Webull vs Robinhood: Which is the Best Low-Cost Online Brokerage?
Imagine being able to trade stocks, options, cryptocurrency and exchange-traded funds without paying a penny in commissions or any hidden fees. Forget about imagining it; it’s already here.
Over the last decade, the commission costs for trading stocks have tremendously decreased. Now, we are at a point where commission-free trading is available on many different platforms. For the average retail investor, there has never been a better time to invest with these free cutting-edge platforms.
These advances in technology and systems have allowed platforms such as Webull and Robinhood to thrive. These are two of the most popular free investing platforms out there today. In this article, we are going to compare the Webull and Robinhood platforms. We will be identifying where each platform shines as well as where each platform could improve.
These apps are changing the face of trading, and we have a lot to tell you about each of them. Ultimately, it’s your choice, but we are here to help you make an informed decision.
Robinhood vs. Webull: Summary
- Both Webull and Robinhood offer $0 commission trading with $0 minimum.
- Robinhood is designed for complete beginners, so intermediate and advanced traders will find the platform to be watered down and lacking in research tools.
- Webull offers research tools above and beyond Robinhood, making it a better option for informed, research-oriented traders and investors.
- Webull offers a trading simulator and Robinhood does not. We feel this is a handy feature, especially for beginners.
- Both platforms fall short when it comes to customer service, which is something most people expect among free trading apps.
- Neither platform is a good fit for passive or long term investing. For that, we recommend checking out M1 Finance.
- Investing Simple readers can get a FREE STOCK from Webull when they sign up using our link and fund with $100!
What Is Robinhood?
Known as the app that pioneered commission-free trading, Robinhood opens doors for beginning investors looking to get their feet into the game without losing money before they even jump in.
Experts designed this platform with beginners in mind. It is meant to be the most straightforward trading platform out there. As a result, intermediate to advanced traders often find this platform to be lacking when it comes to research tools, order types, and technical indicators. Still, if you are looking for a simple platform to trade commission-free, it is an excellent option.
About ten years ago, two friends and roommates (and aspiring finance wizards) at Stanford University launched Robinhood. Following graduation, they headed to New York City, where they had great success building two finance companies selling trading software to hedge funds.
Along the way, as they gained familiarity with the system in the world of finance, they realized that big Wall Street firms pay effectively nothing to trade stocks, while most Americans must pay up to $10 for every trade. They made it their mission to find a way to give everyone – yes, even people without significant wealth – access to getting into the financial markets. Two years later, they headed back to Cali and founded Robinhood, a company that leverages technology to encourage everyone to participate in the larger financial system.
How Does Robinhood Work?
It’s startlingly simple to open a Robinhood account right on your smartphone (or online). Just plug in a few answers, like your contact info and how you’ll fund your account, and in less than an hour, approval notification will be sent to you by Robinhood. Then it’s onto the next step: launching your soon to be stellar investments.
Clearing by Robinhood was the next step in curtailing service fees. Now, Robinhood operates its clearing system, chipping away at many of the service’s account fees. How does this benefit you? If you used to pay $10 for broker-assisted phone trades, that fee is now zero. What’s more, Robinhood whittled down any bank reversal fees to $9 from $30. Remember, every dollar you save means more cash you can funnel back into your trading account.
How Does Robinhood Make Money?
According to the site, they generate revenue from Robinhood Gold, its margin trading service, which starts at $5 a month; interest from customer cash and stocks, much like a bank collects interest on cash deposits; and rebates from market makers and trading venues
Robinhood allows users to trade stocks, ETFs, options, and cryptocurrency completely free. There are no strings attached or hidden fees of any kind.
Simple App Design
They have the most straightforward user interface of any investing app we have tested. This is a pro for some and a con for others. We can 100 percent say that Robinhood is a beginner-friendly app.
Robinhood Gold allows you to take advantage of several different features. It gives investors who can tolerate more risk the ability to trade on margin, which is also known as borrowed money.
