Transforming your Webull account into a cash account is a straightforward process, but it involves understanding some key differences and making the right selections within the app. A cash account on Webull requires you to fund all your trades with settled cash, meaning you can only buy shares with money that has fully cleared. This differs from a margin account, which allows you to borrow money from Webull to make trades, potentially increasing your buying power but also carrying more risk.
Why Go Cash? Understanding the Benefits
Many users opt for a cash account for several reasons:
Simplicity and Reduced Risk: It eliminates the complexities and potential pitfalls of margin, such as margin calls or interest charges on borrowed funds. You can only lose the money you've deposited.
Avoiding Pattern Day Trader (PDT) Rules: If you make four or more day trades (buying and selling the same security within the same trading day) in a rolling five-business-day period in a margin account with less than $25,000, you'll be flagged as a PDT. This can lead to your account being restricted. Cash accounts are exempt from PDT rules.
Discipline in Trading: A cash account forces you to operate within your means, promoting more disciplined trading habits and preventing overleveraging.
No Interest Charges: You won't incur any interest charges, as you're not borrowing money from Webull.
However, it's also important to acknowledge the limitations of a cash account:
Limited Buying Power: Your buying power is strictly limited to the settled cash in your account. You cannot borrow to increase your trading capacity.
Trade Settlement Delays: Proceeds from sales in a cash account take time to settle (typically T+2 for stocks and ETFs, meaning trade date plus two business days). You cannot use the unsettled funds from a sale to make new purchases until they settle. This is where the term "cash available for withdrawal" versus "cash available for trading" becomes important.
No Short Selling: Short selling, which involves borrowing and selling shares you don't own with the expectation of buying them back at a lower price, is not permitted in a cash account.
Now that you understand the "why," let's dive into the "how"!
Step 1: Are You Sure You Want a Cash Account? Let's Confirm!
Before we proceed, take a moment to truly consider if a cash account aligns with your trading goals and risk tolerance. While it offers simplicity and avoids PDT rules, it also restricts your ability to trade with borrowed funds and engage in short selling. If you're looking for more flexibility or plan to actively day trade with a larger capital, a margin account might be more suitable, provided you understand the risks.
Think about it: Do you primarily buy and hold? Are you new to trading and want to keep things simple? Do you want to avoid any possibility of a margin call? If you answered "yes" to these, a cash account is likely a great fit for you!
Step 2: Understanding Your Current Account Type
This is a crucial preliminary step. You need to know if your Webull account is already a cash account or if it's currently a margin account. Most new Webull accounts are opened as margin accounts by default, as it offers more immediate flexibility.
How to Check Your Account Type:
Open the Webull App: Launch the Webull application on your mobile device.
Navigate to the "Menu" Tab: At the bottom of the screen, you'll see a navigation bar. Tap on the "Menu" icon (usually represented by three horizontal lines or "More").
Go to "My Account": On the "Menu" page, look for and tap on "My Account" or a similar option that takes you to your account overview.
Find "Account Details" or "Account Type": Within your account overview, you'll need to locate information about your account. Look for headings like “Account Details,” “Account Type,” or “Brokerage Account.” Under this section, it should clearly state whether your account is a “Cash Account” or a “Margin Account.”
If it already says "Cash Account," then congratulations, you're all set! If it says "Margin Account," proceed to the next step.
Step 3: Initiating the Conversion Process
Unfortunately, Webull does not offer an in-app button or a direct, immediate way to switch from a margin account to a cash account yourself. This is a security and regulatory measure. To make this change, you will need to contact Webull's customer support.
Submitting a Request to Webull Support:
Access Customer Service:
From the "Menu" tab in the Webull app, scroll down and look for "Help Center" or "Customer Service."
Tap on it, and you'll typically find options like "Contact Us" or a chat support feature.
Choose Your Communication Method:
Live Chat: This is often the quickest way to get a response. Look for a chat icon or "Chat with us" option.
Email: If live chat isn't available or you prefer to have a written record, you can send an email. Webull's support email is usually readily available in the "Help Center."
Phone Call: Some users prefer to speak directly with a representative. Check for their customer service phone number within the "Help Center."
Clearly State Your Request: When you contact them, be explicit about your intention. Something like:
"Hello, I would like to convert my Webull brokerage account from a Margin Account to a Cash Account. Could you please guide me through the process or initiate this change for me?"
Be sure to include your account number or other identifying information if prompted by their support system.
Be Patient and Follow Instructions: Webull's support team will guide you through the necessary steps. They might require certain verifications or forms to be filled out. The process might not be instantaneous and could take a few business days to complete.
During this time, avoid making any new trades or having open positions if possible, as it might complicate the conversion process.
