Recently, pricing wars between some of the largest US brokerages and trading platforms have driven commissions for trading stocks down to virtually nothing. Robinhood is credited with starting the trend of commission-free stock trading a few years ago. Since then, countless brokerages have followed suit.
Investors are benefiting significantly from this competition in the form of decreased prices and lucrative signup incentives. As companies compete for investor dollars, investors are able to take advantage of the platforms with the best offerings.
In this article, we compare two of the leading commission-free trading platforms, Webull and Charles Schwab.
Charles Schwab is one of the longest standing and most trusted brokerages out there, now offering commission-free trading.
Webull is a new kid on the block with a sleek app aimed at millennial investors and short-term traders.
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Webull Review 2022: Best Free Investing App? |
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Charles Schwab Review 2022: Best Brokerage? |
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Invest With Charles Schwab |
Webull aims to merge leading investing research, trading tools, and data with an easy-to-use trading platform. It has done a solid job at this and overall has created a very user-friendly platform.
Many Robinhood investors decide to graduate to Webull if they decide to pursue a more active trading approach. This is because the tools and data provided by Webull go much more in-depth than Robinhood.
The app is optimized for active traders, however, many long-term investors will also find their needs met on the platform.
Webull is known for its simple design and beginner-friendly features. The beginner-friendly design does not take away from the research and data objectives of the platform. All of the data that most traders will need is available on Webull's trading platform.
Despite everything that is packed into this app, it is still easy to use and navigate. Younger investors will likely prefer the interface of Webull to that of Charles Schwab.
One of our favorite Webull features is the ability to paper trade. Paper trading is essentially trading with "fake money" to test out your strategies without putting real money on the line.
Webull gives all users $1,000,000 of fake money to paper trade with. This can be an effective way to get a feel for how the platform works as well as hone your trading skills without any risk.
After signing up for a Webull brokerage account and setting up direct deposit, you will get 2 free stock valued up to $2,300.
You'll get your first free stock just for opening the account. Then, when you connect your Webull account to direct deposit and transfer your first amount (of any value) you'll get an additional free stock.
The free stocks are selected on a lottery system, so odds are each stock will be worth about $10 each. But if you get lucky, there's a chance you'll score some stocks worth $1,000 or more!
There are no strings attached to these free stocks and you can decide to sell them immediately if you would like.
We find this signup incentive to be very generous. Competitor Charles Schwab does not offer a similar sign up incentive. However, Schwab does offer a referral bonus and commission-free option trades after certain conditions are met.
Promotions from Webull tend to change over time so click the button below to view the latest promotion from Webull.
With a Webull brokerage account, you can dabble in the following:
Are you interested in achieving financial freedom down the road and saving for retirement? Webull offers both Roth IRAs and Traditional IRAs to its clients that are 100% free. These retirement accounts also have a $0 minimum to get started.
By taking advantage of retirement accounts, investors can save on taxes and potentially pay no taxes on their investment gains. Retirement planning is an important step in financial freedom, so be sure you tackle this head on!
When a company goes public and sells its shares to the public for the first time, it'll typically do so through an IPO. In the past, only institutional investors and the ultra-wealthy could participate in IPO investing.
On Webull, investors will now have the ability to participate in IPOs and get in on investments in brand-new companies as soon as they are listed.
However, it's important to note that IPOs tend to be quite volatile, especially in the first few days of trading. As a result, you'll want to exercise caution in any IPO investing you choose to pursue.
Webull supports both pre-market and after-hours trading. On some other platforms, normal market hours (9:30 AM - 4:00 PM EST) are only supported.
This feature that Webull offers its clients allows them to take advantage of the 4:00 AM - 9:30 AM (EST) pre-market session and also the 4:00 PM - 8:00 PM (EST) after-hours session.
Keep in mind that outside of typical market hours prices tend to be more volatile because there are fewer buyers and sellers in the market.
In addition to incredible trading tools, Webull also offers great market research for investors to consult before jumping in. In the “Market” section of Webull, clients will find real-time quotes of the major indices and also interesting facts such as the biggest winners and losers of the stock market.
Webull also offers global market data, however, some market data is only available with a paid subscription. US market data is 100% free.
