Webull vs. Robinhood: What’s the Difference?

Tue Jun 1, 2021, 05:36 pm | by Charles Munyi | No comments

More millennial traders are turning to online brokerage apps to invest in stocks. In addition, trading through online platforms is cheaper since you don’t have to pay commission fees. Webull and Robinhood are two of the most popular brokers and for a good reason.  They have both revolutionized the trading scene. But what sets them apart?

The main difference between Webull and Robinhood are the features. Robinhood has an easy-to-use trading platform. This feature makes it a favorite for young traders still learning the ropes. On the other hand, Webull meets the needs of sophisticated traders. It offers better tools and charts for analysis.

Both these platforms are low-cost mobile investments. But, ultimately, the choice depends on individual needs and preferences. This article compares the two platforms and helps you decide which is the best for your needs.

Overview of Webull and Robinhood 

Webull has been around since 2017 while Robinhood was founded in 2013. In that short space, they have cemented their places as the best trading platforms. To fully appreciate this feat, you must first look at their incredible journey to the top.

Robinhood

Robinhood is the older of the two platforms. The company first burst into the scenes in 2016, when they secured 1 million users. However, the idea was born much earlier in a dorm room at Stanford. Founders Baiju and Vlad had the vision to bring trading to millennials that Wall street firms ignored. So the pair moved back to California from New York and launched the Robinhood app in 2014.

Although Robinhood wasn’t the first app to offer 0% commission, they made the most noise. Soon everyone was signing up, and their user base steadily grew. It soon became a favorite and opened up the world of finance to young investors. Robinhood is best suited for:

  • Beginner stock and day traders
  • Crypto traders
  • Mobile traders 

Webull

Webull came into the picture to provide direct competition to Robinhood. Wang Anquan founded the company in 2017. Wang is a seasoned business executive who has worked at Alibaba. Webull headquarters are in New York. However, a Chinese holding company by the name of Fumi Technologies owns it.

In addition to charging no commission, the founders wanted to make trading easy. It also offers some advanced tools for analyzing stocks. This combination makes Webull appealing for both beginners and veterans. The platform has earned the platform a total of 2 million users in the past years. This platform is best for:

  • Mobile traders
  • Beginners
  • Day traders who want a cheaper option.

Costs and Fees

Mobile investment platforms are so popular because they charge zero commission. Both Webull and Robinhood make their money through paid subscriptions and various fees. Here is a breakdown of different costs you should know about in the two platforms.

Webull Costs and Fees

Webull charges no commission on stock or Exchange Traded Funds (ETF). However, they must make their money elsewhere. Users pay a spread and the Securities Exchange Commission (SEC) transaction cost. 

This usually amounts to just pennies. Webull also doesn’t charge the user for transferring money in and out of their accounts. However, this only applies if you are using ACH. Domestic wire transfers cost $25 for withdrawal and $8 for deposits.

That cost goes up if you use international wire transfers. Deposits will cost you $12.5, while withdrawals cost users 45 per transaction. For margin trading, users pay a 6.99% interest rate. The maximum interest payable is $25,000.

Robinhood Costs and Fees

Robinhood charges no commissions on all trades, including crypto and options. Instead, like Webull, they make their money from rebates from market makers. However, this doesn’t mean you don’t pay at all. 

Robinhood charges a fixed $5 monthly fee for margin trading. Users must buy the Robinhood Gold to access this feature, and you can borrow the first $1000 of margin interest-free. 

Once you exceed this limit, a 5% margin rate kicks in. Robinhood charges nothing on transfer. However, you can only fund your account through ACH. Wire transfers are not available.

Tools and Features

Tools and features are crucial factors when deciding on a trading platform. The more the tools, the easier it is to trade. Tools include charting, risk management, and trading simulators. On the other hand, features refer to the functionality of the platform. Here are the tools and features of Webull and Robinhood.

Tradable Asset Classes

Webull only caters to the most popular markets. The available markets in Webull are stocks and ETFs. It doesn’t offer markets like crypto, mutual funds, and forex. For that, you may need to sign up to a different platform. Short selling is also an option for Webull users. 

