Are you looking to trade and wondering the differences between Robinhood vs. Webull? Indeed, there are endless options when it comes to investing your hard-earned money. For example, some investors use an adviser, while others prefer doing it themselves with a low-cost brokerage such as Etrade or Schwab. However, startup brokerages such as Robinhood and Webull are making great strides at attracting new investors. And the big brokerages are taking notice.
Investors in the stock market have many choices when it comes to brokerages. However, Robinhood and Webull are becoming household names that people trust. Further, these two are aspiring to become the biggest online stock trading platforms. But why? Commission-free trading. New investors are lured in with the concept of no-fee / free stock trading. Further, both platforms offer new users some free stocks!
What isn’t immediately apparent is that these companies have to make money somewhere. And instead of making money through trading, they’ll get it elsewhere. Regardless, the selling point is compelling.
Digging in: Robinhood vs. Webull
On the surface, Robinhood and Webull might seem like just another free mobile trading app. However, there are significant differences to consider.
Robinhood’s founders, Baiju and Vlad, met while attending Stanford University. It sounds very similar to Larry Page and Sergey Brin’s story (the Founders of Google). After graduation, Baiju and Vlad moved to New York to sell trading software to hedge funds. They quickly discovered that trading firms pay little to nothing to trade stocks. And that realization sparked an idea to create a financial platform that anyone could access without charging commissions.
Robinhood is an essential tool for day traders. It helps keep their trading activities simple. An advantage is that users don’t require a minimum deposit to invest. With this stock trading platform, investors can trade stocks, ETFs, options, and cryptocurrency. Also, there are no commissions to trade. The platform has an easy and streamlined mobile app designed with investing in mind.
Wang Anquan, an Alibaba alum, founded Chinese-owned Webull with the idea of making a better Robinhood. Wang always had ambitions of creating a global company, and he chose to start Webull in the U.S. In 2020, Webull did rather well by growing to over 2 Million users. One might find it interesting that Webull can grow as rapidly as it has given the current geopolitical climate.
Webull is another trading platform worth considering. It offers a streamlined web interface and an app that anyone can use. Like Robinhood, it offers commission-free trading and no account minimums.
Who Should Use Robinhood?
Robinhood offers a reliable trading platform for novice investors. Traders appreciate an easy-to-use interface which is an advantage. Indeed, fewer new users feel overwhelmed. Even trading options contracts is easy!
Unfortunately, Robinhood’s “easy to use” strength ultimately becomes this trading platform’s weakness. The platform is designed and targeted by novice users. The platform makes it easy to trade risky assets (such as buying far out of the money options), which turns out to be a hazard for those investors who are not aware of the risks associated with the trade.
Who Should Use Webull?
Webull’s platform is available in both English and Chinese. The platform appears well designed for professional traders and is infinitely customizable. Furthermore, all the standard order types are accepted (I.e., GTC, Market, Limit, Stop, Stop Limit, etc.). Also, various types of alerts and reports are available.
Are the platforms safe?
Investors naturally will wonder if their money is safe at Robinhood or Webull.
Robinhood is a member of SIPC. It protects its customers up to $500,000 (including $250,000 for claims for cash) against securities. However, if you invest in cryptocurrency using Robinhood, you’re on your own. There’s no insurance in the event the brokerage or customer account gets hacked.
Webull is also a member of SIPC, and their securities customers are also protected up to $500,000 (including $250,000 for cash). However, Webull takes it one step further. Their clearing firm, Apex Clearing, has purchased additional insurance for Webull customers. The coverage limits protect customer securities and cash up to an aggregate of $150 million, subject to maximum limits of $37.5 million for any one customer’s securities and $900,000 for any one customer’s cash.
Note that, like Robinhood, there’s no recourse if the brokerage or customer account gets hacked.
Fees and Commissions
Robinhood and Webull are popular online trading platforms. But unlike traditional online brokers, their selling point is being commission-free. Further, as “unlimited minutes” on cell phone plans changed the industry, commission-free trading is doing the same. However, aside from commissions, other fees can add up.