Access to data and research is one of the features Webull is most well-known for. Initially, Webull was just a research platform. It wasn't until later that the ability to trade stocks was added to the platform.
As a result, the platform has some of the most comprehensive data you are likely to find within a free stock trading app.
This type of research is not available on other popular trading apps like Robinhood or Public.
Another key area where Robinhood and other free trading apps fall short is the technical data. On Webull, you will find advanced tools like candlestick charts as well as over 20 different technical indicators.
This is useful for traders who make decisions based on technical stock analysis. Webull has research tools for fundamental analysis in addition to technical analysis.
To access the full suite of technical tools, traders should consider using the desktop version of Webull. While the app provides significant functionality, serious traders will want to take advantage of the Webull desktop platform and all of the tools Webull has to offer.
In general, Webull is a "trader-first" platform and the majority of features on the platform are tailor-made for stock traders.
Webull offers phone, email, and live chat support. Most questions can be answered by visiting the help center of the app, but if you can't find your answer you can reach out to them directly for support.
There is plenty of documentation to answer frequently asked questions. But in the case where human assistance is required, Webull has many options for its users.
Compared to many of the free investing apps out there, Webull's customer service has a definite advantage.
Webull can be downloaded from the Google Play Store, App Store, or directly onto your desktop for Windows and Mac users.
Many Webull users find the Desktop 4.0 platform is better for conducting technical research. This platform rolled out in mid-2020 and provides investors with an advanced interface for planning and executing trades.
Of all of the free desktop platforms we have seen for active traders, this one comes out ahead.
A very attractive part of Webull is its $0 commissions on stocks, options, and ETFs.
Rest assured that Webull is making plenty of money, but not through charging commissions to customers. For more information on how Webull does make money, check out this article!
There is no minimum deposit required to open up a Webull brokerage account. This is especially important for the investors who aren't quite ready to take the leap. No minimum requirement allows investors of all sizes to participate in the market.
Currently, to get your free stocks, all that is required is an initial transfer of any amount with direct deposit.
Webull provides up to 4x day-trade buying power and also 2x overnight buying power with margin accounts.
To qualify for margin, clients must have a minimum of $2,000 to apply.
It's important to keep in mind that while leverage can magnify gains, it can also magnify your losses. Investors should thoroughly research advanced strategies and trading on margin before putting their cash on the line.
Margin rates on debit balances vary between 6.99% and 3.99%. This rate varies depending on the amount of margin taken out by the investor.
The more margin that a client takes on, the lesser rate they will pay on that debt.
This brings us to our final fee basis for Webull, short selling.
Webull’s short selling fees, which are relatively small, are something to note for the investor who is more interested in shorting stocks rather than longing stocks.
Shorting is the act of borrowing shares at a high price hoping that the stock will decrease in value and then selling it back to the market at a lower price.
While this is a more complicated process than described, the essential takeaway is that when an investor shorts a stock, they are betting on the price decreasing in value. Margin fees apply when short selling since you are borrowing the securities.
Since 1973, Charles Schwab has been committed to putting its clients first. Through the good times and the bad, Charles Schwab has a track record of being persistent in its ability to provide award-winning service and expertise to its clients.
Achieving its clients' goals is Charles Schwab’s number one priority and it has remained committed to that since its founding in 1973.
With over $7.5 trillion in assets under management, Schwab has built an established base of investors on its platform. This is a unique advantage that Charles Schwab and other titans of industry have over smaller and newer players like Webull and Robinhood.
Schwab and others have been around for a long time and as a consequence have earned the trust of millions of investors.
However, because of their size, it can be harder for larger firms like Schwab to adapt quickly to changes in the industry. While many investing apps are able to add features and move quickly, Schwab users should not expect many updates or additions to the platform with a quick turnaround.
Because of this, users shouldn't expect an experience as sleek as that of Webull.
Schwab offers competitive fees and offers a wide range of investment features to meet a wide array of clients' needs. These features include stock trading, estate planning, retirement planning, and much more. We will explore these different features below.
This brokerage account gives investors access to more than 10 different asset classes. Each of these could play a role in helping investors achieve optimal portfolio diversification.
