The first thing to consider when evaluating the Forex broker Oanda is that the company was one of the pioneers of the online currency trading industry and has been around since the early 1990’s. With servers that process around a million queries daily, some estimates say 20 percent of all Forex spot trades pass through Oanda. If popularity and quality of service can be inferred from longevity, Oanda should at least be in the discussion of credible options for opening an account. Here’s the breakdown.
With a nearly thirty-year track record of integrity in its back pocket, Oanda has gone above and beyond what many brokers do in establishing the company as an example of honesty and reliability. Looking for voluntary regulation in a generally unregulated industry? Oanda counts itself as a member of the Futures Commission Merchant (FCM), Commodity Futures Trading Commission (CFTC), and the National Futures Association (NFA). Additionally, Oanda only works with trusted global banks like J.P. Morgan Bank and Deutsche Bank, a company policy that goes a long ways towards making customers feel their funds are well-protected.
Differing from many other Forex brokers, Oanda offers only one type of account, the standard account. At first glance, this might seem to be a limiting factor, but taken another way it’s the ultimate in trader freedom. Everyone is treated the same regardless of size or bankroll. There is no minimum deposit to speak of. You can open an account and trade with as little as $1. Any size trade is allowed, with no minimum lot size restrictions.
Like most Forex brokers, Oanda offers a demo account that allows a trader to test strategies and learn the ropes by trading with fake money under real world conditions. A demo account lets you interact with the market with the same charts and indicators available to live traders with $50,000 in virtual money. Buy and sell as much as you like. The account never expires and incurs no obligation to ever advance to a standard account. It’s a good idea for Forex newbies to ALWAYS start with a demo account. Successful strategies come and go but lessons learned during this phase, related to money management and trading discipline especially, will serve you well for the rest of your trading life.
Metatrader 4 (MT4) and FXTrade Web Trader are the two Oanda platforms that serve the company’s trading community. The first, MT4, is a popular program used by dozens of Forex brokers and trusted by millions of currency traders as the gold standard for charting, reliability, and personalized indicators. FXTrade Web Trader is the web-based version of Oanda’s trading platform. If you have an Internet connection, you can access your account and make trades by logging in through the Oanda website. Both platforms are available as mobile apps, though there have been complaints about the lack of features when going that route. While reliable, it just doesn’t offer much flexibility.
Like most online Forex brokers, Oanda doesn’t charge commissions for trades. They make their money on the spread between bid and ask prices, and have always had a reputation for some of the lowest spreads around. Expect to pay less than 2 pips on trades involving major currencies during most normal market hours. A note of warning: Oanda spreads can widen considerably and without warning during volatile market situations, especially immediately before and after major U.S. economic report releases. Price can shoot up or down hundreds of pips, sometimes even passing over stop loss orders in the frenzy. For this reason, some traders stay out of short-term positions during these times.
1. Reputable broker
2. Generally tight spreads
3. Easy to use trading platforms
4. Transparent pricing
5. Lots of trading options with over 70 currency pairs
1. Spreads widen during news releases
2. Charts are not up to industry standards
3. Expert Advisor (EA) trading is NOT supported on the MT4 platform
4. They are a market maker
5. Little in the way of training or education
* For those who may be unfamiliar with the idea of a market maker, it just means that Oanda is one of the big boys who set their own real-time currency prices. It’s not a bad thing or good thing, but something a trader should be aware of.
The Bottom Line
As online Forex brokers go, Oanda has stood the test of time and never been involved in shady practices. Trust us, they make enough money playing the game the right way. They don’t want to screw things up by losing public confidence. When it comes to interacting with the frenetic Forex market, simple is good, and that’s where Oanda excels. New traders should know that Oanda’s trader training and education falls short of what some other brokers offer. Taking into account the amount of free trading information available from other sources, this doesn’t seem to be too much of a drawback.