Oanda Broker Review

When it comes to looking for a forex broker to trade with, OANDA is a strong option! The strapline for their website is “We do all things currency”. In this broker review, we will highlight the important factors to look for when considering whether you should open a trading account with OANDA. At bestbrokers.com we believe that OANDA scores very well across many aspects.

Key Pros and Cons

These are the key factors we think you need to consider before trading with OANDA:

Company Information

OANDA is an industry-leading forex broker. Its strong history spans over 25 years where it has driven impressive growth to become one of the pioneers of its peers.

The company was founded by two professors back in 1996 in the US state of Delaware. In the two and a half decades since its incorporation, the company has grown impressively. With headquarters in Times Square, New York City, OANDA now has offices in eight countries around the world. This expansion means it has now become a leading presence at the top table of the truly global brokers, able to compete with the best.

Here is the list of the countries that OANDA has offices in:

Management

In 2018 OANDA was bought out by CVC Capital Partners, a leading private equity firm which has allowed an extension of its strategic growth plan as a leading global multi-asset brokerage. With the development of cutting edge technology, Oanda can continue to invest in its institutional-grade platform. This means that Oanda can offer traders the tools to maximize their potential.

Why Trade with OANDA?

Here are some of the key highlights of trading with OANDA that we believe help to make it one of the best brokers to trade with.

Regulation

For many traders, choosing a broker with strong regulation is one of the most important factors. A broker with multiple licences from jurisdictions around the world is a trustworthy and attractive proposition. So, in this regard, there can be few that can surpass OANDA.

Many brokers will have licences in maybe three or four regions. However, OANDA goes the extra mile for their clients, with regulatory licences in eight jurisdictions. It is also important that this regulation is in some of the most highly regarded and stringent regimes.

Below is a list of the countries/regions and regulators that OANDA is licenced for:

This scope of regulation is significant and important for traders, helping to improve the element of trust. However, it also has other implications as well.

Most importantly, having many regulatory licences means that OANDA is a broker that people from all over the world can trade with. Forex brokers can be restricted from operating in certain countries due to their lack of regulatory licences. For example, many brokers outside countries such as the US, Canada and Japan will not seek regulation in those regions due to the administration which is deemed to be too stringent and expensive. It means that traders in these regions cannot use these brokers. However, having so many regulatory licences for key regions around the world, means that OANDA provides a service for traders around the world.

Furthermore, having a license in the British Virgin Islands is useful as it improves the choice that traders have for their trading. It means that it is possible to register in a region that allows for much higher leverage for their positions when trading on margin.

KYC Procedure for Account Creation and Depositing

We signed up to join OANDA and the process took us about ten minutes in total. Here we lay out exactly what the process entails. The questions you will be required to answer include:

1. Your country of residence.

2. Registration details – including email contact, choosing a username and password. Also your home address and telephone number.

3. Personal details – including National Insurance Number (in the UK) and date of birth and a couple of questions on how much your salary is and how much you have in savings.
   It is all fairly standard up until this point. Next up, OANDA needs to test your trading knowledge.

4. A suitability test

   After giving your registration and personal details, you are then asked to complete a fairly extensive “Appropriateness Assessment”. We believe that this part of the process is positive as it suggests integrity. It is also one of the more rigorous sign-up procedures you will come across. The test includes questions on:

   • Forex pairs
   • What CFDs are
   • Margin
   • Volatility
   • What the spread is, and what a “variable” spread is
   • An explanation of what a gap is
   • Risk management
   • Leverage

   Once you have passed this test, you are almost there. Just one more thing you need to do.

5. Proof of ID – finally, you will be asked to provide proof of your identity. For this, you will need to upload some documentation for them to check.

   For the ID check, you can do this by uploading one of the following:

   • Passport
   • National ID Card
   • Driver’s License
   • Visa or Proof of Residence card

   Once you have provided this information, then you will need to wait for OANDA to verify your identity (which can take anything up to a few days). After that is done, you will then be free to start depositing funds to begin trading.

   One more encouraging feature of signing up for OANDA is that there is no requirement to make a minimum deposit. This means that you can open your account and take your time with the demo, attend some webinars and get comfortable with your strategy before committing funds to your first trade.

