Oanda Experiences: Venerable FX Brand with Good Performance as a Market Maker

Since the mid-1990s, Oanda has been offering private clients the option of trading foreign currencies through a fully automatic platform. Indices, commodities, precious metals, and bonds are now also part of the broker’s offer. The broker acts as a market maker and lets his customers choose between MetaTrader4 and its in-house platform, Oanda fxTrade. This platform has been equipped with some exceptional features, such as finely calculated financing costs, for example.

Oanda Evaluation Pros & Cons

  • This broker has been active since 1996
  • Headquartered and regulation in the UK
  • Many underlying assets
  • MT4 or in-house trading platform
  • No rollover – financing costs on a per-second basis

  • Market making

Table of Contents

    Broker Review: Our Oanda Experiences

    1. Trading Conditions: Market Making with Favourable Spreads


    Oanda acts as a market maker. Market makers themselves quote buying and selling prices, and are thus entering into a legal and possibly also an economic counterparty position to their customers. In principle, STP market models (ideally on an exclusive commission basis) are preferable. The market-maker status is therefore a weak point in the Oanda test.

    In regards to the abovementioned counterparty risks, the broker states that customer money is only withdrawn from the segregated customer accounts at large credit institutions as a direct result of trading activities or withdrawal claims. The broker uses its own state-of-the-art risk management techniques, such as stress testing and back-testing, to keep the overall currency risk under control.

    However, the broker does not make it 100% clear that overlying net positions are necessarily secured on the financial market. This statement would, however, be particularly important with regard to the abovementioned conflicts of interest. Instead, the broker illustrates that net positions above certain thresholds are hedged with the broker’s partner banks.

    At the same time, the spread tool, via which customers as well as every visitor to the broker's homepage can track the spreads of the past months, are a big plus in the Oanda evaluation. In this case, no average spreads are given, but the exact spreads are displayed graphically for each point in time.


    Spread Tool: Traders can track the spreads of the past months.

    Such an evaluation is shown in the figure above. This figure displays the spreads in the EUR/USD pair between mid-February and the end of April 2016. For the majority of this period, the spread ranged between 1.5 and 2.0 pips. This is not a very good value: A spread of 2.0 pips leads to a cost of $20 for trading a 1.0-standard-lot position in EUR/USD. Brokers with a STP market model often charge 0.3 to 0.4 pips as well as commissions of 0.6 pips. However, trading at Oanda is cheaper compared to many other market makers – especially those from the Southern European region.

    This also applies to other underlying assets. The average DAX-CFD spread amounts to 0.5 to 1.5 points; for the Dow Jones, the spread is mostly 1 to 2 points. When trading gold, it is approx. $0.3 US dollar and approx. $0.05 when trading oil.

    Rating: B-

    2. Underlying assets/ Trading Platform Offering: FX, Metals, Indices, Commodities, Bonds

    Icon_Blatt_mit_SiegelIn addition to foreign currencies, the underlying assets also include indices, bonds, precious metals, and commodities. A large catalogue of underlying assets is recommended as many trading strategies are based on mechanical trading signals and thus depend on a sufficient number of signals for an attractive performance. In many approaches, this can only be realized by looking at a large catalogue of underlying assets.


    Traders get access to innovative tools

    Traders get access to innovative tools

    Another noteworthy feature: The financing costs are billed on a per-second basis; there are no rollover swaps. Most brokers calculate financing costs at specific, fixed times – approximately every day at 11pm or on two fixed days of the week. In doing so, flat-rate periods are used so that the traders' neglect of these times can lead to disproportionate costs.

    Oanda calculates financing costs on a per-second basis for all underlying assets when traded via the Oanda fxTrade platform. The costs are settled daily: If the sum of the credits (short positions) exceeds the sum of the debits (long positions), a positive balance is credited. The finely calculated financing costs are a major plus in the Oanda test report.

    Rating: B-

    3. Order Features of the Trading Platform: The Most Important Order Types


    Oanda customers must choose between the in-house trading platform Oanda fxTrade and MetaTrader4. Both platforms offer the most important order types, including market, limit buy, limit sell, take profit, stop loss, and trailing stop.

    The trading platform Oanda fxTrade uses the “Upper Band” and “Lower Band” designations for limit orders. An upper band appears as a line chart after entering the order ticket and defines the highest possible price at which an order can be executed. A lower band defines the lowest price at which an order can be executed. There are key combinations for the most important order types. It is also possible to open orders with one click via the in-house platform.

