Oanda - Forex Broker Review

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Oanda Overview

Oanda was one of the first established online forex brokers and launched the FXTrade platform in 2001 that allowed forex traders to trade directly from their home computers in the forex market. It is registered with the CFTC as a Futures Commission Merchant (FCM) and is a member of the National Futures Association. It allows trading with trades of up to 38 currency pairs, currency options as well as Gold and Silver trading.

This broker separates itself as the first ever broker that offered traders an opportunity to trade the market without fixed lots. Traders can trade in any amount of currency they wish. This is a very important feature especially if you are new to forex trading as when you are ready to trade using real money you can trade very small amounts to start with and increase the trading capital over time.

It also provides some of the lowest leverages available to forex traders. The leverages of between 10:1 and 50:1 are some of the lowest in the forex industry and have contributed positively to many traders not losing their whole capital in one hit due to a bad call.

Their forex trading platform is java based with clients enjoying streaming quotes, real-time graphs and indicators, an economic calendar and real time news and analysis. There is no need to download software that may slow down your computer.

The Pros:

1. Easy to Use Forex Platform

Their platform is unique and is very easy to use for the forex trader. There are a lot of options available for the trader including showing the profits made in terms of pips or dollar amount. Most other forex platforms are based on futures trading and may not be conducive to forex trading.

Their forex platform also allows you to trade with very many exotic pairs. Some of these pairs leave a lot to the imagination like the Turkish Lira which many traders have never heard of.

2. Continuous Interest Payments

It is one of the few forex brokers who pay an interest on your deposits. This is based on the current market rates. In fact, for forex traders who ‘trade carry’ trades, this broker is an excellent option as they can still continue earning interest on their forex positions.

Though the above is a positive factor, take heed that it can also be bad if the currency position you have taken is showing negative interest, as you will be charged for the difference in interest rates.

3. Sub-Accounts

It is one of the few forex brokers that allow you to have more than one account under your main account. Traders use sub-accounts for various purposes like hedging against a position in their main account, using one account to test a trading strategy, and even concentrating on one currency pair or one trading strategy for each account.

However, it is imperative that you monitor your trading accounts to reduce the risk of a margin call. It is also a bit difficult to follow too many sub-accounts and you may be at risk of making the wrong trades in the wrong accounts

The Cons:

1. Spreads

Oanda advertises as the forex broker with the lowest spreads. This is true most of the time. With spreads as low as 1.2 in the EUR/USD pair, it can be very tempting for new traders to place trades with Oanda.

However, during periods of very low volumes and extremely volatile periods like news releases, the spreads can increase at arbitrary levels. Do not be surprised to see 10 pip spreads during the Asian session.

When using this broker, you must look at the spreads at any time before you place a trade and scalpers find it very hard to trade during high spread sessions. The fact that the spread change is arbitrary makes trading more difficult.

2. Unstable Trading Platform

The java based FXTrade trading platform is sometimes unstable. One of my worst experiences was after I had placed a trade and before I could change my stops, the FXTrade platform froze.

There are normally no explanations on these frequent outages and they can even blame your ISP. This particular problem has led to many traders with very large accounts to avoid using Oanda all together.

A bigger problem is the time it takes to execute an order. If you are a scalper looking for quick short-term profits, the oanda platform can cost you profits since it can lag as long as 5 seconds before accepting your order. If you have a slow internet connection, using Oanda can cost you a lot of profits.

3. Limited Tools

For those who have used Oanda for many years, you know that the Oanda platform has not changed during this period. New forex charting packages are now available that allow the forex trader to place trailing stops, trade on the charts, add new indicators etc.

The most basic trading tools are provided and so it is not recommended for the professional forex trader. The fact that they do not seem to appreciate customer complaints even in their own forums shows a lack of interest in developing their product line.

All in all, Oanda is an excellent choice for new forex traders. My personal recommendation is to try their free demo account, get the hang of the look and feel factor, see if it works fine with no hiccups on your computer or internet connection and start trading using real capital once you have more than 15 out of 20 profitable days trading the virtual (demo) account.

To open a free demo account with FXGame, the demo version of FXTrade platform, visit: https://fx2.oanda.com/mod_perl/register/register.pl

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