Users can trade the following assets of the Charles Schwab platform:
Schwab is known to many for its high-quality customer support. By offering support 24/7 online, over the phone, or by email, Schwab is acting on its “client first” policy. This includes keeping representatives on call if you run into any issues or simply have questions about the Schwab experience.
In addition, Charles Schwab employs thousands of financial advisors. This is a huge benefit that Webull simply does not offer. If you feel your situation is a little more in-depth and could use an in-person visit, Schwab has over 300 physical locations where you can visit to discuss your finances.
The ability to visit a physical location to discuss your finances with a professional is another advantage of Schwab over Webull. This is likely why Charles Schwab attracts an older investor class, many of who weren't raised with a DIY mentality.
Back in 2019, Schwab was granted the top award for self-directed investing from J.D. Power. This is a respectable feat and one that should be noted by big and small investors alike. With Schwab's research platform, investors have access to 3rd party data from companies like Morningstar and Credit Suisse.
Some popular self-directed tools include Schwab equity ratings, select lists of mutual funds and ETFs predicted to outperform their peers and other technical indicators from StreetSmart Edge.
StreetSmart Edge is Schwab’s downloadable technical charting platform. Schwab’s StreetSmart Edge platform lets you mark up charts, analyze trends, and gain an upper hand when deciding to make trades.
This research comes standard by giving your business to Schwab and is something that makes them stand out in a very crowded field.
Schwab is currently offering a referral bonus of up to $1,000 if you sign up using a referral link from a friend. These bonus amounts vary by the deposit amount. See below for the details:
In addition, users on the Schwab platform who transfer at least $100K are able to get free option contract trading for 2 years. This offer includes 500 commission-free online options trades with a limit of 20 contracts per trade.
This offer might not make sense for most, but if you've got the cash and the desire to trade options on one of the best brokerages, then this is your chance!
Schwab sets itself apart by offering several options including a Roth IRA, Traditional IRA, Rollover IRA, and Inherited IRA. These accounts and several others help investors plan for retirement and significantly cut down on taxes.
Similar to its brokerage platform, retirement accounts are completely free to use.
Investors often want to put money away for the future but keep it as liquid as possible. For these investors, Schwab's high yield savings account is a great option. Though at a lower rate than many cash management programs, Schwab offers a 0.05% yield on clients’ savings.
If having cash on hand but still earning interest is your goal, then Schwab offers just that with their high yield savings account.
Newer investors who are less confident in their ability to manage a portfolio might be interested in a robo-advisor. Through its full-service Robo advisor, Schwab will build, monitor, automatically rebalance, and diversify your portfolio across multiple asset classes.
Signing up is simple and following these steps will ensure that you get the best plan for your personal situation. Simply follow the steps below:
Though this platform is free of commissions and account minimums, there are a few fees that you should be aware of when using Schwab.
There is a $0.65 price per contract for options trades, which makes Schwab more expensive in this category than Webull. This does not, however, mean that Webull is the better choice for options trading. It's up to you to decide which is a better fit because cheaper doesn't always mean better!
Schwab requires between a $5,000 minimum for the most basic robo-advisor, and a $25,000 minimum for their premium robo-advisor. However, for the premium Robo-advisor, Schwab charges a one-time planning fee of $300 and you will pay a $30 per month advisory fee after that.
In our opinion, Charles Schwab offers a better overall platform for investors who are serious about accumulating wealth for the future. We feel that Webull offers a better offering for active traders with a superior desktop trading station and mobile app, and has a slight edge by offering no commissions on options trades.
Overall, Schwab offers a wider variety of assets including futures, mutual funds, and more. Schwab also has its free robo-advisor, Schwab Intelligent Portfolio. However, it comes with a minimum investment of $5,000.
Webull falls short by not offering dividend reinvestment or rebalancing tools. You will find all of these features with Schwab. However, this is to be expected since Webull is focused on the more active trader while Schwab gives more attention to long-term investors.
Lastly, Webull has somewhat of an edge with the signup incentive. If you open a brokerage account with them and fund it with any amount, you will get 2 free stocks. Schwab currently does not have a signup incentive for new users.
Both platforms are 100% free to sign up for though, so there's no harm in giving both of them a test drive, collecting your free stocks, and seeing which you prefer.