    The available order types are particularly relevant for discretionary trading strategies. If a trader determines that a long position is to be opened when a fixed price level is exceeded (a chart technical resistance, for example), a stop buy or a stop-buy limit order can be placed at this level, for instance. The opening of the position is thus automatically carried out when the course level is reached – without the customer’s presence being required in front of the screen.

    Rating: B-

    4. Analysis Features of the Trading Platform: MetaTrader4 or fxTrade

    Icon_LupeBoth the in-house Oanda fxTrade and the MetaTrader4 platform offer various analysis features to their users. These features include drawing tools such as trend lines and channels, Fibonacci retracements, Gann lines, custom commentaries, etc., along with indicators such as RSI, MACD, CCI, Momentum, ADX, and several others. The offer in the area of charts and indicators is also sufficient for higher demands in case of both platforms.

    Oanda fxTrade platform

    Oanda's trading platform fxTrade

    The Oanda fxTrade platform in particular further allows users to take advantage of a fairly individual chart analysis display. This is made possible thanks to the numerous possibilities for the representation of lines, areas, and indicators. This makes the charts rather visually appealing.

    The in-house trading platform has been in operation since 2001 and was also used by ABN Amro Market Index in the meantime as well as by the Royal Bank of ebenda (“RBS marketindex”) after the takeover of ABN. The CFD and FX offers of these two banks were discontinued, however. Earlier customers of RBS and ABN, who are giving Oanda a try, will likely recognize the technology. A central feature of the platform is the representation of the map background in squares.

    For several years, it was possible to draw quadrangles on the chart using the mouse as well as to define the quadrangles as binary options. It was determined whether a square is hit or missed by the market. The Oanda Box Options were discontinued a few years ago.

    Rating: B-

    5. Regulation, Deposit Guarantee, and Risk Limitation: London's Broker Proved Itself at the Time of the “Francs Shock”


    Customers from Europe will trade via the British subsidiary of the broker, which is active across the globe. This company is subject to the regulatory jurisdiction of the British Financial Conduct Authority (FCA). The UK regulatory environment is considered to be well established and is therefore a positive aspect of the Oanda evaluation.

    The customer deposits are held in segregated accounts separate from the broker’s operating assets. Royal Bank of Scotland (RBS) serves as a partner bank in particular. As a result, customer deposits fall under the legal UK deposit guarantee scheme FSCS. This scheme is also responsible for receivables from open transactions.

    Not only beginners, who are giving an FX broker like Oanda a try for the first time, should take a look at the margin-call obligation policy independently of the individual provider. The losses in the trading of foreign currencies and CFDs may in principle exceed the credit on the trading account. Sadly, stop-loss orders and hedging measures by the broker will not protect customers if extreme market fluctuations occur, which was the case in January 2015, when the so-called “Francs Shock” occurred, for example.

    Oanda Swiss francs shock

    After Swiss francs shock: Oanda communicated that all negative account balances would be settled

    In the wake of the drastic appreciation of the Swiss franc, the broker communicated that all negative account balances would be settled insofar as these had been caused by the extreme market movement on the Swiss foreign exchange market. This policy is a big pro in the Oanda test report not just for beginners, but for traders that do not want to take too big of a risk either. It should be noted, however, that the broker's actions at that time are not equivalent to a legally binding exclusion of any additional margin-call obligations in the future. In the risk-assessment instructions, customers are reminded that the losses can in fact exceed the initial account balance.

    Rating: B

    6. Automated Trading: Expert Advisors

    Icon_UhrNo automated trading is possible via the in-house platform Oanda fxTrade. Customers with an interest in this approach to trading should therefore opt for the opening of MetaTrader4 trading account – which is a platform that is also used by various competitors and is one of the most widely used trading platforms worldwide.


    MetaTrader4 allows for the use of mechanical trading systems and their automated execution via the trade account within the framework of Expert Advisors. These are based on the MQL4 programming language and can either be created or imported using the editor that has been integrated into the software. The range of available EAs is large and covers all possible trading approaches (e.g. trend success strategies, swing trading, outbreak strategies, etc.).

    Clients can automate their data input

    Clients can automate their data input

    MetaTrader4 offers a tool for back-testing. This allows for trading strategies to be hypothetically applied to past periods. Within a very short time, the software calculates the performance that would have been achieved in a particular market given the application of the specified parameters and for a certain period of time.