You can increase your buying power by trading on margin. Robinhood extends you a loan to purchase stocks relative to your account value. You need to have at least $2,000 in your account to open a margin account. It also allows you to have instant deposits from your bank and professional research reports from Morningstar.
You must opt into the service, which has a flat monthly fee based on margin (Robinhood refers to this as buying power) as well as your account size.
Margin trading is hazardous, and beginner investors should not be using it. If you’re new to investing and wary of risk, we say skip this option for now until you’re familiar with all the ins-and-outs.
Once you’re ready to go, you won’t be bogged down by account verifications. Robinhood uses instant verification with many major banks. Bank transfers of up to $1,000 are available immediately for investing, and the same goes for profits of up to $1,000 from selling stocks. Deposits more substantial than $1,000 will take around five business days to process. Want to invest in a schedule? You can set up automatic deposits out of your bank account weekly, biweekly, monthly or quarterly.
Robinhood Minimum & Fees
Just like with Webull, this is a 100 percent free trading platform. They do not charge any hidden fees, and there are no strings attached. Don’t have the cash to open a sizeable account? No worries. Robinhood doesn’t have a purchase minimum, which means people can get started investing right away. Of course, to invest, you’ll need enough to purchase the investment you have your eye on. But you can start small, then gain momentum as you go along and become more confident and acquire more know-how.
Even though there is no minimum balance to open an account, however, you do need to have $2,000 to open a margin account.
- Easy to use, beginner-friendly platform.
- Ability to trade stocks, ETFs, cryptos, and options.
- Access to margin through Robinhood Gold.
- Free pre-market and extended-hours trading.
- The app only supports basic order types.
- Minimal research tools and data available.
- No trading simulator.
- No sign-up incentive from us.
- Do not offer retirement accounts.
But here’s a real perk: there’s even a way to get free stock. All you need to do is have a friend invite you, and Robinhood will add one share of free stock to your account when they approve your brokerage application. You’ll be able to keep the stock or sell it after two trading days.
How does Robinhood choose which stock you get? They select the shares of free stock randomly from their inventory of settled shares. The keyword here is RANDOM. The Robinhood people choose the shares randomly, so you may not receive the same stock as others who open accounts at the same time as you do.
The value of the share you receive may be anywhere between $2.50 and $200 and fluctuates based on market movements. Robinhood selects companies based on the price of each share, from the most popular and highest total value companies on Robinhood.
And sorry, there’s no way to beat the system and open two accounts for free shares. Robinhood only allows a single Robinhood account per person!
Choosing The Right Platform
Many online stock apps offer up-to-the-minute education and valuable advice in much the same way a stockbroker would do. So do your homework ahead of time. The most successful Robinhood users do the research and are transparent in where they want their money invested. Trades can be executed in a flash, as Robinhood handles market orders, stop orders, limit orders and stop-limit orders.
But enhanced info for users is in the works at Robinhood, as they now offer analyst ratings from an independent investment research company. You can also scour lists of the top movers and earnings calendars. Want to know how another fledgling (or more advanced) investors are doing? You can take a peek at the most popular purchases, as well as how many got in on the deal and how much each investor paid per individual share.
What Is Webull?
Webull is a commission-free stock and ETF trading platform. Experts designed Webull for the active trader who is looking for a more dynamic user interface than most free platforms are offering. This platform has features specifically for traders such as technical indicators, research agency ratings, financial calendars, and more.
With easy access to margin, research tools, and live data, Webull has built an ideal platform for active traders. Keep in mind; it is not designed for long-term passive investors. Instead, it’s for those of us who are actively trading.
Since Webull is putting so much in front of you at your fingertips, it can be overwhelming if you are a complete beginner. Robinhood has created a true beginner-friendly platform, but most intermediate to advanced traders agree that it lacks in many areas. Even though there are so much information and data packed into this app, Webull still maintains an excellent user interface. The app itself has a great design, and it is effortless to navigate. You can read our webull in-depth review here.
BONUS: Free Stock!