Stocks and options trade for $0.00 in commission. However, an SEC fee of $5.10 per $1,000,000 of sells gets rounded up to the nearest penny. Notably, Robinhood does not pass on this fee for sells under $500. Additionally, there is a FINRA trading activity fee of $0.000119 per share (equity sells) and $0.002 per contract (options sells). It’s rounded up to the nearest penny, and Robinhood caps the cost at $5.95.
While the standard Robinhood account is not a margin account. However, for $5/mo, Robinhood offers a Gold account. Margin rates within Robinhood Gold are very competitive: just 2.5%, and the first $1,000 is free. It’s just about the lowest in the industry, aside from an Interactive Brokers Pro account.
Domestic and international wire transfers and ACH fees are $0.00. And check delivery costs $20.
Similar to Robinhood, Webull offers $0 commissions and $0 account minimums. Further, the SEC fee is the same, $5.10 per Million (equity sells), and the FINRA fee is $0.000119 per share. Also, option sells are $0.002 per contract, and all get rounded up to the nearest penny.
However, with Webull, margin rates are markedly higher. Margin at Webull starts at 3.99% for debit balances exceeding $3 Million. Traders borrowing $0-$25,000 pay 6.99% – an industry average, but still very expensive. Webull does say they offer up to 4x buying power for day trading.
Deposits and withdrawals using ACH cost $0, up to $50,000 a day. However, wire transfers are substantially more expensive. Domestic wire deposits are $8 each. And domestic wire withdrawals are $25 each. Need to send money internationally? International wire deposits are $12.50 each, and withdrawals are $25 each.
Our Robinhood vs. Webull research found that both offer trading in ETFs, cryptocurrency, options, and stocks. Futures, forex, CFD’s, mutual funds, or bonds are not currently supported. However, Robinhood offers traders fractional shares, where Webull does not.
Robinhood and Webull have a restricted number of account types. For example, Robinhood has an individual taxable account only. Webull, on the other hand, also offers Traditional, Roth, and Rollover IRAs. Each user can open one IRA.
Related read: 19 Blue Chip Stocks for Incredibly Reliable Dividends
Trading Platform and Features
Robinhood and Webull offer similar products to trade. Both platforms will allow investors to trade U.S.-based ETFs, stocks, options, and cryptocurrency. Furthermore, both offer margin trading.
However, the trading platforms are markedly different. Robinhood was the first to develop a mobile platform for trading. It is the reason why this platform works best for novice or new investors in the market.
Moreover, Robinhood’s trading screen is minimal. It offers basic information such as recent changes, current prices, and price history. A drop-down menu enables investors to set sophisticated orders. They can also find more needed information like the trading volume.
Webull offers an excellent trading platform that sophisticated investors appreciate. Further, the platform has various numbers of research tools that might intimidate a novice investor. Nevertheless, the basic pricing information needed gets laid out. It also has a variety of technical data that is very impressive. I also like the IPO and in/outflow reports.
No one argues that Robinhood and Webull have well-developed mobile apps. However, the Achilles heel could be with customer service. Both companies offer (practically no) live customer service. Support is limited to email or FAQ.
Traders who prefer to pick up the phone and call someone will be disappointed. However, those who don’t mind endless FAQs or watching Youtube videos (who doesn’t love Youtube?) won’t mind either.
What about Cash Management?
Banking and investment accounts might not seem like they go hand in hand. But, with Robinhood, they offer a debit Mastercard to access your funds. While we’re not sure why one would want to use a debit card on a trading account (perhaps unless it’s an emergency), it’s worth knowing that Webull does not offer such a product.
The Final Verdict
Robinhood is ideal for traders looking for a low-cost, easy-to-use platform.
Webull might make sense for investors seeking a more sophisticated trading platform that includes research and potentially additional margin. Furthermore, Webull has the edge on registered accounts like IRA’s.