Step 4: Understanding the Implications During and After Conversion
The transition period is important to be aware of.
What to Expect During Conversion:
Temporary Trading Restrictions: While your account is being converted, there might be temporary restrictions on trading. This is to ensure a smooth transition and prevent any issues with unsettled trades.
Review of Open Positions: If you have any open positions (stocks, options, etc.), Webull might advise you on how these will be handled during the conversion. It's often best to close out positions before initiating the conversion if you can, but support will advise you if this is necessary.
Funds Settlement: Ensure all your funds are settled. If you have recently deposited money or sold securities, give it time for the funds to fully settle before requesting the conversion.
What Happens After Conversion:
Confirmation: You will receive a confirmation from Webull once your account has been successfully converted to a cash account. This will typically be an email or an in-app notification.
Updated Account Details: Verify your account type again in the "My Account" section of the app to ensure it now displays "Cash Account."
Changes in Trading Behavior:
Remember, all trades must now be settled cash. This means if you sell a stock, the proceeds won't be immediately available for a new purchase. They will need to settle (T+2 for stocks/ETFs).
You will no longer be able to short sell.
You will not incur margin interest.
You will not be subject to PDT rules (as long as you only use settled cash).
Step 5: Adapting Your Trading Strategy (If Necessary)
With your shiny new cash account, you might need to adjust your trading strategy slightly, especially if you were previously accustomed to the immediate buying power of a margin account.
Key Adjustments:
Focus on Swing Trading or Long-Term Investing: Cash accounts are ideal for swing traders (holding positions for a few days to weeks) and long-term investors who aren't trying to make multiple trades within a single day with unsettled funds.
Understand Settlement Times: Always be aware of the settlement period for your trades. If you sell a stock on Monday, the funds will typically be settled and available for a new purchase on Wednesday (assuming no holidays).
Plan Your Trades: Since you can't use unsettled funds, plan your entries and exits carefully. If you sell a position to free up capital, you'll need to wait for that capital to settle before reinvesting it in a new security.
"Good Faith Violations" (GFV): While cash accounts are exempt from PDT rules, you still need to be aware of Good Faith Violations. A GFV occurs when you buy a security with unsettled funds and then sell that security before the initial funds have settled. While it won't trigger PDT, repeated GFVs can lead to trading restrictions. Always use settled funds to avoid these issues.
By following these steps and understanding the nuances of a cash account, you'll be well-equipped to manage your investments on Webull with greater clarity and control. Enjoy your journey to a simpler trading experience!
10 Related FAQ Questions
How to check if my Webull account is a cash account?
You can check your account type by opening the Webull app, navigating to the "Menu" tab, then "My Account," and looking for "Account Details" or "Account Type" which will state "Cash Account" or "Margin Account."
How to avoid pattern day trader (PDT) rules on Webull?
To avoid PDT rules, you can convert your Webull account to a cash account, as cash accounts are exempt from these regulations. Alternatively, maintain an equity balance of over $25,000 in your margin account.
How to convert my Webull margin account to a cash account?
You cannot convert your Webull margin account to a cash account directly through the app. You must contact Webull customer service via live chat, email, or phone and request the conversion.
How to deposit money into my Webull cash account?
To deposit money, go to the "Menu" tab in the Webull app, select "Deposit," choose your preferred deposit method (e.g., ACH transfer), enter the amount, and confirm the transaction.
How to withdraw money from my Webull cash account?
To withdraw money, navigate to the "Menu" tab, select "Withdraw," choose your withdrawal method, enter the amount you wish to withdraw, and confirm. Ensure your funds are settled before attempting to withdraw.
How to understand trade settlement times in a Webull cash account?
In a Webull cash account, stock and ETF trades typically settle on a T+2 basis (trade date plus two business days). This means funds from a sale will be available for new purchases after two business days.
How to avoid Good Faith Violations (GFV) in a Webull cash account?
To avoid GFVs, always ensure you are using settled funds for your trades. Do not buy a security with unsettled funds and then sell that security before the initial funds have settled.
How to tell the difference between "Cash Available for Trading" and "Cash Available for Withdrawal" on Webull?
"Cash Available for Trading" includes both settled and unsettled funds that can be used for new purchases. "Cash Available for Withdrawal" only includes funds that have fully settled and are ready to be withdrawn from your account.
How to short sell in a Webull account?
Short selling is not permitted in a Webull cash account. You need a margin account to engage in short selling, as it involves borrowing shares.
How to contact Webull customer service for account changes?
You can contact Webull customer service through the "Help Center" or "Customer Service" section within the Webull app, typically via live chat, email, or a phone number provided in the app.