Markets.com Review: Good Market Maker for CFD Beginners
Markets.com is part of the brand portfolio of the Cypriot company Safecap Investments Ltd., which has been acquired by the FTSE-listed software company Playtech AG in the meantime. The broker offers the trading of CFDs using many underlying assets and trading is based on a market-making model. Trading is predominantly free of commission and is carried out via an in-house trading platform or MetaTrader4. New customers receive a bonus of €25 for real money accounts without having to make a deposit.
Broker Test: Our Markets.com Review
1. Trading Conditions: Market Maker with Various Spreads
- Account Management: No Account Fees
- Minimum Deposit: None
- Platforms: Sirix or MetaTrader
- Commissions Equity CFDs: Starting at 0%
- Spread Stock CFDs: $0.10 to $0.40 (MT4)
- Spread DJIA CFD: $3.00 (Lot: $100)
- Spread DAX: €2 (Lot: €100)
- Spread EUR/USD: 3 Pips
First, we must mention one of the weaknesses of Markets.com: The broker acts as a market maker in regards to all financial instruments. This is to say that the broker acts as a counterpart to its clients and is thus potentially exposed to conflicts of interest. Market makers usually first offset opposing positions of their customers and generate their contribution margin by means of the spread between the bid and ask prices.
Conflicts of interest can arise in particular in connection with overhanging net positions: If these are not consistently hedged on the financial market, the broker can build positions against its customers. For beginners in CFD trading, which are giving an off-market broker such as Markets.com a try for the first time, the applicable market model generally plays no role. However, for professional traders, any market model that deviates significantly from the highest possible Direct Market Access Standard means that they will not want to choose this type of broker.
Account management is free of charge and does not require a minimum deposit whatsoever. Trading most CFDs is free of commission, although exceptions are possible for individual shares: The price list also provides the “commissions” in addition to the spreads. If no commissions are collected, Markets.com exclusively generates its margin contribution through spreads.
When trading CFDs on the S&P500 via the MetaTrader 4 platform, the spread amounts to $1.00 with a contract value of $100. When trading a DAX CFD, a spread of €2 with a lot value of €100 is due. When trading a DJIA contract, a spread of $3 is due in case of a $100 contract value.
The spreads for the trading of equity CFDs amount to $0.1 to $0.4 for the MetaTrader 4 platform. When trading the main currency pairs (Forex majors), the spread is mostly 3 to 4 pips. This means that the trading conditions – when taking the market model into account – tend to be a big con in the Markets.com review, although the conditions do not differ from those of other market makers to a significant degree. For beginners, however, the spreads should not be a hurdle and no reason for not choosing this broker.
2. Underlying assets/ Trading Platform Offering: More Than 1,000 underlying assets from All Asset Classes
The underlying assets are an important part of the final Markets.com evaluation. The more markets are available, the more often signals are generated for mechanical trading systems, such as new 20-day highs, charting outbreaks, or a significant increase in volatility. A large number of qualitatively clear trading signals significantly improve the chances of profitable trading.
Through the broker's platform, CFDs can be traded on foreign currency pairs, indices, equities, and commodities/ precious metals. A total of at least some 100 underlying assets are available, including 28 indices and 18 commodities/ precious metals. The sub-catalogue for the commodities sector is significantly broader than that of many competitors. Amongst others, there are maize, cotton, fuel oil, zinc, and soybeans too choose from.
The market model does not provide for the direct coupling of contracts to reference stock exchanges. At the same time, some of the CFDs are based on term contracts, which means that the rolling procedures are associated with the corresponding cost.
3. Order Features of the Trading Platform: Many Possibilities
The choice between several trading platforms is a big plus in the Markets.com evaluation: In addition to MetaTrader4, the Sirix and Markets Trader platforms are also available as a web-based version. The functionalities of a trading platform are measured not least by the available order types. The more order types are available, the more precisely trading strategies can be implemented.
In the case of Markets.com, the order types are the same for both platforms. Traders can choose between market orders and pending orders. In either case, take profit and stop loss can be added. For pending orders, there is a choice between buy limit, sell limit, sell and buy: Pending orders have to be placed via MetaTrader 4 at the current market price with a minimum distance of 80 points on currency pairs.
