Twenty years ago, the stock market was the exclusive territory of wealthy individuals, powerful asset management firms, and large institutional investors. Average people with average bank accounts didn’t bother with trading stocks because after broker fees and commissions, there was no chance of a profit.
The internet – and the subsequent rise of digital technology – changed everything. In 1995, shortly after Amazon got online, E-Trade launched a web-based trading platform. That first iteration of online trading was still too costly for average retail investors. Fees and commissions were equivalent to those of traditional brokerage firms. However, the idea inspired competition in the online trading space, and within ten years there were more than a dozen platforms to choose from.
The next generation of online brokerage firms found new ways to generate revenue, and most basic fees and commissions were eliminated for retail investors. Suddenly, the stock market was open to everyone. New companies like Robinhood, tastytrade, and WeBull followed E-Trade’s lead with digital trading platforms, and established firms like JP Morgan, Vanguard, and TD Ameritrade added online account options.
The trouble is finding the best online broker based on individual needs. Some platforms require minimum balances, some are geared towards experienced investors, and some lack selection – for example, they don’t offer ETFs or mutual funds.
On top of that, it’s difficult to determine which platforms have implemented current cybersecurity measures – and there is always the question of stability. Are account-holders covered by SIPC (Securities Investor Protection Corporation) if the platform fails? In short, are online trading platforms like Robinhood, tastytrade, and WeBull safe?
What Is WeBull?
Robinhood was founded in April 2013, and tastytrade (originally tastyworks) has roots that trace back to 2011.
WeBull is a more recent addition to the online brokerage space. The platform was founded in May 2017 by one of Chinese e-commerce giant Alibaba’s former employees, Wang Anquan.
WeBull’s goal was to offer retail investors access to stocks, exchange-traded funds (ETFs), options, and cryptocurrency in one convenient location with a special focus on keeping transactions affordable.
WeBull is similar to its online brokerage peers in that it doesn’t charge investors for stock and ETF trades. However, it sets itself apart from the others by offering no-fee options and crypto trading.
WeBull has no minimum balance requirements, and there are plenty of tools and resources for general investing education, as well as research into particular stocks and cryptocurrencies.
These features have made WeBull a popular choice for novice traders and traders interested in exploring multiple asset types.
Is WeBull Legit?
Occasionally, those new to the WeBull brand are concerned about WeBull’s legitimacy. Its background diverges from the Silicon Valley tech legends that launched in founders’ garages. Though WeBull’s headquarters are located in New York, the parent company, WeBull Corporation, is based in the Cayman Islands.
WeBull isn’t a US company – it is owned by Fumi Technology. Fumi is a Chinese holding company whose primary investors are Chinese. Fortunately, the fact that WeBull’s parent company is Chinese doesn’t affect consumer protections for US account holders.
As with US-based traditional and online trading firms, WeBull clients are protected by the SIPC and the FDIC (Federal Deposit Insurance Corporation). The SIPC insures brokerage account holders up to $500,000, and the FDIC insures deposit account holders up to $250,000.
Is WeBull Safe For Beginners?
WeBull caters to traders who are just starting out by providing an extensive collection of education and research tools. One of the platform’s most interesting features is “paper trading” or a modeling tool that investors at all levels of experience can use to test strategies before risking their cash.
It’s fair to say that WeBull is safe for beginners because it recognizes the pitfalls that are most likely to cause losses for new investors. The platform takes care to educate account holders on risks, and it offers resources specifically designed to protect beginners from falling victim to common errors.
If WeBull doesn’t charge fees or commissions on stock, options, cryptocurrency, and ETF trading, the obvious question is how does WeBull make money? It’s not from per-contract fees on options trades – WeBull may be the only online brokerage firm that allows those transactions free of charge.
Instead of charging fees and commissions, WeBull makes money through alternative sources of revenue that are available to online brokerage firms. For example, there is an interest charged to margin accounts that ranges from 5.49 percent to 9.49 percent. There are also per-trade fees charged for a handful of transaction types, including shorts and margin trades.
On cryptocurrency trades, there is a one-percent spread between bid and ask prices, though there is no transaction fee per se. WeBull also makes money by charging for subscriptions to market data, and it receives payment for order flow (PFOF) – a practice that is common in the industry.
Pros and Cons of WeBull
Though WeBull offers the same standard features as other advanced online trading platforms and it even has a few advantages over its competitors, it isn’t without drawbacks. This summary of WeBull pros and cons makes it easy to compare online brokerage firms:
No commissions for stock, ETF, and options trading
No options per-contract trade fees (unique as compared to peers)
Educational tools and resources
Intuitive user interface
Tools for screening, research, and analysis
Limited selection of assets – WeBull does not support trading of bonds, futures, mutual funds, OTC (over-the-counter) stocks, or foreign exchange
Unlimited day trading is only available for accounts with a balance of $25,000 or more
WeBull does not offer managed accounts
With those pros and cons in mind, the next question is how does WeBull compare to other platforms such as Robinhood and tastytrade?
WeBull vs Robinhood: Which Is Best?
Robinhood is one of the most recognized self-directed trading brands, so it is one of the first platforms investors consider when opening an account. But should they? Is WeBull better than Robinhood? When it comes to the basics, the two are virtually interchangeable. Neither has an account minimum, and neither charges commissions on ETF, stock, cryptocurrency, and options trading.
Both platforms are designed to make trading simple for users. Interfaces are intuitive, and views are clear and uncluttered. WeBull allows for a bit more customization, which can be important for more experienced investors. Both are available as mobile apps, and the apps offer equivalent functionality.
Generally speaking, Robinhood and WeBull reviews suggest that WeBull has a wider selection of research and analysis tools that are important to expert traders. Though beginners do fine with WeBull, Robinhood can be more comfortable at the start of a new investor’s journey.
Why We Prefer tastytrade
WeBull and tastytrade invite a different sort of comparison, as both are designed to meet the needs of experienced traders. Neither charges fees or commissions for stock and options trades, though tastytrade does have a $0.50 per contract fee for options transactions.
Where WeBull doesn’t offer futures trading, tastytrade does. However, tastytrade is limited in terms of fixed income assets. Both have in-depth tools and resources for investors, but tastytrade offers features that WeBull can’t match. For example, there is no comparison between tastytrade and WeBull when it comes to educational content – tastytrade’s library outshines WeBull’s in every way.
Another plus is that tastytrade has tools specifically designed to support derivatives traders. In addition, WeBull’s high minimum balance requirement to be eligible for free unlimited day trading makes tastytrade the preferred platform for that active traders. The biggest downside to tastytrade is that it doesn’t have the same robust selection of research tools, screeners, and market news that is offered through WeBull.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.