Are you interested in getting a completely free stock? Webull is offering Investing Simple readers who open an account and fund it with $100 a utterly free stock. The value of this stock is up to $300. It is based on a lottery system.
Webull is a great trading platform for beginners. They even offer a trading simulator that lets you practice trading without using real money. The only catch is you have to use our link in order to get the free stock. If you simply download Webull from the app store, you will not get the free stock.
How Does Webull Make Money?
A lot of people are wondering how Webull makes money, and for a good reason! There are many free trading apps out there these days. I am here to tell you that they are not, in fact, operating a charity. Webull makes money in several different ways outside of charging customers fees or collecting commissions.
- They offer paid subscriptions if you are looking for real-time global market data.
- Webull offers margin accounts, allowing them to earn margin interest.
- They can earn interest on all the idle cash held within brokerage accounts.
- By directing order flow, they earn fractions of a cent on every trade placed.
Just to be clear, they do not charge any fees or commissions to customers!
Real-Time Market Data
Webull is most well-known for the data. In fact, they were initially just an app for investment research before they added the trading feature! Webull offers real-time market data for all US markets. This is particularly important when it comes to trading, as your goal is to capitalize on very quick moves in the market.
Unlike many trading platforms that have delayed quotation, Webull is sharing this data with traders through the app in real-time. For those looking for real-time data for global markets, Webull offers this for a monthly subscription. Remember, however, that you do not need to pay for any subscriptions to access real-time data on US markets.
You do not need to pay for any subscriptions to get access to real-time US market data. Real-time data is essential when you are using it to make trading decisions. As a trader, you are often looking to capitalize on micro-trends that can happen at the blink of an eye. Delayed reporting of price data could be very costly for an active trader.
Technical Indicators & Order Types
Traders rely on technical analysis or chart patterns. Webull offers close to two dozen technical indicators available at the click of a button. They also offer a number of advanced order types that you do not see on other free platforms. This includes OCO, OTO, and OTOCO.
This is one of the features that are totally unique to Webull. To be honest, the fact that other trading apps have not picked up this ball and run with it came as a surprise to us.
For beginners entering the stock market, paper trading is a very important step in the process. The trading simulator allows traders to practice without using real money. Instead, you are using fake money and placing trades just like you would with real money. This allows you to test out trading strategies and become more familiar with the platform risk-free.
Commission Free Short Selling
Most free brokerage accounts do not offer short selling. This is an advanced trading strategy where you bet against a particular stock. Not only does Webull offer short selling, but it is also available commission-free. Short selling must take place in a margin account. In order to open a margin account, your account balance needs to be $2,000 or more.
One of our favorite features was the analyst ratings. Webull offers a variety of research tools for both the technical trader and fundamental investor. This includes press releases, earnings reports, earnings dates, dividend dates, key financial documents, analyst ratings, and more.
Analysts make buy, sell, and hold recommendations about stocks. This can be very helpful to you when you look at making buying or selling decisions. They present this in a very organized fashion, and it is possible to get a good overview of a particular company in a matter of seconds through the app.
Extended Trading Hours
Most free trading platforms do not offer extended hours trading. Instead, you can only place trades during market hours which are 9:30 a.m. to 4:00 p.m. EST from Monday to Friday. Those that do offer extended trading hours frequently charge a fee for this service.
Webull offers free extended hours trading to all users. You can place trades during pre-market (4:00 am to 9:30 am EST) or after-market (4:00 pm to 8:00 pm EST) by placing a limit order.
Fundamental investors study the financial health of a company to make a long-term bet. They look at key financial documents like the balance sheet, cash flow statement, and income statements. They also look at key metrics like earnings per share, PE ratio, and more!
Webull places all of this data at your fingertips. You can view the numbers from the key financial documents as well as see visual graphs of the overall trends. They also offer helpful comparison tools that compare the metrics of one company to another in the same industry.
You will be able to answer questions like:
- Is the company beating earnings expectations?
- Are profits and revenue increasing?
- What are the assets compared to the liabilities?
- How does the overall valuation compare to peer companies?