Account Types

Unlike some brokers, which have a multitude of account types for you to choose from, OANDA have just two types of accounts: a Standard account and a Premium account.

Each of OANDA’s entities across the various regions around the world has slightly different elements to the trading accounts. However, the graphic below shows a comparison of the accounts.

API Trading

Another functionality that OANDA offers clients is API trading. Application Program Interfaces (APIs) are an automated form of trading. Many traders use algorithm trading as a way to customise their trading strategy.

OANDA have a developer portal function to help traders get started, with resources and code samples available. Traders just need to open an OANDA account, select an API and build their strategy!

Account functionality offered only in certain regions

With offices all over the world under different regulatory regimes, it means that OANDA can offer clients certain account features depending upon which part of the world they are registered.

Here are the main variable and the regions they are available:

Spread-only and Core Pricing models

In September 2018, OANDA introduced a new pricing model that is now available to certain regions. Traders can choose between a traditional Spread-only pricing model, or a Core pricing plus commission model.

For the Core pricing model, traders get much tighter spreads but pay a commission of $5 per $100,000 traded of the base currency. This is the equivalent of 0.5 pips for a 1 lot trade on EUR/USD. From the spreads that they give on the website, this means that trading 1 lot of EUR/USD on a commission basis saves the trader on fees.

This allows OANDA traders in the US and Australia the ability to lower their costs when trading in high volume. Here is a table of average spreads for the different models:

The table below shows how a trader can save costs with the core pricing + commissions account (according to the average spreads). We show the total trading cost incurred by both models when opening a 1 lot ($100,000 traded) position on EUR/USD.

*a trade size of one lot on EUR/USD

Guaranteed Stop-Loss Orders

If you are a trader registered in jurisdictions such as Australia and Singapore, there is an added benefit of having Guaranteed Stop-Loss Orders. These help to give traders guaranteed prices for automated closing out of positions.

During times of elevated volatility, markets can gap sharply and there can be significant slippage on stop-losses. For a nominal fee (in Australia it is A$2 per lot), GSLOs help to protect the trader’s losses.

Spread betting available for UK clients

UK clients can reduce their tax bill by trading over 100 instruments across all the asset classes through the spread betting account. Spread betting means that any profits are free of capital gains tax in the UK.

Trading fees and other costs

For any broker you come across there will be a cost to your trading. After all, the brokers have got to make money somehow. Trading fees can be an extremely important factor that will eat into your profit and loss at the end of the month. So, keeping your trading costs to a minimum is important. You want to be trading with a broker where the fees are as low as possible.

At BestBroker.com we believe that Oanda has an extremely competitive offering when it comes down to the costs of trading. But what are the fees that you may have to pay?

These costs will come under two broad areas:

• Trading fees – spreads, commissions and overnight financing charges
• Non-trading costs – account fees, inactivity fees, currency conversion fees

Let’s break these down and see what they are for OANDA.

Spreads

Trading spreads are competitive. OANDA has spread from 0.6 pips on EUR/USD and 0.9 pips for GBP/USD. It is always good for brokers to be open about their pricing, and the website has a markets board showing live spreads straight from their platforms.

These minimum spreads sit broadly alongside those of OANDA’s competitors. However, spreads are not always this tight throughout the whole session and can be considerably wider at times. Taking this into account, average spreads are wider.

This table shows how OANDA matches up against rival brokers on major forex pip spreads (both a minimum and average basis). Again, we believe that OANDA compares well.

*unconfirmed

Commissions

For the jurisdictions that allow traders to use the “Core Pricing” model, traders can pay a commission on each trade to get much tighter spreads. For getting tight spreads, a commission of $5 per $100,000 (per lot) is charged.

Financing charges

These are the forgotten costs of trading. Charges are applied for holding a position open overnight. OANDA layout a useful table that is updated daily.

