How to Day Trade on Webull

Thu Jun 25, 2020, 06:08 pm | by Delaney | No comments

When you day trade, there are lots of brokerages out on the market to choose from. Like many brokerages nowadays, Webull is a commission-free option that is often compared to Robinhood. It’s a mobile-based brokerage that allows you to trade on-the-go and offers stocks, ETFs and options. Depending on your account balance, it also offers added benefits such as short selling. Keep reading to get a breakdown on day trading on Webull.

Brief Overview: Day Trading Requirements

Before we get into how to day trade on Webull, we have to give a brief rundown of the pattern day trading rule.

A day trade is defined as buying and selling a stock in the same trading day, with no overnight holding. 

The pattern day trader rule was put in place by the Financial Industry Regulatory Authority (FINRA) in 2001. It states that pattern day traders must have a minimum of $25,000 in equity. This rule means that if you do not meet the equity requirement and you place more than three day trades within five business days, you will be flagged as a pattern day trader. Once you make your fourth trade, your brokerage will flag you as a pattern day trader and you will be blocked from trading until you meet the requirements. 

Pattern day traders must have a minimum equity of $25,000 in order to continue day trading. However, this rule only applies to margin trading accounts, not cash accounts.  

Read More: Beginner’s Guide to the Pattern Day Trading Rule

Webull Account Options for Day Trading

Webull has two main account options: cash and margin.

However, the amount of equity in your account has an effect on what you can do in your account. Here’s a quick breakdown: 

Cash 

  • Unlimited day trades (not restricted to the pattern day trader rule) 
  • No margin trades or short selling 

Margin Account Between $0-2,000

  • No margin trades or short selling allowed 
  • Restricted by pattern day trader rule

Margin Account Between $2,000-$25,000

  • Short selling allowed
  • Restricted by pattern day trader rule
  • Margin trading allowed

Margin Account Over $25,000

  • Unlimited day trades
  • Short selling allowed 
  • Margin trading allowed

Read More: Guide to Short Selling

Margin accounts allow you to borrow money, giving you more leverage to get a higher return. However, it also has the possibility of a great loss.

Cash accounts do not allow you to borrow money, therefore you can only risk the amount in your account, which is why it does not need to follow the pattern day trader rule. 

Margin and cash accounts have their own unique pros and cons, and it really depends on how often you plan on making day trades, if you want to trade using margin, and how much money you have to fund your account to decide what works best for you. 

If you have a margin account and are under the $25,000 equity requirement, you can use the “day-trades left” tracker to make sure you don’t go over the limit and get flagged.

How to Day Trade on Webull 

Once you decide what account is right for you, sign up, and fund your day trading account, you can start using Webull to make trades according to your trading strategy. 

Here are some things to consider when you are day trading on Webull.

Margin

Even if you don’t have $25,000 in your account for unlimited day trades, if you have $2,000 or more, you can use margin or you can short sell stocks. 

Margin trading on Webull does require a fee as follows:

Account BalanceRate
$0-25,0006.99%
$25,000.01-100,0006.49%
$100,000.01-$250,0005.99%
$250,000.01-500,0005.49%
$500,000.01-1,000,0004.99%
$1,000,000.01-3,000,0004.49%
$3,000,000.01+3.99% 

Trading Hours

Webull allows trading during pre-market and after hours. You can trade at any time on a trading day between 4 a.m. to 8 p.m. EST. Unlike Robinhood, you do not need to subscribe to a higher tier to access pre-market and after-hours trading. 

Read More: How to Day Trade on Robinhood

What Can I Trade? 

Depending on your trading strategy and the amount of money you have in your account, you can trade or short sell stocks on Webull. Webull also offers no-commission or contract fee for options contracts. 

Additionally, for traders looking to practice, but not trade, they offer paper trading so you can practice your trading strategy before risking money.

Additional Upgrades

You can add on additional premium data for an additional charge, including Nasdaq Basic, national best bid and offer, and international stock exchanges. 

Final Thoughts

There are tons of brokerages to choose from, and Webull is a great option if you’re looking for on-the-go trading tools. Unlike Robinhood, Webull allows short selling, and doesn’t require an additional subscription to trade pre-market or after hours. It is definitely possible to day trade on Webull, though it might be better for a more casual day trader.

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