Even if this covers the most important types of orders, the broker's renouncement of more important order types, which have long been offered by many competitors, such as trailing stops, remains a big downside.
4. Analysis Features of the Trading Platform: Charts, Indicators and Trading Systems
The analysis functions of the Sirix and Markets Trader platforms do not exceed basic standards. There are different chart display options and a catalogue of common indicators such as CCI, MACD, SMA, RSI etc. As expected, MetaTrader4 offers more features – especially with regard to the standalone development of this platform and the import of automated trading systems.
MetaTrader4 allows for the development of mechanical trading systems including entry and exit signals based on the MQL4 programming language. Since the platform is also used by numerous other brokers, there is a very large MetaTrader4 community around the world as well as a large number of free-running scripts. These can be imported and, if necessary, implemented as trading systems. The platform also features a strategic tester, with which the performance of trading systems can be checked for a bygone period. Even for beginners, who are giving an off-market CFD broker such as Markets.com a try for the first time, trade via MT4 is a plus since only platforms of this calibre ultimately allow for the best possible professional development as a trader.
5. Regulation, Deposit Guarantee, and Risk Limitation: No Margin Call Obligation, Protection by Cypriot ICF
Many of the potential customers who are considering trading via Markets.com were attracted by the takeover of the broker by the British company Playtech. Despite the changed ownership, Markets.com operator Safecap Investments Limited is continuing its operations from Cyprus. Accordingly, the company is subject to the jurisdiction of the Cypriot supervisory authority CySEC (As a side note: Playtech is listed in the FTSE-250, but is based on the Isle of Man).
The central focus is also on Cyprus in regards to the deposit guarantee scheme. The company is linked to the ICF (Investor Compensation Fund), which fulfils claims up to €20,000 per customer in the event that such compensation claims are made. In principle, this protection also applies to receivables from open positions, but is guaranteed by a compensation organization in a still unstable financial sector.
Markets.com has announced that customer deposits are kept in segregated account at other banks and are thus separated from the operating assets of the company. This is in fact a legal requirement. However, the broker does not rule out that these banks might be based in Cyprus as well. Both the regulation and deposit protection are thus two weak points in our Markets.com review, which beginners with a small minimum deposit do not have to worry about, however.
For beginners, another criterion is more important: The losses when trading with CFDs can in principle exceed the account balance and lead to a claim of a broker against its customers. In the worst case, this leads to the financial ruin of the customer. Such dramatic scenarios occur when deficit positions cannot be settled in time due to extremely volatile markets. Markets.com excludes negative account balances in a legally binding manner and thus qualifies as a solid broker for beginners.
6. Automated Trading: All MT4 Features
The entire MetaTrader 4 offering is available for automated trading. Back tests, with which the profitability of mechanical trading systems can be checked, are of particular interest in this regard. For example, traders can use any combination of indicators for periods from 1970 to the present and see what results this trading system would have achieved for the respective time period.
Automated trading is not only possible via MetaTrader. Nevertheless, the platform offers a decisive advantage. Since the software is free of charge for brokers, MT4 is used by many providers. As a result, the reach is much greater than in the case of in-house developments that are only used by a single broker. In addition, a great reach ensures the existence of a lively community and the constant availability of a large number of Expert Advisors, which can be imported into the platform at any time, tested retrospectively, and can subsequently be optimized.
The programming language MQL4 is relatively easy to learn. Traders who develop and use mechanical trading systems, but do not want to deal with the programming language themselves can use the MQL Communities to commission programmers to implement the respective programming for them.
7. Account Opening and Minimum Deposit: Without a Waiting Period
Account management is free of charge and there are no inactivity fees – even in case of longer inactivity. There is no minimum deposit. The deliberately very low entry barriers are an advantage for beginners, who can give Markets.com a try without any obligations and without any financial risks, and can also choose another broker in the end, if necessary.
There are various deposit methods, including payment by credit card, Giropay, bank transfer, and instant transfers, to choose from. Depending on the chosen method of payment, trading can be started immediately: The statutory identity check of the customers is postponed for small deposits.
