A Beginner's Guide to Investing with the Webull Stocks App

When it comes to the stock market, Robinhood is likely one of the first names you've heard. However, Webull, a Chinese-owned competitor, has been gaining users as well.

There has been a surge in the number of investors who are entering the market to put their money to work in a wide range of investment vehicles during the past two years. And they can do so across a wide range of platforms. In addition to making the stock market more accessible, Robinhood and Coinbase have hauled in millions of cryptocurrency enthusiasts since their public debuts this year. Additionally, there are Robo-advisors such as Betterment and Wealthfront as well as newer trading apps such as Webull.

The following information is for those who have selected to trade on Webull.

What does the term “Webull” mean？

There are some similarities between Webull and Robinhood's trading platform. To put it another way, it's a younger company than the likes of Fidelity, Charles Schwab, and Robinhood, all of which were established in the last few years (2012.)

Users can buy and sell equities, exchange-traded funds (ETFs), options, and cryptocurrencies including Bitcoin, Dogecoin, and Shiba Inu coin on Webull, which is controlled by a Chinese holding company Fumi Technology.

Bloomberg News reported that the company had more than 2 million brokerage clients as of December 2020. However, Webull stated to Bloomberg that it was gaining users from Robinhood, a claim that was disputed. There was no response from Robinhood or Webull to Money's request for comment on their existing user base. In the third quarter of 2021, Robinhood's monthly active users dropped from 21.3 million to 18.9 million, a considerable decrease.

How much does Webull cost？

There are no commission costs at Webull when you purchase or sell cryptocurrency like Bitcoin or options. Robinhood made commission-free trading popular, and now it's standard practice across the industry, including at established firms like Charles Schwab and Fidelity. The SEC and FINRA may still charge very tiny costs, like $0.02 per trade, according to Webull's website, which states that these fees may still be imposed.

When it comes to making money, even platforms that don't charge commissions have to find a way. Here's how Webull operates:

Order flow payment. Apps that direct consumers' orders to high-speed traders to generate money are a controversial but frequent practice in the trading industry.

Loans for the purchase of stock. Short selling is a strategy used by certain investors to wager that the stock price of a firm will fall. To generate money, Webull lends investors' shares to short-sellers, who then sell those borrowed shares to third-party investors, expecting to repurchase them at a lower price at a future date.

Interest accrues on unused credit. Cash deposited into an account or dividends received are examples of free credit balance. By lending your money to third parties and collecting interest, brokers profit from your unused funds.

The interest that is accrued at the margin. Margin accounts, which may be opened by anyone with at least $2,000, allow you to borrow money to make stock purchases. As a result, customers have more purchasing power, but they also face greater danger. Depending on the quantity of the loan, Webull charges interest every month. The annual margin rate for a debit balance of up to $25,000 is 6.99%.

Users of Webull's trading platform can access basic U.S. market data for free, but they can also subscribe to more in-depth market data through a collaboration with NASDAQ called Level 2 Advance. According to Webull's site, users may better assess whether a stock is available or in demand at a specific price with the membership.

How to sign up for Webull

To open an account, you must be at least eighteen years old and have a current Social Security number on file (or Individual Taxpayer Identification Number). You'll also need to be a US citizen, have a permanent residency card, or have a visa to live in the US or a US territory. Webull will perform a light credit check on your file when you apply for an account, but this will not affect your credit score.

A Webull account can be created through the company's website or the Webull app. To open a personal account, you'll need to choose between cash and an equity account. If you've ever used a stockbroker previously, you're probably familiar with the concept of a cash account: Investing in stocks and other financial instruments comes at a cost to you. It's more complicated and hazardous to use margin trading since you borrow money against the investments you currently own, which increases your buying power but also increases your losses. There is a registration process for Webull users before they may purchase or sell cryptocurrency or participate in options trading.

A personal retirement account (IRA) is another option (IRA). Investors have the option to trade stocks and ETFs in their Webull IRAs, which are available in three different flavors: Roth, regular, and rollover.

Is Webull a safe place to invest？

Our customers are covered up to $500,000 ($250,000 in cash) if the brokerage goes out of business or its assets are stolen because Webull is a member of the Securities Investor Protection Corporation. Insurance for securities and cash up to a total limit of $150 million is provided by Apex Clearing, the brokerage's clearing firm. Maximum limitations for securities and cash are $37.5 million and $900,000 respectively.

If you're concerned about losing money in the market, keep in mind that this insurance won't protect you. There's no guarantee that the stock market will continue to perform well in the future, even if it is currently.

Market turbulence, like a slump due to investors' concerns about the high debt levels of one of China's top real estate developers, has continued to rise in recent months, despite the regular market volatility.

Furthermore, there are no signals that the bull market is about to come to an end. The S&P 500, the Dow Jones Industrial Average, and the Nasdaq all continue to set new record highs in the stock market. The S&P 500 gained 6.9 percent in October, while the Dow gained 5.8 percent and the Nasdaq gained 7.3 percent, respectively. The S&P 500 and the Nasdaq had their best monthly performance since November 2020 in October, despite the volatility of the month.

A large chunk of the increase can be attributed to the fact that third-quarter corporate profits were very robust. According to FactSet statistics, the third-highest year-over-year gain in earnings since the second quarter of 2010 was expected for the quarter ending Sept. 30.

Nevertheless, financial experts believe that a market correction, which they define as a drop in stock prices of 10% to 20%, will occur soon.

How to begin investing properly with Webull

Make sure you have a strong financial basis before you start investing. An emergency fund of three to six months of costs is typically recommended by financial consultants in the event of a financial disaster, such as losing your job or needing to replace your automobile. Your high-interest debt should be paid off and your employer's matching contribution should be at least up to their match.

Consider dollar-cost averaging if you decide to invest, which involves placing a certain amount of money into your brokerage account at a predetermined time interval. Jeff Corliss, managing director of RDM Financial Group, argues that $100 a month is a good starting point for new investors.

It is a good idea to invest in ETFs rather than individual companies when it comes time to diversify your portfolio.

As a result, “if you load up on one equity and it goes down, it can be pretty painful,” said Corliss in an interview.

Individual equities and cryptocurrencies, for example, are considered more hazardous and should only account for 2% to 3% of your overall portfolio, according to financial gurus.

It is possible to receive free stocks by investing with Webull.

If Webull is following Robinhood's lead, it appears to be offering free stocks in campaigns. In June, for example, consumers who opened a Webull trading account and deposited $100 or more received one free stock.

Webull allows you to place orders and monitor your positions on the go, as well as on a desktop platform that can be tailored to your needs. Like many other stock trading platforms, you may create a watchlist to keep track of the performance of stocks and funds you're interested in and see the top winners and losers of the day, just like other stock trading platforms.

If you're just getting started in the stock market, the website provides a wealth of information about specific stocks and funds that may be intimidating to a novice investor. Webull's paper trading function allows newbies to practice making trades before putting their money on the line (paper trading is a way to simulate buying and selling securities without actually using real money).