Deposit fees

OANDA have zero fees for clients depositing money into their accounts. However, there may still be charges levied by payment providers. – for more details see Deposit Methods

Withdrawal fees

Withdrawal fees vary depending upon

• The form of withdrawal (debit card, credit card, bank transfer, wire)
• Your chosen currency

The first withdrawal of the month is always free of charge, although charges are levied on subsequent withdrawals – for more details see Withdrawal Methods

Inactivity fees

If you have a funded account open but there is trading activity after a while brokers will start charging you. This is called an Inactivity Fee. This is a fairly standard practice amongst brokers and there are two variables here:

• The length of inactivity before the charge is levied
• The size of the charge

At OANDA, inactivity fees begin to be levied after 12 months of no trading activity. This is up to a maximum of $10 (or £10 in the UK) per month.

We believe that 12 months is fairly average, six months is short, with 24 months before inactivity fees are charged would be considered generous.

Currency Conversion Fees

If your base currency is different to the currency that a traded instrument is priced in then you will be charged a currency conversion fee.

For example, if the base currency of your account is in UK sterling, and you want to buy the S&P 500 index, then the trade is made in US dollars. Any dollar profits that you make will incur a conversion charge to exchange the currency back into UK pounds.

At OANDA this charge is 0.5%. This seems to be fairly average across the brokers.

Overall on Fees

We believe that on costs and fees, OANDA compares well to rival brokers.

Desktop Trading Platforms

OANDA now have the option of three platforms for traders to use:

• OANDA Trade – the proprietary platform
• MetaTrader 4 – the ubiquitous MT4 is the benchmark platform across the industry
• TradingView – OANDA has also partnered with TradingView to offer traders a third platform

There is one proprietary platform plus an additional two white-label options to give traders a strong choice of how they do their trading.

OANDA Trade

OANDA’s proprietary platform has strong functionality. Some of the functions and features of the platform include:

• Customisable platform layout
• Trade and manage positions directly from the charts
• More than 10 chart types
• More than 50 drawing tools
• Market news and analysis
• Identical desktop and web-based platforms

We also really like the ability to overlay multiple currency pairs onto a single chart for comparison. This is a function that is not seen on MT4 and is a strong feature of the platform.

The platform is also available in many languages, including English, French, German, Spanish and Japanese.

MetaTrader4

MT4 is the standard platform that all brokers will offer, but OANDA has enhanced the MT4 service. By adding its custom-built bridge OANDA’s can offer its competitive pricing and improved execution speeds.

Furthermore, when traders use the MT4 premium upgrade, this enhances functionality, with additional order types and trade management features.

TradingView

OANDA has also now partnered up with TradingView to provide a third platform. Once more, as with MT4, this comes with OANDA’s clear pricing and fast execution. Features of TradingView include:

• Hundreds of charts and indicators
• Build your own technical analysis indicators
• Social trading – view other user’s trading ideas and use community-built indicators
• Integrated economic calendar
• Backtest trading strategies

Mobile Trading Platforms

The mobile version of OANDA Trade is another strong feature. As with other brokers, the app is available through Android and Apple devices.

• Functionality is similar to the desktop/web-based versions – with the same advanced charting capabilities
• Customisable platform app (something not often available through other trading apps)
• Set alerts and notifications – another positive

Trading Instruments

There is a wide range of traded instruments available, although this is not as wide as some brokers. Asset classes offered include forex, indices, metals, commodities and bonds.

Forex

They have a very strong offering of forex pairs to choose from. Looking across several brokers, OANDA offers a good selection of 70 pairs including majors, crosses and exotics. Many competitors will offer perhaps 40 to 50 pairs, so we see OANDA as being strong on forex.

Indices

At OANDA you can trade 16 of the world’s major stock market indices. All of the usual major US and European indices are available, in addition to Asian indices from China, Hong Kong, Singapore, India and Taiwan.

Metals

If you are into trading precious metals, then you will be impressed with what OANDA have to offer. They have all the key precious metals (Gold, Silver, Platinum and Palladium), however, an impressive addition to this is that you can trade gold and silver priced in all the major currencies. Trade Gold prices in Canadian dollars, or Silver prices in Japanese yen, the choice is yours. Furthermore, prices are also offered in Hong Kong dollar and Singapore dollar.

There are a total of 23 metals markets to choose from, which we believe is a strong offering.

Commodities

There is also a selection of 8 other commodities. These include base metals (copper), energy (both oil prices and natural gas), and softs (such as corn, sugar and wheat).

