Webull is a trading platform for stocks and ETFs. It has no minimum cash deposit and does not charge trading commissions. It created this web space for traders who want better tools than those often found.
The platform puts all information at the trader’s fingertips, such as research agendas, financial calendars, live data and much more. To use Webull, you must select one of its two accounts: Cash and Margin. If you still haven’t decided which of the two is more convenient, we will compare Webull Cash VS Margin Account here.
What is a Webull Cash Account?
Webull cash account is a traditional one that allows the client to trade with deposited funds. All users must comply with cash settlement rules and non-daily transfers.
With this account, you can trade only with the deposited money. Therefore, it does not offer leverage, even if your account is worth more than two thousand dollars. The cash account allows you to choose between four options: covered calls, long calls, long put options and guaranteed cash put options.
Features of a cash account
- Daily transaction rules do not apply but must follow cash settlement rules
- Trades with limited funds and no leverage is allowed, even if over two thousand dollars
- Has four option strategies: covered calls, long calls, long puts, long puts and guaranteed cash put options
- Allows you to sell a position that purchased with unsettled funds
What is a margin account?
Webull’s margin accounts are the opposite of a cash account. They have access to leverage and work as follows: users can use their funds by leveraging them to buy additional securities.
To have access to leverage, the client must have at least two thousand dollars in cash in the account. It allows you to have up to four times the amount of your daily operations and twice the overnight purchasing power. Those accounts with more than $25,000 are eligible to become a daily pattern trader, allowing you unlimited daily transactions.
Features of a margin account
- It allows for risk but has risks that you should analyze beforehand.
- A minimum of $2,000 is required to qualify for leverage.
- You can sell all eligible securities if the minimum account value is kept at two thousand dollars
- It has trading strategies
- Accounts with $25,000 can become pattern day traders
What is the difference between a Cash account and a Margin account on Webull?
To make the difference between each of the accounts clearer, below are some notes for you to consider:
Purchasing Power
Purchasing power is the buying power a person has. In cash accounts, you can use the money deposited; it is impossible to borrow from a fund. At the same time, margin accounts allow users to use the value and accumulated money to purchase additional securities.
In margin accounts, the purchasing power manifests itself in two forms: overnight purchasing power and the power of daily transactions. The daily transactions are self-explanatory, but the overnight alternative presents the amount you have to buy securities and hold overnight.
Day trading
Users with cash accounts can make as many settled funds transactions as they want, but each transaction requires two business days to complete trade. Users cannot use it to buy or sell until they decide on the payment. Any time you try to pay with an unfunded intraday trade, it will be considered a “bona fide violation”.
Regarding a margin account, traders can trade for three days out of five; if you sell more than that, you will be identified as a Pattern Day Trader (PDT), whose goal is to maintain a $25,000 account to have unlimited trades.
Settlement Rules
The cash account allows you to concentrate on settled and unsettled funds. Unsettled funds are money received when liquidating positions in the last two days; these become firm funds once the transaction is completed.
Settled funds can be used for transactions, but running out of the number of funds could be a bona fide violation. A margin account allows unsettled funds to be used without the risk of non-compliance linked to settlement dates.
Withdrawals
The cash account allows you to withdraw up to the amount of money in your account. Can withdraw funds if they are fully cleared. Margin accounts work differently. In this case, you can start according to the amount you have in cash and the amount you can borrow. The amount of the loan depends on the securities held on margin.
Which account is better?
It’s not a question of one being better than the other, considering Webull is a reliable platform. If you are a newcomer to this trade and want a low-risk threshold for your investment, we recommend you opt for a cash account. This allows you to access the necessary tools and explore more options as you learn.
If you are an expert or understand all the risks, then the margin account is your alternative. At Webull, there is a margin account that can give you up to 3x the purchasing power of cash, but this could become a risky move. In this case, we suggest you analyze your decisions wisely.