OANDA Review

  • Minimum Deposit: $0
  • Products: Forex, Indices, Metals, Shares, Commodities, Crypto

    78.3% of retail CFD accounts lose money

    Oanda is a US forex broker. Oanda offers high-quality and easy-to-use trading platforms, and its research tools are also powerful, with numerous technical indicators and a great API offer. The account opening process is user-friendly and quick. On the downside, Oanda has a limited product portfolio, as you can trade only forex and CFDs. It is not listed on a stock exchange and doesn’t have a banking background, two factors that could boost its safety qualification.

    Company Overview

    Dr. Michael Stumm and Dr. Richard Olsen co-founded OANDA in 1996. OANDA advertises that it handles “all things currency,” from currency conversion to providing FX data services for businesses to offering an established global online brokerage service to individuals seeking to trade the retail FX and CFD markets.1 Its headquarters is in New York.2

    Globally, OANDA offers two account types, standard and Advanced Trader, and a product catalog that includes a wide range of CFD and spread betting offerings across a variety of asset classes, although not all of them are available in every region that it services. In addition to FX, the broker also offers indices, metals, commodities, and bonds to provide trading opportunities across financial markets.

    OANDA offers most clients varying degrees of account protection depending on the region. OANDA Europe Limited offers ESMA-mandated negative balance protection, while OANDA Asia Pacific Pte. Ltd. offers guaranteed stop-loss orders. U.S. clients are the exception because OANDA Corporation does not offer their accounts any such protections.

    In the U.S., OANDA ranks in the top 50 in the CFTC’s retail forex obligation report, which “represents the total amount of funds at an FCM, RFED, or FCMRFD that would be obtained by combining all money, securities, and property deposited by a retail forex customer into a retail forex account or accounts, adjusted for the realized and unrealized net profit or loss.”34

    A well-organized website with a stated goal of transparency, emphasis on client education and research, multiple user interfaces, and global regulatory oversight places OANDA in the top tier of online forex brokers.

    Who OANDA Is For

    OANDA offers clients exposure to a variety of financial instruments but is a good fit for seasoned traders looking for a stellar browser-based desktop trading experience. Product offerings vary by region. For example, U.S. clients can only trade FX, but the broker boasts fast and reliable trade execution, research resources that are above industry norms, functional user interfaces, and a verifiable track record of regulatory oversight.

    Pros

    • Accepts U.S. clients
    • Regulated by FCA and NFA
    • Well-designed platforms
    • Superior research offerings
    Cons

    • No account protection for U.S. clients
    • No guaranteed stop-losses for U.S. or U.K. clients
    • Traders in the U.S. cannot access single-stock CFDs
    • Many ancillary fees

      Costs 

      OANDA generates revenue via the spread that it then offers to the client, as is the norm in the brokerage industry. Its spread structure is quite simple and consists of two pricing options, “spread only” and “core pricing + commission.” The former generates revenue through customer trades that “cross” the bid-ask spread, while the latter adds a base commission of $50 per million to the raw spread, which is on par with industry standards. Commission charges are aggregated and posted to client accounts as cash adjustments.

      These pricing options are easy to find on OANDA’s website(s) and are available for both account types that the broker offers, although the shown spreads will vary. For example, the minimum EUR/USD spread for U.S. clients on a “standard” account under the “spread only” model is 1.4 pips, while the “core pricing + commission” model shows a raw spread of 0.4 pips.8

      OANDA advertises the use of an automated engine to attempt to follow global pricing closely, but spreads are still subject to market volatility and liquidity. In keeping with its ethos of transparency, OANDA publishes historical spread data for all of its asset classes.

      U.S. clients have the option to participate in OANDA’s Advanced Trader program which is a four-tiered reward system and premium account for high-volume traders. Benefits include spread or commission discounts, assignment to a “dedicated relationship manager,” API support, free VPS and wire transfers, and discounted access to third-party platforms. Tier 1 requires that the client deposit at least $10,000 and have less than $10 million of monthly trade volume, Tier 2 is for those who deposit at least $10,000 and have over $10 million of monthly trade volume, Tier 3 requires clients to have at least $100,0000 in deposits or have at least $100 million in monthly trade volume, and Tier 4 requires at least $250,000 in deposits and over $500 million in monthly trade volume.9

      Those who do not have $10,000 to qualify for the Advanced Trader program can open a standard account, which has no minimum. This account lacks benefits such as a relationship manager and free wire transfers.10

      OANDA’s forex funding fees, charged on positions held overnight, are described as “a blend of underlying liquidity providers’ tom-next swap rates, adjusted by our x% admin fee (annualized).”11

      In addition to a monthly inactivity fee “of 10 units of the currency in which your account is denominated when there are no open trades in your account for a period of at least 12 months,” the broker also lists fees for deposits/withdrawals, bank wire transfers, and multiple debit card withdrawals in the same month.

      Trade Experience 

      OANDA offers clients three ways to trade the markets with its flagship offering fxTrade, which is accessible via browser or mobile application. Plus, it also offers the popular MetaTrader 4 (MT4) download for desktop and mobile for trading on portable smart devices.

      fxTrade, OANDA’s primary user interface, is well designed and provides clients with access to trading instruments, complex order types, and account analytics. The desktop version offers proprietary charting as well as advanced charting from third-party provider TradingView. Clients can take full advantage of OANDA’s research offerings, including MarketPulse and Autochartist technical analysis directly from the platform, though the products will open up in a web page.