As an alternative to the opening of a live account, a demo account can be opened, which is made available without a run-time limitation. Personal contact with the customer service team is not necessary for the setting-up of a demo account, while many brokers will only set up such accounts after an initial sales call and/ or limit the runtime of such demo accounts.
8. The Broker and Its Competitors: A Playtech Company
Since 2015, Markets.com has been part of the software company Playtech Limited. The company is listed on the FTSE 250 and is based on the Isle of Man. Playtech was founded in 1999 and develops software for gambling. The company has offices in Sweden, Russia, Estonia, Latvia, the UK, Germany, Ukraine, Bulgaria, Gibraltar, Cyprus, Israel, and the Philippines. A total of about 3,600 employees work for Playtech.
Safecap Investments Limited, which operates the broker brands finexo and forexyard among others, is the operator of Markets.com. The company has been active in the Cypriot market for quite some time. The core business of Safecap Investments Limited is the development of broker brands, which enable currencies and CFDs to be traded through market-making market models. The Cyprus location has established itself as a brokerage location for the purpose of investments of this type due to the liberal regulatory and tax practices and the concomitant framework conditions of the EU Financial Market Directive MiFID.
Markets.com has sponsored the Premier League Club FC Arsenal London since October 2014. The broker, however, does not appear as a main sponsor, but merely as an official sponsor and is thus listed as a sponsor in addition to various other brands.
The company background is a neutral aspect in our Markets.com review: On the one hand, the broker has a considerable reach through Playtech and Safecap Investments and thus achieves a favourable market position. On the other hand, Safecap is only known for market makers and Playtech not least for gambling.
9. Additional Services and New-Customer Offers: €25 Bonus for New Customers without Making a Deposit
For many prospective buyers who are giving a market maker like Markets.com a try for the first time, a risk-free new customer bonus is of interest: €25 will be credited to the trading account without having to make a separate deposit. This bonus can then be used to open positions. It goes without saying that the payout of the bonus cannot be requested immediately after the credit. However, what is more important is this: Given the minimal capitalization of the real account, the broker allows prospective buyers to see the actual spreads. The spreads for real-money accounts can deviate significantly from those of mere demo accounts.
Regardless of the so-called “free bonus,” new customers receive a bonus on the first deposit in the context of various promotions, which change on a regular basis. For example, 10% are customary. However, justifying the opening up of the account at Markets.com merely on the basis of an attractive new customer bonus is not a good idea. As with all brokers, strict conditions apply to the payout of such bonus credits. Specifically, the broker will require a turnover of €10,000 per €1.00 credit within 3 months after the bonus amount was credited to the customer’s account.
The broker regularly organizes free seminars that deal with various aspects of active trading. The offer includes regular live trading as well as theme-specific seminars related to money management, Fibonacci trading, chart analysis, etc., for example.
In the past, there used to be a customer referral program: Anyone who convinced their friends and acquaintances from other trading communities to open an account by way of an authentic and personal Markets.com review could collect a bonus under certain conditions. If and when this offer will be reissued is not known at this point in time.
10. Customer Service and Website: Capable of Improvement in Some Regards
We would also like to briefly talk about the customer service and the website of this broker as part of our Markets.com review. There is a need for improvement in both areas. For example, it is obvious that standard text modules have been copied from other Safecap brands in some places. A sample test of the customer service offered via the live chat provided mixed results: The first customer service agent that we made contact with was not able to provide more than superficial information regarding a specific question, while the second customer support agent was able to quickly clarify the facts.
Conclusion of the Market.com Review
Markets.com is a market maker for beginners: Free account management, a free €25 bonus, predominantly commission-free trading, and the legally binding exclusion of future margin-call obligations make this broker a great starting point for your first attempts at CFD trading. Its strengths include the MetaTrader 4 trading platform and the relatively large catalogue of underlying assets, which is convincing in regards to both its breadth and depth. However, there are also some weaknesses to be found, including the broad spreads, the regulatory environment, and the market model used. However, these criteria are much less important for beginners with manageable deposits than the other characteristics set out above. For professional traders, the broker is certainly not the right fit.
Our Markets.com Review as a Test Score: B-