Not everyone follows their intuition when making investment decisions, and that’s probably a good thing!
Many people rely on something called technical analysis, which is reading the charts and following the trends. Webull offers over 20 different technical indicators on the platform. Traders use these charts to identify microtrends to capitalize on. You will not find this many indicators on other free trading platforms out there. This includes popular indicators like moving averages, Bollinger bands, volume, candlestick charts, MACD, RSI, and more!
Another useful feature for users is the financial calendar. This calendar shows you important upcoming dates for a company, including dividend payments and earnings reports. Beyond that, there are also calendars that show what companies are reporting earnings each week as well as what are the up and coming IPOs or initial public offerings.
Watchlists And Alerts
Webull allows you to create watchlists of stocks that you want to keep an eye on! You can also set price alerts that will allow you to get notifications from Webull when the price reaches a certain level. For example, if you were looking to buy a stock for under $100, you could set a price alert for when it reaches that level and receive a notification from Webull.
Webull Minimum & Fees
To echo what we said earlier, this is a 100 percent free trading platform. They do not charge any hidden fees, and there are no strings attached. There is no minimum balance to open an account. However, you do need to have $2,000 to open a margin account. There are fees charged by the SEC and FINRA for each trade. Webull charges these fees on every trade across all brokerages. It is important to understand that Webull passes these fees directly to these regulatory agencies, and Webull does not receive any of the money. You will pay these fees regardless of what brokerage you use.
There is a $0 fee for incoming ACATS stock transfers and $75 fee for outgoing transfers. For those funding the account with a wire transfer, the initial transfer in is free. After that, there may be fees associated with this wire transfer.
ACH or Automated Clearing House transfers are completely free. This a direct electronic transfer from your bank account to Webull. You can electronically transfer money to and from Webull at any time fee-free.
- Get a FREE STOCK when you open and fund with $100!
- Trades are 100 percent commission-free, including short selling.
- Research tools are in place for both technical traders and fundamental investors.
- The trading simulator lets you practice trading risk-free.
- Free extended hours trading pre-market and after-market.
- Real time data available on US markets for free.
- Might be “information overload” for complete beginners.
- No retirement accounts, just the taxable accounts.
- No cryptos or options.
- Only one account type available.
- No web-based platform, the app only on the phone.
- No portfolio guidance i.e. pre-built
Are Free Trades Legit?
Webull and Robinhood are offering a very similar platform for investors. Both are leveraging technology and operating paperless businesses to be able to offer investors a commission-free and fee-free investing experience. Instead of charging a commission on trades like a traditional brokerage, they make money in a few different ways:
- They earn interest on the uninvested cash held within brokerage accounts.
- They both offer paid subscriptions (Robinhood Gold, Webull Global Market Data).
- By lending shares out to short-sellers, they can earn interest in the process.
- By directing order flow, they can earn a fraction of a cent on each trade placed.
- Both offer margin trading, allowing them to earn margin interest.
The old saying goes, if it seems too good to be true, it probably is. The good news is that it is just not the case with these free investing platforms! They carry the same SIPC insurance as the mainstream brokerages. They simply found creative ways to make money outside of charging customers fees and commissions.
Webull vs. Robinhood Verdict
Webull and Robinhood both offer commission-free trading with no minimum account balance. These are the only two real similarities. Beyond that, they each offer a totally different experience for investors.Robinhood is designed for complete beginners who are looking to trade stocks, ETFs, cryptos or options, all commission-free. Producers designed Webull for intermediate to advanced traders looking for more technical or fundamental data that you will find with most of these free trading platforms. One thing you will find is that they all lack solid customer support. Since they have to cut costs and operate lean business models, they do not offer any kind of phone support. You are not able to call and ask questions or place trades over the phone. Overall, we think Webull has the slight upper hand because they offer a trading simulator, as well as many research tools for both active traders and long-term investors. One feature we would like to see added in the future for both is the ability to purchase fractional shares. At the end of the day, both platforms are 100 percent free, so you can try them both and see which one is a better fit for you!