out its data page to see plenty of charts and graphs detailing market performance.
If you’re trading from a desktop or laptop, you can download Webull’s desktop trading platform, which includes real-time market data and analysis of business and industry trends.
You can look at market fundamentals or do technical analysis to try and get a leg up on other investors, or use analyst ratings to guide your investment strategies.
Also, there is a powerful screening tool that you can use to find companies that meet precise requirements for your investment strategy.
If you’re interested in day trading, margin (money you borrow to invest) can be a valuable tool to increase your potential profits (and risk). Webull lets you borrow up to four times the amount that you have in your account to trade on margin. You can borrow up to twice your balance for pre and post-market trading.
Trading on margin costs money. You’ll pay interest based on the amount of the loan and the length of time you choose to pay it back. Don’t forget that borrowing money to trade amplifies potential losses, so never borrow more than you can afford to lose.
One of the most challenging parts of investing is coming up with a strategy and testing it. You can craft a plan and backtest it against previous market performance.
Still, nothing matches testing a strategy in real-time. The problem is that you don’t want to risk real money when you’re testing a new idea.
Webull offers a stock market simulator that you can use alongside your real portfolio. This tool makes it easy to test new investing plans.
Extended Trading Hours
Typically, the stock market is open from 9:30 AM to 4 PM, Eastern time Monday through Friday. Webull gives its customers access to pre- and post-market trading hours. That means that you can start trading as early as 4 AM and don’t have to stop until 8 PM.
Keep in mind that prices tend to be more volatile outside regular market hours, so trading during these times could be riskier than usual.
What Can You Invest In with Webull?
Webull gives you plenty of options for investments. You can buy and sell stocks, ETFs and options.
The company is also working on offering cryptocurrency trading. When Webull adds that function, it expects to let its customers trade Bitcoin, Bitcoin Cash, Litecoin and Ethereum.
What Does Webull have that Robinhood Doesn’t?
Webull has a few features that Robinhood does not offer, including:
- Individual Retirement Accounts. Robinhood only gives investors a traditional brokerage account. This makes Webull a good choice for people who want to save for retirement.
- Simulators. If you want to test an investing strategy in real-time, Webull has a simulator to help with that. Robinhood doesn’t have a market simulator.
- Powerful research tools. Webull offers additional tools and analysis for people who want to research potential investments.
Pros and Cons of Webull
- Powerful research tools
- Option to open an IRA
- Pre- and post-market trading
- Margin accounts
- May be too complex for new investors
- Cannot own fractional shares
- No cryptocurrency trading (at time of writing)
What is Robinhood?
Robinhood is a phone-based brokerage account. The company currently lets customers trade stocks, ETFs, options and cryptocurrencies, including Bitcoin, Bitcoin Cash, Ethereum and Dogecoin.
The app offers a clean interface and access to news articles that make it easy for beginning investors to start trading.
How Does Robinhood Work?
Getting started with Robinhood is like opening an account at any financial institution. Provide some identifying information and link your bank account so you can transfer funds to Robinhood.
Once you fund your account, you’re ready to start trading. Robinhood offers just one type of brokerage account, so you don’t have to worry about choosing between a taxable account and an IRA.
To make a trade, you can open the Robinhood app on your phone, search for a company and select an amount to invest. Robinhood lets you purchase fractional shares in a company, so you don’t have to worry about having enough cash to buy a full share.
There are no commissions to buy or sell shares. Instead, the company makes money by lending money to investors and through its Robinhood Gold subscription service.
Robinhood offers several features to its customers:
If you want to level up your experience with Robinhood, you can sign up for Robinhood Gold. The service costs $5 per month but unlocks many features.
Gold members get access to margin trading, which lets you borrow money to buy stocks. Also, you’ll get access to additional professional research from Robinhood’s team of analysts and level 2 data from Nasdaq, which gives you more insight to the bids and asks for shares.
Gold members can also make instant deposits from their bank accounts, letting them move money into the market quickly instead of waiting for the funds to clear. You can instantly deposit between $5,000 and $50,000, depending on your portfolio balance.
With many brokerage accounts, you can only buy full shares when you want to invest in a business. If a company’s shares trade at $40, that means you can only invest in $40 increments. In contrast, Robinhood lets you buy fractional shares, so you could invest $50 to purchase 1.25 shares in the company.
Fractional shares make it much easier to allocate your funds because you’re not worried about buying in exact dollar amounts.
Robinhood has a cash management account that you can use to earn interest on your uninvested funds and have flexible access to that money.
When you sign up for the cash management account, you get a debit card that you can use to make purchases or withdrawals from ATMs.
Money in the account earns interest and receives up to $1.25 million in FDIC insurance. There are no minimum balances and no fees to use the cash management account.
Robinhood publishes a series of articles through its Robinhood Learn platform. These articles explain everything from investing concepts to the history of the modern financial system.
This feature makes Robinhood a great platform for beginners who want to learn more about the market and how it works.
Extended Trading Hours
Robinhood gives its users access to extended trading hours. However, the hours are shorter than the ones that Webull’s users can access.
Pre-market trading through Robinhood starts at 9 AM, thirty minutes before the market opens. Post-market trading continues until 6 PM, two hours after the market typically closes.
What Can You Invest In with Robinhood?
Robinhood lets its customers invest in stocks, ETFs, options and cryptocurrencies. You can purchase fractional shares in stocks and ETFs, which makes it easier to deploy your cash.
What Does Robinhood have that Webull Doesn’t?
Robinhood has a leg up over Webull in a few areas.
- Cryptocurrency trading. Webull is currently developing a cryptocurrency trading platform. But for the moment, if you want to trade cryptos, you’ll have to use Robinhood.
- Cash management. If you want easy access to your uninvested cash and to earn a solid interest rate, Robinhood has that option.
- Fractional shares. With Robinhood, you can invest any amount of money in a business. You aren’t restricted to purchasing full shares in the company.
Pros and Cons of Robinhood
- Easy to use for new investors
- Fractional shares
- Earn interest on uninvested cash
- Option to reinvest dividends
- Fewer research tools than Webull
- Only offers a taxable account
- No trading simulator
Webull vs. Robinhood: Which To Use?
Whether you should use Robinhood or Webull depends on your preferences and investing needs. Both platforms let you invest in basically the same assets, so it’s mostly a question of the features surrounding the platforms.
If your goal is to save for retirement, Webull is the clear winner. Robinhood doesn’t offer the option to open an Individual Retirement Account while Webull does. The tax benefits of an IRA can be significant, so it’s worth opening one if you’re saving for retirement.
Webull also tends to be better for advanced investors who know what they’re doing. The website’s interface offers a lot of research tools and ways to analyze the market.
The information can be incredibly useful but could quickly move into the territory of information overload for newer investors.
On the other hand, Robinhood is great for people who have some extra cash and want to learn about the market. The app has a sleek, easy to use interface and offers just enough information to help you make decisions without overloading you with data.
Its extra features, like a cash management account and fractional share investing just add to the simplicity of using the platform.
Both Robinhood and Webull are excellent choices for investors who want a commission-free way to trade stocks, ETFs and options. That makes them great for hands-on investors. However, neither is well-suited for passive investment.
If you’re the kind of person who wants a buy and hold an investing strategy, you’re probably better off with a traditional brokerage account from a company that lets you invest in mutual funds. Also, Index funds are a great, low-cost way to diversify your portfolio and invest for the long-term.
Have you used Robinhood or Webull? If so, what was your experience? Let us know in the comments below.