How Does Webull Make Its Money?

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Webull is a trading platform that is quickly gaining popularity. But what exactly is it and how does it earn money?

You might have heard of Webull before and wonder how it makes a profit with its commission-free trading and mostly free services. Here is a walkthrough of how they do it.

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What is Webull?

Webull is a highly rated online brokerage platform that was founded in 2017. It is a financial technology company owned by a Chinese company called Hunan Fumi Information Technology Company. They provide trading technologies and analytical tools with real-time market data.

The Webull app is accessible through their website and as of 2018, on the mobile platform too. Since then, users have found the convenience, pleasing aesthetics, and ease of navigation to be a welcome addition to the stock trading world. To date, the app has had millions of downloads.

The following year, they were able to get a technological upgrade by providing a Robo-advisor that offers financial advice based on a proprietary algorithm. It’s paired with a beautifully implemented graphical interface.

Then, in 2020, they implemented cryptocurrency transactions.

Another feature that is exclusive to Webull is that they provide a time-lapse replay of stock charts and technical price analysis.

Overall, Webull allows the trading of cryptocurrencies, stocks, options, margins, and ETFs. They also offer a competitive margin rate.

Is Webull a public company?

Webull is not a publicly traded company. It is a privately held company that operates as a brokerage firm offering commission-free trading services for stocks, options, and exchange-traded funds (ETFs).

What cryptocurrencies are on Webull?

Webull allows cryptocurrency trading in the following:

Ethereum
Litecoin
Bitcoin
Dogecoin
Bitcoin Cash
Shiba Inu Coin
Cardano
Z Cash
Algorand
Basic Attention Token
Dash and Stella Lumens

No minimum equity is required to trade on their platform. They support both market orders and limit orders. However, there are order limitations. A single trade transaction cannot exceed $100,000.

For buyers, a total pending order of up to $200,000 is allowed. Short selling is not available for crypto.

Webull isn’t only accessible to professionals. They cater to newbie investors who want to dip their toes in an investment platform. They do this through their lack of commission fees and account minimums.

Webull instant buying power for cryptocurrency, stocks and ETFs

Webull allows users to fund their accounts using ACH transfer which typically takes about four business days to settle. Webull provides their users with instant buying power while the transfer is in process to allow users to purchase crypto, stocks and ETFs as soon as they initiate the transfer. This allows their users to jump on any trending investment opportunities without having to wait.

What else does Webull offer?

Commission-free and fee-less

Being a relative newcomer in the trading industry, they have quickly gained popularity. In addition to providing quality commission-free trading with no account minimum, they offer no per-contract fees, no hidden charges, and a variety of financial services for free. These make them a popular choice among traders both newbies and veterans.

Great research tools and charts

Additionally, they provide professional analytics with the use of advanced fundamental analytic tools. They offer news updates and data that show earnings per share, insider trades, revenue, earnings, dividends, and other key statistics.

Webull is equipped with an impressive dashboard that allows you to keep track of how a particular stock is doing and how the global market is performing. You can buy and sell directly from the dashboard.

Fractional shares

A fractional share is when you purchase a portion of one whole share of a company. Fractional shares allow investors to purchase stock based on a selected dollar amount rather than the price of an entire share. This option is good because it enables investors to buy into a company when one full share of the stock is too expensive.

If you have been eyeing a pricey stock but want to invest with sound principles of diversification, you should not want to invest nearly all of your savings in a sole company. Fractional shares can be bought through Webull and are an affordable way to invest. When working with limited capital and choosing a dollar amount for the investment, you can quickly diversify your portfolio with fractional shares.

Check out Webull Fractional Shares.

Is Webull legit?

A lot of the unease surrounding Webull involves the fact that it is owned by a Chinese company. Although this fact can often instigate suspicion and uncertainty, it’s safe to say the company has conducted itself professionally. It’s gone through all the appropriate measures to establish itself as a trustworthy brokerage. Webull is definitely legit.

Webull is regulated by the Financial Industry Regulatory Authority (FINRA), the US Securities and Exchange Commission (SEC), and the UK Financial Conduct Authority (FCA). The company operates under international laws, which govern the rights of investors.

Webull is also a member of the Securities Investor Protection Corporation (SIPC), which protects investors in the event a brokerage firm fails. Although extremely rare, it provides peace of mind.

In the event of brokerage firm failure, SIPC can protect your securities and funds account up to $500,000.

Having been registered with all of these regulatory bodies overseeing business conduct, financial activity, and providing insurance of funds to the end-user, Webull is without a doubt a legit brokerage company.

Which countries does Webull operate in?

Webull is available in the following countries:

United States
Korea
China
Japan
India
Turkey
Brazil
Malaysia

They are aiming to expand their services to other countries in the near future.

What are Webull’s available trading hours?

In addition to normal trading hours from 9:30 am to 4:00 pm EST, Webull includes pre-market trading hours from 4:00 am to 9:30 am EST and after-hours trading from 4:00 pm to 8:00 pm EST.

That is, Webull offers an extremely generous timeframe of 4:00 am to 8:00 pm EST of continuous trading hours. That’s 16 hours total!

What type of accounts can you open?

Webull offers cash and margin as the two main types of individual accounts.

A cash account is when the investor pays the securities in full. How much money you have in the account is how much money you can use to trade.

A margin account, in contrast, allows investors to leverage purchases of securities by borrowing money against said securities. This helps magnify the return on investment of stock purchases, but it also magnifies the risk involved. If not used correctly you can easily owe more money than you actually have.

