Matador App Review

2018-09-17T13:28:20+00:00
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Let’s be honest, the thought of investing in the stock market can be intimidating. For most people, the stock market is some great mystery. That’s the thing that crashes every now and then causing people to lose all their money, right? Talk about scary.

That uncertainty drives most people to delay investing until they’ve learned enough about investing to feel comfortable putting their hard-earned dollars into the market.

For many, investing is an all-or-nothing activity. And with financial jargon being an impenetrable wall of gibberish, many choose the nothing option. It’s a shame when folks are financially ready to start investing but not mentally prepared to take that next step.

Wouldn’t it be nice if there were an investing app that made investing accessible and affordable for newcomers who want to get started with just a few hundred bucks? There is.

Matador wants to give investors the ability to do something they haven’t traditionally been able to do: casually invest in the stock market, together with others.

With traditional brokerages, you’ll pay around $8 a trade. That makes it incredibly cost prohibitive to periodically throw your spare cash into the market by purchasing a few shares. With Matador trades won’t cost you anything.

Matador takes trade commissions out of the equation, making it affordable for new investors to buy and sell stocks. Think about how much easier it would be to skip the latte and buy a few shares when you don’t lose a chunk of your cash to pesky fees!

What is Matador?

Matador is a smartphone-based trading platform that offers commission-free stock trades. Currently, it’s only available on iOS but the app is coming to Android soon. What makes Matador unique is its social component that allows users to compare their portfolio performance with their peers and other investors. Think of Matador as a social media/investing app for millennials.

matador app review

Is Matador Really Free?

Unlike most brokerages that charge between $4 and $8 per trade, trades are completely free with Matador! According to Matador’s website, this is made possible by cutting out costly non-essential parts of the business – like storefronts – and passing the savings along to investors.

On top of fee-free trading, users don’t have to pay deposit or withdrawal fees and there’s no account minimum. This makes it easy for users to get started and to purchase more stocks whenever they have a little extra cash to spare.

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How Does Matador Work?

Executing trades with Matador is fairly straightforward and intuitive. Just search for the stock you have in mind and you can pull up the company’s profile. This page displays information about the company and price history. Next, select either the “Buy” or “Sell” button and you’re on your way to a fee-free transaction. Matador supports market orders, limit orders, and stop orders.

Since trades are free, you might be tempted to dabble in day-trading (a day trade is when you buy and sell a stock the same day). Matador will track any day-trading activity to ensure you don’t exceed the regulatory limit of four day trades in any five-day trading period. However, it’s worth noting that Matador doesn’t support day-trading and might restrict accounts that are being used for that function. Plus, I don’t recommend that investing beginners try their luck in the risky world of day-trading.

Are Investing and Social Media Meant for Each Other?

My first impression when I explored Matador’s features – this app is geared toward millennials. You know, that much-maligned generation often criticized for their insatiable desire to share photos of their latest meal on Instagram. At least with Matador, users can share their latest investing activity rather than sharing their latest selfie. Here’s a little bit about how this feature works:

Matador’s social settings default to “share.” This means that unless you turn off social features, the Matador community will be able to view the stock you own (but not the dollar amount invested) and any trades you make through the app.

The social features span from individual users to the Matador community as a whole. If you’re curious what companies your friends are investing in, you can link your Facebook account to connect with friends who are using Matador. If you’d prefer to get a sense of which stocks are trending across the broader Matador community, you can do that too. The social tab gives you a quick look at which stocks the Matador community has traded the most each week.

As the new kid on the commission-free brokerage block, Matador has a small but growing user base. That makes it difficult to assess how users might benefit from this feature. The concept certainly shows potential. But for now, it’s too soon to say whether Matador’s attempt to incorporate a social element into an investing app adds value or is just a gimmick.

How Does Matador Make Money?

Commission-free trading is great for users. But at the end of the day, Matador is still a business. And businesses need to make money to remain in business. So where is Matador’s money coming from?

As far as I can tell, Matador’s business model takes after other freemium models like Robinhood and earn interest on the cash balances that sit in users’ accounts. For example, I deposited $50 when I signed up for Matador and bought shares of stock totaling $46.77. That left a cash balance of $3.23 in my account. If that money were sitting in my savings account, I could be earning interest on it. Instead, it’s sitting in Matador’s account so Matador pools that money with other users’ cash balances and collects the interest.

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Is My Data Safe with Matador?

When it comes to account security, your data is safe with Matador. Matador uses bank-level security with 256-bit encryption. Matador’s brokerage services are provided by T3 Securities, Inc. T3 is regulated by the Financial Industry Regulatory Authority (FINRA) and is a member of the Securities Investor Protection Corporation (SIPC), which means your account is insured up to $500,000.

Is My Money Safe with Matador?

There have been a few other stock-trading apps that have attempted to make it with free or freemium business models. Some of those companies, like Loyal3 and Zecco, didn’t fare so well. But right now, Robinhood appears to be thriving and newcomers like Matador and Webull have recently entered the mix as well.

While Matador’s accounts are SIPC-insured, there is still a slight risk that Matador won’t be able to earn consistent profits to stick around. Only time will tell.

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Pros

  • Free Trades. Trades will cost you zip, zilch, nada. We like that.

  • No Minimum Deposit. Matador doesn’t require a minimum deposit to get started.

  • No Deposit or Withdrawal Fees. Matador doesn’t charge fees to deposit or withdraw funds from your account.

  • Social Media Aspect. We’ll put this in the pro category for now. Whether this feature is useful or more of a distraction remains to be seen.

Cons

  • No Retirement Accounts. Right now, Matador only offers individual taxable accounts.

  • Limited Functionality. Matador doesn’t offer many complex trading options. That’s okay for beginners, but not ideal for more advanced investors.

  • Accessibility. Matador is currently only accessible via iOS mobile devices. So if your an Android user or prefer to use your desktop, Matador isn’t ready for you yet.

Is Matador Right for You?

New investors could certainly do worse than trying out Matador’s no-fee investing platform. Matador has some excellent features and some novel ideas that could prove useful to new investors. However, Matador is far from perfect and has some work to do to catch up with other commission-free competitors like Robinhood.

Matador has come a long way in a short period of time, but they’re still in their infancy as a start-up. That means it’ll be challenging to wrestle market share away from competitors like Robinhood. I’m curious what Matador will do to close the gap. Unlike some of their more mature competitors, Matador doesn’t offer options trading or cryptocurrencies. Right now, it’s unclear which new features Matador will introduce next. And it remains to be seen whether users will find much value in Matador’s social media concept.

Frankly, if I were a new investor Robinhood would be my first choice because of the free share promo and its more advanced features. My second choice — Webull. But if you’re looking for yet another option, Matador might be worth a shot. After all, it’s tough to beat free!

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About the Author:

Cato
Hi, I'm Cato! I'm an attorney with a passion for fantasy baseball, burritos, and investing! I also paid off over $86k in student loan debt in under four years while aggressively investing for my future. Subscribe if you want to learn more about mastering your finances so you can live the life you want!