      OANDA’s order book displays client sentiment while its depth of market (DOM) provides insight into supply/demand dynamics. Additionally, an abundance of relevant tools and resources, including Dow Jones FX Select news and various types of calculators, make fxTrade an excellent trading platform.

      The web-based offering includes charts from TradingView with advanced studies and display styles along with most of the functionality of the downloadable version. Clients also have the option of trading directly from charts. Other features include customizable watchlists, news feeds, research options (economic analysis, MarketPulse) that open up in a browser, and API access.

      OANDA offers a unique functionality whereby the client has the option to set trade defaults for individual instruments based on a specific amount of base currency, percentage of leveraged NAV, or amount in the account’s currency. This gives the client more flexibility in their trading and aids in their overall risk management.

      OANDA also offers clients “a powerful and more dynamic trading experience” by partnering with third-party providers MultiCharts, CQG FX, and TradingView. Furthermore, they offer VPS capability through third-party providers BeeksFX and Liquidity Connect.

      fxTrade offers four basic order types with the option of attaching take-profit and/or stop-loss orders to them. There is also the option for a trailing stop-loss order. Additionally, users can choose to set their stops and limits based on price or pips, and pertinent information such as “pip value,” “trade value,” and “margin required” are shown on the order ticket itself.

      • Market: The simplest order, in which a trader signals that their trade request should be executed at the prevailing market rate.
      • Limit: A pending order for which the entry is at a predetermined point below or above the prevailing market rate depending on whether it’s a buy or sell. The trader also has the option of selecting the expiration time of this order.
      • Take Profit: Automatically closes an open order when the exchange rate reaches a specified threshold.
      • Stop Loss: A defensive order protecting you from further loss. It will automatically close an open position, if the exchange rate moves against you and reaches a specified level.
      • Trailing Stop: Used to limit loses and avoid margin closeouts. It will close the trade if the market moves against you and reaches a specified threshold. However, when the market moves favorably, the trigger level adjusts to maintain the same distance from the current price.

      Clients can also use the popular MetaTrader 4 (MT4) platform for trading. MT4 includes advanced charting, studies, watchlists, and trade automation through “expert advisor” plugins that many traders appreciate. Because the MT4 platform is such a well-known industry standard, traders moving to OANDA from other brokers will be familiar with its functionality. On the downside, the look and feel of the application are a little dated, and some functions can be clunky.

      The fxTrade mobile trading platform crams an impressive amount of functionality into a small platform to the point that it is almost as robust as the desktop application. Traders can access OANDA’s trading instruments, complex order types, and account analytics all from their mobile devices. The mobile platform also includes charts with price overlays, indicators, and flexible display styles as well as the ability to trade directly from the chart, just like the desktop application. Other features include news feeds and economic analysis. It was nice to continue our research and trading experience on a mobile platform that felt very similar to our desktop experience.

      OANDA’s client login page is impressive for its functionality. It empowers the client by providing various options that allow them to launch interfaces and manage account specifics, such as adding or withdrawing funds, adding subaccounts, changing passwords, accessing APIs, and contacting customer service.

      Range of Offerings 

      OANDA’s main focus is on forex which makes sense given that it advertises that it does “all things currency.” The range of CFD offerings includes:

      • Forex
      • Bonds
      • Precious metals
      • Indices
      • Commodities
      • Stocks

      However, in the United States only Forex CFDs are available with OADNA offering over 70 currency pairs. U.S. customers can also directly trade cryptocurrencies through a partner company.

      Security 

      OANDA Corporation is a retail foreign exchange dealer (RFED) with the CFTC and is a registered Forex Dealer Member (FDM) of the NFA (No. 0325821). OANDA Europe is authorized and regulated by the FCA (#542574) in the U.K., and U.K. clients are entitled to additional asset protection up to £85,000 through the Financial Services Compensation Scheme (FSCS).6

      Additionally, it is also regulated by the Investment Industry Regulatory Organization of Canada (IIROC), the Australian Securities and Investment Commission (ASIC), the Monetary Authority of Singapore, and International Enterprise of Singapore.16

      Despite the impressive amount of regulatory oversight, the amount of protection for each account in the event of default is limited and may vary depending on where your account is held. For example, OANDA Europe Limited offers ESMA-mandated negative balance protection, while OANDA Asia Pacific Pte. Ltd. offers guaranteed stop-loss orders. U.S. clients are the exception given that OANDA Corporation does not offer their accounts any such protections. 

      The Commodity Futures Trading Commission (CFTC) limits the maximum leverage available to retail forex traders in the United States to 50:1 on major currency pairs and 20:1 on other pairs.17 More information can be found on OANDA’s regulatory and financial compliance page.

      While OANDA may not have the strongest emphasis on security, they do what is necessary to secure the platform and customer data. The company provides a safe environment for trading and complies with regulations, but does not go too far beyond that. Two-factor authentication (2FA) is available for OANDA customers as is biometric login for the mobile app.

      Additionally, OANDA’s efforts to position itself as a trusted broker in the online broker space deserve credit. The company has emphasized its position by saying, “We believe the retail trading industry as a whole will benefit from a more transparent approach where brokers are held accountable for making questionable statements or falsely disclosing their interests”.

      Scroll to Top