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Before you start day trading on Webull, you must know the limitations that it comes with. This differs between a margin account and cash account.
Let’s go over the limitations on each type of account so you know how many Webull day trades are left on your account.
One of the most popular type of accounts on Webull are margin accounts, because it provides the trader a way to get unlimited day trades on their Webull account without having to wait for settled funds.
You can buy and sell an option contract or stocks, and you do not have to wait for the funds to settle. But this type of account on Webull comes with limitations.
Let’s go over the limitations of a day trading on a margin account.
To benefit from the unlimited day trades that a margin account provides, you must keep an account value of $25,000 at all time!
The second your account value drops less than $25,000, you know longer have unlimited day trades on your Webull account, and then are limited to three day trades per every five rolling business days.
Now, let’s say you’re trying to attempt to regain unlimited day trades, you have two options:
With an account value less than $25,000 you will come across the second limitation for day trading on Webull margin account.
At this point, your second day trading limitation on Webull is that you only get 3 day trades per every five rolling business day, and are no longer available for unlimited day trades.
This is not ideal, especially during a bear market.
If you go above 3 day trades, you will be hit a pattern day trader violation. With three pattern day trader violations, you’re liable to get your account suspended.
Most traders that don’t have $25,000 to risk, usually go to a cash account. One of the pros to a cash account is that you get unlimited day trades, no matter the account value.
But this comes with limitations as well. Let’s go over those!
Let’s say you have $500 settled in your account, and you buy and call option contract for $100.
Once you close that position, the funds you realized (win or loss) will now be marked as unsettled.
The limitation is that you can only trade with settled funds in your account. If you use funds from your unsettled portion, and close on the same day, you’re going to be hit a with violation.
One of the other limitations to day trading on a Webull cash account is the length that unsettled funds take to be settled.
For example, for option contracts it takes T+1 to settle. This means it takes one day for unsettle funds to settle from the date of the transaction.
But not everyone does option trading, day traders also do stock or equity day trades.
If you’re doing stock/equity day trades on Webull cash account, the limitation to this length is T+2. This means it takes two days for those unsettle funds to settle from the date of the transaction.
Also, federal holidays or short trading days, banks will not settle any unsettle funds-you’ll have to wait for the next business day.
For example, let’s say it’s Thursday, and the following day is a short trading day. Whatever unsettle funds the day trader finishes on Thursday, it will not be ready to trade on Friday.