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Published: Nov 10, 2021 12 min read

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Smartphone displaying the Webull logo with the company's website in the background
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If you’re one of the many investors who first came to the stock market in the last few years, you’ve likely heard of Robinhood. But a Chinese-owned rival named Webull has also been raking in users.

Millions of investors poured into the market over the last two years to not only put their money to work in funds, stocks and bonds, but to also day trade, gamble on meme stocks and buy cryptocurrency. And there are many platforms they can use. Robinhood has made headlines for making the stock market accessible, as well as controversy for its video game-like features, while Coinbase has raked in millions of crypto fans — both Robinhood and Coinbase made their public debuts on the market this year. There are also traditional brokerages like Charles Schwab and Fidelity, robo-advisors like Betterment and Wealthfront and other upstart trading apps including Webull.

If you’ve decided to go with Webull, here’s everything you need to know about trading on the platform.

What is Webull?

Webull is a trading platform that, in some ways, closely resembles Robinhood. The company was founded in 2017, meaning it’s newer to the brokerage industry than traditional players like Charles Schwab and Fidelity and digital-only platforms like Robinhood, which was founded in 2013, and Coinbase (2012.)

Webull, which is owned by Chinese holding company Fumi Technology, allows users to buy and sell a range of different investments, including stocks, ETFs, options and cryptocurrencies like Bitcoin, Dogecoin and Shiba Inu coin.

The company had more than 2 million brokerage clients as of December of 2020, Bloomberg News reported. While that’s still much smaller than Robinhood’s nearly 19 million, Webull claimed to Bloomberg that it was taking customers from Robinhood. (Webull declined to comment on its current number of users, and Robinhood did not respond to Money's request for comment.) Robinhood saw a significant drop in customers in the third quarter of 2021, with monthly active users down to 18.9 million compared to 21.3 million in the second quarter.

Is Webull free?

Webull doesn’t charge commission fees for any trading, including buying and selling crypto like Bitcoin and options trading. Commission-free trading was popularized by Robinhood, and now it’s the industry norm, even among traditional brokerages like Charles Schwab and Fidelity. You still may see very small fees, like $0.02 per trade, from regulatory agencies like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), according to Webull's web site.

But even no-commission platforms need to make money somehow. Here's how Webull does:

  • Payment for order flow. This is a controversial yet common practice in which trading apps make money from high-speed traders to whom they route customers’ orders.
  • Stock loans. Some investors participate in a practice called short selling, a way to bet a company's stock price will drop. Webull makes money by loaning out investors' shares to short sellers, who then sell those borrowed shares to third-party investors, hoping to buy them back later at a lower price.
  • Interest on free credit balances. A free credit balance is the money a broker has to pay you on demand, like the cash you put into an account or dividends. Brokerages make money off of the idle cash sitting in your account by lending it out to third parties and collecting interest.
  • Margin interest. Users with at least $2,000 have the option to open a margin account in which they can borrow money to buy stocks. This gives customers more buying power, but also exposes them to greater risk. Webull charges interest on a monthly basis, and the margin rate is determined by the size of the margin loan. For example, a debit balance up to $25,000 has an annual margin rate of 6.99%.

Basic U.S. market data is free on Webull, but the trading platform also offers more in-depth market data with what it calls Level 2 Advance, a partnership with NASDAQ that users can subscribe to for $1.99 a month. With the subscription, users can better determine the availability or demand for a stock at a certain price, according to Webull’s site.

How to open a Webull account

To open an account, you’ll need to be at least 18 years old and have a valid Social Security number (or Individual Taxpayer Identification Number). You'll also need to live in the U.S. or a U.S. territory and have U.S. citizenship, a permanent residency card or a visa. When you apply to open an account, Webull will run a soft inquiry on your credit history, which will not affect your credit score.

You can open a Webull account via the company’s website or by downloading the Webull app. To open an individual account, you’ll need to decide between a cash or margin account. A cash account is straightforward and likely what you’re used to if you’ve used brokerages before: You pay for the securities, like stocks, that you buy. Margin trading is a bit more complicated (and risky) in that you borrow money against the investments you already own, which means you may have more buying power but it can also magnify your losses. Webull users need to fill out an application before buying and selling crypto or taking part in options trading.

