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Margin & Cash Account: Key Differences


Margin and cash accounts offer two distinct ways to trade, each suited to different investment strategies and goals. Choosing which type of account depends on your preferences and objectives. We hope this comparison helps clarify the key differences between these account types, enabling you to make an informed decision.


Margin Account

A margin account enables you to borrow against your holdings to purchase additional securities, providing the potential for increased returns. However, it carries additional risks due to the use of leverage.


At Webull, margin accounts offer up to 4x leverage for day trades and 2x leverage for overnight positions. For instance, with a $2,000 margin account, you can access $8,000 for day trading and $4,000 for overnight trading, subject to the specific securities involved.


Margin accounts are subject to day trading rules:

  • Accounts with a balance of $25,000 or more can execute unlimited day trades.
  • Accounts with a balance below $25,000 and not classified as Pattern Day Trader (PDT) accounts are limited to three day trades within a rolling five-business-day period.

Additionally, margin accounts support options trading up to level 4. Refer to the associated strategies for more details.


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Please note, calendar spreads and diagonal spreads are not available for VIX.


Cash Account

A cash account does not provide leverage, and trading is limited to settled funds. You can trade using deposited funds but cannot access leverage at any time.


Day trading rules do not apply to cash accounts, allowing investors to day trade without restrictions as long as the funds used are settled.


Additionally, cash accounts support options trading up to level 2.

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