    Rating: B-

    7. Account Opening and Minimum Deposit: No Minimum Deposit and Unlimited Demo Account

    Icon_Blatt_mit_StiftA big plus: New customers can give Oanda a try without having to deposit any money whatsoever. Account opening does not require a minimum deposit. If the Oanda fxTrade platform is chosen for trading, there are also no fixed order sizes. The platform accepts tickets of up to 10 million units in each market. For non-UK customers, making a deposit is possible via bank transfer, credit card, and PayPal, for example.

    Oanda demo trading account

    Oanda demo trading account: Testing strategies under real market conditions.

    An unlimited demo account can be opened. No personal contact with the customer service team is required. It is not guaranteed that the market rates of the demo account always correspond with those of the live account. The demo account is only available for the in-house platform and, given its functionalities, it is also suitable for permanent, parallel use in addition to a live account at Oanda or another broker.

    The account-opening process is simple; the account is available after a few minutes. According to the broker, the broker is only asking questions that are necessary for regulatory reasons. Nevertheless, a complete verification of the account including both identity and address verification is required in the further course of account management and particularly in the run-up to a payout.

    Rating: B

    8. The Broker and Its Competitors: Active on the Market since 1996


    Oanda has been around since 1996 and is one of the oldest FX brokers in private banking. The in-house trading platform Oanda fxTrade has been in operation since 2001. Alongside the FCA in the UK, the broker is supervised by the respective supervisory authorities in the USA, Canada, Australia, Japan, and Singapore as well.

    In addition to CFD and FX trading, the broker offers spread betting to customers in Great Britain and Ireland. Moreover, services for business customers are included, such as FX data feeds and Global FX settlements.

    Oanda is now part of Next Generation Finance Invest AG (Next GFI), which holds shares in Gekko Global Markets, StockPulse, Yavalu, and 2Iq, too, and has since changed its name to ayondo Holding AG. The social trading platform ayondo was already part of the portfolio of Next GFI before the change of name.

    The portfolio shows that the owners of Oanda have experience with the development of innovative platforms for the financial market. This is why the broker is expected to have a certain technical lead in the future.

    The very long market presence and the good, long-term co-operations with banks are another (small) plus in our broker review. Good relationships with banks allow market makers to hedge their net positions at low cost, which thus also entails low operating costs and, at best, lower transaction fees.

    Rating: B

    9. Additional Services and New-Customer Offers: Webinars and Other Know-How

    Icon_PluszeichenMany customers, who are not using a market maker like Oanda for the first time, expect a large deposit bonus. This is especially true of those who have relied on market makers in the Southern European market (much more expensive). Deposit bonuses etc. have not always been at the heart of this broker's new-customer policy.

    Oanda's award-winning platform offers many advantages

    Oanda's award-winning platform offers many advantages

    A big plus in the Oanda review: The broker provides its customers with a serious offer in the field of knowledge transfer. This offer includes webinars and tutorials concerning the use of the trading platform, questions regarding technical analysis options, risk and money management, the development of trading strategies, the use of indicators, etc. Some offers are available to all visitors of the website, while others require the use of the Oanda fxTrade trading platform. Registration for these events takes place after logging into the platform.

    Rating: B

    10. Customer Service and Website: Too Much Design

    Icon_TelefonCustomer service is primarily available via the live chat and via e-mail. When customer service was contacted within the framework of this test, a customer-support agent answered a standard inquiry regarding the conditions, market model, and platform correctly and comprehensively within a few minutes. There is a very extensive FAQ section, in which many questions are discussed at length.

    Oanda referral bonus

    Oanda provides a referral bonus

    The broker maintains a customer-referral program: If existing customers succeed in convincing others of opening an account given their personal Oanda experience report, the broker will award a credit of $88 to the referrer. The bonus is subject to certain conditions that the new customer has to fulfil. In particular, the new customer must have deposited at least $500 within 30 days after the opening of the account and 3 trades need to be made within this time period. This makes the customer-referral program conditions much more moderate than in the case of many other brokers.

    Rating: B-

    Conclusion of the Oanda Review

    Oanda is one of the oldest brands in FX trading and offers a very powerful trading platform. The time-honoured brand cannot hide the fact that the broker acts as a market maker and the spreads are competitive, while they are by no means unsurpassed. Through the optional use of MetaTrader4 instead of the Oanda in-house platform, customers now have automated trading systems at their disposal. The British regulatory environment, the renouncement of a minimum deposit, and the extensive offering in the field of knowledge transfer speak just as much for the broker as the second-to-second calculation of financing costs and the renunciation of standardized transaction quantities. Oanda is one of the best FX market makers and is a good address for anyone looking for just that.

    Our Oanda Experiences as a Test Score: B