Beginners may want to practice and get a feel of the interface before committing real money. Webull has a paper trading account where you can hone your skills.

Robinhood has slightly more tradable assets than Webull. Users can access stocks and ETFs at zero commission. Additionally, Robinhood offers access to options, crypto, and fractional shares. Unfortunately, there is no access to bonds, forex, and mutual funds. 

This can be a problem for people who want diversity. However, for most beginners, the limited choice is a good thing. It helps them perfect one market before trying out another.

Ease of Use

Trading can be challenging at the beginning. However, grasping the concepts is much easier if the interface is user-friendly. Both Webull and Robinhood have desktop and mobile apps that you can download for free. 

Both platforms are generally easy to use and load funds instantly. However, when it comes to the interface, Webull has a slightly steeper learning curve. The trading indicators and charts can be intimidating to a beginner. 

However, once you grasp the basics, you should have no problems with the platform. Robinhood edges out Webull but only slightly. The design is sleek and takes very little time to understand. 

Security

Security is crucial in online trading. A wrong move and you could lose all your investments in a matter of seconds. In addition to site protection, security also includes registration and insurance. So do the two compare?

Securities Exchange Commission (SEC) recognizes Webull as a broker-dealer. Additionally, Webull LLC is a member of the Securities Investor Protection Corporation (SIPC). The SIPC protects Webull user accounts should the company become insolvent. 

To top it all off, all user accounts have encryption and password protection. So unless you mess up, you have nothing to worry about — SIPC also protects Robinhood. It’s comforting to know that your investment is safe even if the company goes under. 

Robinhood is also registered by the SEC as a broker-dealer. They must therefore play by rules set out by the SEC. All accounts have industry-standard protection that includes encryption and two-factor authentication. 

Trading Tools

Modern trading is fast-paced and is constantly changing. Therefore, even seasoned traders need all the help they can get. Trading tools make it easier for an investor to identify opportunities for profitable trades. Webull and Robinhood offer the essential tools for trading.

Of the two platforms, Webull has better research tools. Webull users have free access to real-time U.S market data. You can get everything, including live quotes, balance sheets, and cash flow reports. 

You can also research other markets not offered by Webull, like crypto and forex. To top it all off, users get live news updates from reliable sources such as Bloomberg and CNBC.

Robinhood users are at a slight disadvantage when it comes to research tools. You will have to look for live data from external sources like Yahoo Finance. This is because Robinhood only offers standard research tools. However, you can gain access to better research tools if you upgrade to Robinhood Gold.

Account Types

Trading accounts fall into two main groups. The first and most common is an Individual taxable account. The second option is an Individual Retirement Account (IRA). These two accounts have different taxation rules. 

Taxable accounts have benefits including, penalty-free withdrawals and no income limits. However, an IRA account allows the user to claim tax deductions. Unfortunately, Robinhood only offers individual taxable accounts. The lack of options means a user cannot take advantage of the benefits that come with IRAs.

On the other hand, Webull offers all account types. Users can opt for individual taxable, traditional IRAs, Roth IRAs, and roll-over IRAs. You can even invest in a different account to get the best of both worlds.

Customer Service & Education

There is a glaring difference between the two when it comes to customer service. Webull has several customer support options, including email, phone, and in-app chat. You can also reach them on these options at any time. 

On the other hand, Robinhood offers little in this area. It is not clear what number reaches customer support. They do not have phone support. Reaching them by email also takes forever. The in-app chatbot offers little to no assistance. 

This can be frustrating, considering the app crashes during peak trading hours. This is an area Robinhood is regularly getting criticism. Webull comes on top by a mile in customer service. However, the two are neck and neck when it comes to educational resources. 

Both platforms have inbuilt Robo-advisory tools. It helps navigate the platform the first time you set it up. Robinhood Learn is an educational hub that teaches the basics. But, Webull users have a slight advantage thanks to paper trading.

Final Thoughts  

Webull and Robinhood are equally matched in most of the crucial areas. Both platforms offer commission-free trading and are perfect for young investors. Ultimately, the choice depends on your needs. Choose Webull if you want paper trading, better tools, and different account types. Similarly, choose Robinhood if you wish for more tradable assets and low-cost margins.