Does Webull Allow Day Trading?

Webull is an online brokerage platform that is especially popular among beginners in trading. But as you may know, all brokerage and stock markets put limitations on day trading in order to protect new traders. If you are new to Webull, you probably want to know does Webull allow day trading. Here we will explain all about your trading options on Webull. 

Does Webull allow day trading? The answer is yes, Webull allows day trading. But day trading is regulated by Pattern Day Trading rules and order types you place in your trade. Webull has several order types, and the rules of day trading will be different for each of these types.  

Also, Webull offers two types of accounts, and depending on which one you have funds, day trading limitations will be different. In order to fully understand how Day Trading works on Webull, you will need to go through all the rules and fully understand how Pattern Day Trading works. 

What is Day Trading?

To fully understand the rules of day trading on Webull, first, you need to know what day trading is. Simply put, it is when one trader buys and sells a security in one day. This is a commonly used strategy for investors to make a profit on short-term price fluctuations in one day. And even though this strategy can earn you money, it can also make you lose. This is why the Securities and Exchange Commission (SEC) has made the day trading rule in order to protect new investors from losing money.  

Does Webull Allow Day Trading? 

As we already answered, Webull allows day trading on its platform. Webull is regulated by FINRA and the US Securities and Exchange Commission and must impose the same rules. So you can day trade on Webull but with limitations. These limitations will depend on order types, what kind of account you have, how much balance you have in your account, and the Pattern Day Trading (PTD) rule. Note that, on Webull, pre-market and after-hours trading on the same trading day will be taken into account when calculating how many trades are left. However, selling shares you have from the previous day will not be taken into count. Also, you will have to know how to properly use different order types Webull has because your trade will be different with each one. Here is a list of order types Webull offers: 

  • Limit buy,
  • Buy loss,
  • Sell stop limit,
  • Trailing stop-limit order,
  • Market sell,
  • Buy stop,
  • Limit sell,
  • Buy stop limit,
  • Stop loss,
  • Market buy,
  • Trailing stop loss.

Pattern Day Trading Rule 

So, what is a Pattern Day Trading rule? This rule defines a Pattern Day Trader – an investor who executes four or more day trades in five business days on a margin account or three day trades in one week if they have less than $25,000 on a margin account. SEC has made this rule which compels you to maintain $25,000 on your balance if you wish to trade more than three times a week on a margin account. Also, if you have more than $25,000, you will have no limitations on day trade. So, in essence, day trading will limit you to a single day, while the PDT rule will limit how much you can trade in a week. 

Pattern Day Trading on Different Accounts

Webull offers two types of accounts – a margin account and a cash account. A margin account allows you to margin trade, which means investors will use borrowed funds to make trades. This account allows day trading, but if you have $25,000 in your account, the same amount needs to be on your account after day trade is closed. 

A cash account is an account that only allows you to trade with settled funds, meaning you can not trade with borrowed money. On cash accounts, there are no limitations in making day trades, and you can make an unlimited amount of trades for the exact same amount of money you have on your account. However, in a cash account, you will need two business days for your funds to fully settle. Take a look at differences in cash and margin accounts regarding the day trading.

Short sellingMargin TradeDay Trade
Margin account $0-2,000NoNo3-day trades in 5 business days
Margin account $2,000-25,000   NoDay trade up to 4 times3-day trades in 5 business days
Margin account More than $25,000YesOvernight up to 2 timesunlimited
Cash account No No Not applicable 

Is It Good to Day Trade On Webull? 

There are many advantages Webull offers to its users when it comes to day trading. For starters, Webull charges 0% commission on options, stocks, and ETFs. That allows investors to trade in smaller amounts without worrying about paying too much money on fees. Another advantage of Webull is paper trade, where new traders can learn to trade in the demo version, allowing them to see how the market works. 

Even though you will not pay fees on transactions if you trade on margin, where you borrow money from Webull, you will have to return these funds to Webull with interest. Webull interest rates on margin trades are among the lowest. Also, if you day trade, you will have to pay a fee to SEC and FINRA.

Should You Day Trade? 

Even though day trading can be quite lucrative, it can also make you lose a lot of money if you don’t know what you are doing. Day trading is risky and demands deep knowledge of market price fluctuations. So if you are not experienced in trading, you could first start learning using Webull’s paper trading options and then move to a cash account and see how good you are.