Trading on margin is only available for margin accounts with $2,000 or more in net account value. You may upgrade your cash account to a margin account at any time provided that all trades and funds are settled by contacting Webull.

Bear in mind that if you want to short shares, you’ll need a margin account. A cash account won’t let you short shares.

Webull also offers traditional IRAs. You must have an individual account before applying for an IRA. The requirements in opening a traditional IRA are:

Must be a US citizen and currently residing in the US, or a US resident alien.
You and/or spouse are able to receive taxable compensation in the current year.
Must be less than or equal to 70.5 years old by year’s end.

How does Webull make money?

Webull relies on the following business models to make money:

Margin Fees

If you have at least $2,000 worth of securities, Webull can offer to lend you extra funds to provide more buying power. They earn money by charging interest on the money borrowed.

The margin fee is calculated based on the loan amount. The more you borrow, the lower your interest rate.

The interest payment needs to be settled on a monthly basis.

Stock Lending To Short Sellers

Another way Webull earns money is through short selling. The company sells shares from investors to short sellers. They buy back the stock when the price drops and returns the initial cost to the owner.

By lending your idle investment assets to these short sellers, they can charge the borrower interest. As mentioned prior, you need to have a margin account in order to participate in short selling.

Free Credit Balance Interest Fee

Free credit balance refers to the remaining uninvested money in a margin account that brokers use to generate income. They offer it as loans to third-party investors and charge interest on the loan amount.

It’s similar to the above stock lending model, but the asset is idle cash instead of stocks.

Order Flow for Payment

Webull is tasked with directing trades to outside venues. This is called order flow, and they receive compensation or rebates for doing so. The order flow can be directed to clearinghouses or market makers, among other venues.

When the end receiver, for example, the market maker, receives the order, they then make money by buying or selling the stock at a better price than the initial customer. They then pocket the difference and send a fraction of it to Webull as a way of saying “Thanks for doing business with us.” This is what is referred to as rebates.

Pursuant to SEC rules 606 and 607, Webull is required to publicly disclose any payment for order flow information.

On average, Webull can expect to make about 0.01% of the total dollar amount of orders being directed out from their platform. That means for every $1 million being traded, Webull gets around $100.

The free-to-use platform combined with the $0 commission model actually helps to increase revenue in this category due to more users making more frequent trades.

This is one of the more complex ways that the company makes money but is a huge revenue generator. This was made more apparent after Robinhood, Melvin Capital, and Citadel’s huge Gamestop and AMC debacle occurred, and its been quite the controversial topic in trading.

Webull Subscription Fee For Level 2 Market Data

The subscription model is probably as basic as it gets. The company provides a service, and the user pays for it if they so desire.

In the case of Webull, it offers Level 2 Advance, which is a service that provides deeper market data for NASDAQ. This allows users to have a clearer view of order flow and buying/selling pressure.

It costs $1.99 a month for this feature, which is an extremely reasonable cost given how useful it can be for experienced traders. It can provide that extra edge that a lot of retail traders don’t normally opt for.

Webull Transfer Fees

This is probably another one of the easier to understand ways that a company can make money.

Webull does not charge a fee for deposits or withdrawals via ACH transfer. However, they do charge wire transfer fees for both domestic and international customers.

For domestic wire transfers, there is an $8 deposit fee and a $25 withdrawal fee. For international wire transfers, there is a $14 deposit fee and a $45 withdrawal fee.

Registration can either be done on either a desktop computer or via the mobile app, which is available on the Google Play App Store as well as the Apple App Store. You’ll need to sign up with an email address or phone number.

You must be at least 18 years old with a valid social security number. Simply follow the steps as instructed. You’ll be requested to provide proof of identity and proof of residency, among other things.

Your account will be ready to use once approved, which doesn’t take long. Webull is fully digital and the approval process is a breeze.

Once you’ve gotten past that and your account is active, you may provide funds for trading via wire transfer or direct deposit. You’ll get some instant buying power, and you can then start trading.

Now, here’s some good news! When you sign up for the first time, you instantly get two shares of stock for free. You get another two on top of that once you deposit a minimum of $100. Every once in a while, they offer these two free stocks for any deposit with no minimum amount attached.

Webull Customer Service

For general inquiries, Webull provides answers to frequently asked questions on its website. You can navigate to these FAQs by clicking the “Help” tab on the top.

They also have a convenient live chat option as well.

For further inquiries, go ahead and reach out via the following:

Via email: customerservices@webull.us
Via a toll-free number: 1-888-828-0618

Webull Alternatives

Robinhood: Robinhood is a commission-free trading platform that offers access to stocks, options, and cryptocurrencies.
TD Ameritrade: TD Ameritrade is an online brokerage that offers commission-free trading on stocks, options, and ETFs, as well as a range of educational resources.
ETRADE: ETRADE is an online broker that offers commission-free trading on stocks, options, and ETFs, as well as a range of investment tools and resources.
Fidelity: Fidelity is a full-service online brokerage that offers commission-free trading on stocks, options, and ETFs, as well as a range of research tools and educational resources.
Charles Schwab: Charles Schwab is a full-service online brokerage that offers commission-free trading on stocks, options, and ETFs, as well as a range of research tools and educational resources.
M1 Finance: M1 Finance is a hybrid robo-advisor and brokerage that offers commission-free trading on stocks and ETFs, as well as automated portfolio management and a range of investment tools.
Interactive Brokers: Interactive Brokers is an online brokerage that offers commission-free trading on stocks, options, futures, and more, as well as a range of advanced trading tools and research resources.