You can also opt for an individual retirement account (IRA). Webull currently offers Roth, traditional and rollover IRAs in which users can trade stocks and ETFs.

Is Investing with Webull safe?

Webull is a member of the Securities Investor Protection Corporation, meaning Webull customers are protected up to $500,000 ($250,000 of cash) in case the brokerage shuts down and assets go missing, according to Webull. Apex Clearing, the brokerage’s clearing firm, has an additional insurance policy which provides protection for securities and cash up to an aggregate limit of $150 million. That’s subject to maximum limits of $37.5 million for a customer’s securities and $900,000 for a customer’s cash.

But keep in mind this coverage won’t protect you from just losing money in the market, which is why it’s important to invest responsibly. Even if the stock market is doing well now, that doesn't mean it always will.

Despite some usual market turbulence, like a dip attributed to investors' concerns about the high debt levels of one of China's largest real estate developers, stocks have continued to soar in recent months.

And the bull market doesn't show signs of a slowdown. The S&P 500, Dow Jones Industrial Average and Nasdaq — benchmarks used to measure how the stock market is doing overall — keep hitting record highs. October was the market's best month of the year so far, with the S&P 500 up 6.9% and the Dow and the Nasdaq up 5.8% and 7.3%, respectively. October is known for being a particularly volatile month for Wall Street, but the S&P 500 and the Nasdaq's best monthly performances since November of 2020.

The boost was thanks in part to a strong corporate third-quarter earnings. Based on companies that had reported as of early November, the quarter ended Sept. 30 was on track show the third highest year-over-year growth in earnings since the second quarter of 2010, according to data from FactSet.

Still, market experts expect a market correction — generally considered a dip of 10% to 20% in stock prices — to rear its head before long.

How to start investing with Webull responsibly

Before you begin investing, make sure you have a solid financial foundation. Financial advisors tend to recommend having an emergency fund that can cover you for three to six months of expenses in case of a financial emergency, like losing your job or needing to replace your car. You should also pay off any high-interest debt and make sure that if your employer offers a retirement plan like a 401(k), you’re at least contributing up to their match.

If you do decide to invest, consider a strategy like dollar-cost averaging, which entails putting a set amount of money into your brokerage account at a set period of time. For beginners, $100 a month may be appropriate, says Jeff Corliss, managing director at RDM Financial Group.

Once you’re ready to put your money to work, consider investing in ETFs — as opposed to individual stocks — to assure you have a diversified portfolio.

“It can be really painful if you load up on one equity and it goes down,” Corliss says.

If you do want to hold some more risky investments, like individual stocks or cryptocurrency, financial advisors recommend keeping this to a small percentage of your portfolio, like 2% to 3% and not more than 5%.

How to invest with Webull and get free stocks

Webull seems to have taken a page out of Robinhood’s book, offering free stocks via promotions. For example, in June customers were offered one free stock just for opening a Webull brokerage account and another free stock for making an initial deposit of $100 or more.

With Webull, you can place orders and check on your positions with both the mobile app and on a customizable Webull desktop platform. Like many other stock trading platforms, you can put together a watchlist to keep track of how stocks and funds you’re interested in are doing and see the top winners and losers of the day.

The platform also offers lots of real-time data on individual stocks and funds, including recent news stories, past performance, analysts recommendations and financials like revenue and debt, which may be overwhelming to someone brand new to investing. Newbies can practice making trades via Webull’s paper trading feature (paper trading is a way to simulate buying and selling securities without actually using real money).

Overall, make sure to do your homework before you start investing, and ensure that your portfolio matches your risk tolerance, timeline and goals.

More from Money:

Robinhood for Beginners: A Complete Guide to Investing With the Controversial Stocks App

Coinbase for Beginners: A Complete Guide to Buying and Selling Cryptocurrency on the Popular Exchange

Robo Showdown: Investors Are Setting up Multiple Robo-Advisors Just to Watch Them Fight