One slight disappointment is that there could be a better offering of base metals (perhaps iron ore, and zinc), but broadly speaking this is a good selection of instruments.

Bonds

Not many brokers offer traders the ability to trade bonds. However, at OANDA there is a selection of six of the most popular government bonds. You can trade 10yr bonds from the UK (Gilt), Germany (Bund) and the US (Treasuries), in addition to three other durations of Treasuries.

Stocks

This is one big area that OANDA is lacking. Stock trading is not available on OANDA. Some stock brokers will offer hundreds or even thousands of individual stocks. The absence of stocks on OANDA’s platform is a disappointment and is certainly restrictive for people looking to trade them.

Other asset classes

OANDA also does not offer the ability to trade ETFs (Exchange Traded Funds) or futures and options. Furthermore, the US and UK jurisdiction restrictions mean that trading cryptocurrency CFDs is also not possible. This option is only available to traders in countries such as Australia where Bitcoin trading and Mini Bitcoin are available.

It is rare for brokers to offer these types of products (especially futures and options), however where crypto is offered, we believe a selection of just two instruments is disappointing.

Trade Execution

OANDA is very strong when it comes to trade execution. Here’s why:

• No dealing desk execution – fully automated execution not only helps with execution speed but also improves trust in the broker
• Incredibly fast server speed is considered to be “institutional-grade execution”(less than 1 millisecond on the V20 platform)
• No re-quotes on all orders traded at market prices. Also, no automated rejections occur either

Deposit Methods

There is no minimum deposit to open an account at OANDA. Furthermore, on the standard account, there is no minimum level needed to maintain an account (although there is a minimum level to qualify for the Premium account).

OANDA have several methods of depositing funds. Availability will depend upon which region the trader is in.

OANDA does not charge fees on deposits, but the method used may incur bank charges. There seem to only be upper limits on deposits from traders in the US for certain payment methods. Funding seems to be done quickly too and only gets slowed down by bank clearing.

Withdrawal Methods

At OANDA the withdrawal methods and costs will vary depending upon:

• The region that you are trading in
• Your method of withdrawal
• Your account type – one of the added perks of being a Premium Account holder is that you have unlimited free wire transfers

You will generally get at least one free withdrawal per month on most methods (debit card, PayPal). After that, subsequent withdrawals will incur fees depending on the region, for example £10 in the UK, $15 in the US and €20 in the EU.

However, using bank transfers and money wire will incur a fee on the first withdrawal (in the UK is £10, US is $20 and EU is €20). Subsequent withdrawals will incur this fee plus the same charge as for debit cards.

According to the FAQs page, withdrawals are usually processed within one business day, and the funds appearing on your account will depend upon which method has been chosen.

Customer Support Contacts

The support pages are written in a variety of different languages including English, French, Spanish, Portuguese and Japanese. Just click on the flag to select the required country and you will be redirected to pages in your preferred language.

If your queries are not met by the FAQs, then the online chat-bot “OANDA Assistant” is available. The online chatbot is run in four different languages (English, Spanish, German and Japanese) for instant contact. The only downside of this is that it is an automated system. However, it is also worth noting that OANDA’s Premium Account comes with a dedicated account manager that will act as human support.

If it is the personal touch you are after, you are also able to contact OANDA via telephone too. Clicking on the regional office will open the details you need. However, one of the very few downsides we have found is that some offices do not provide telephone contact details. If you are a trader in Germany or Poland you might have to try your English out and phone the London number instead.

Beyond that, there is always email contact which comes vias the address frontdesk@oanda.com. This is useful if perhaps your requirement for help is more detailed than the automated chat-bot can handle.

“OANDA’s award-winning Customer Service

It is also worth noting that OANDA’s customer service is award-winning too. In 2018 they won the Investment Trends – US Foreign Exchange Report award for Customer Service.

Research and Educational Materials

OANDA is a strong source of research and educational content for all traders. The website has a dedicated research section called “Market Pulse” (which also acts as a standalone site) and an education tab called “Learn” which is a plentiful source of material to learn how to trade.

There is also a good selection of webinars on live markets and trading strategies to attend. Also for developers, there is a very useful guide on how to implement the API.

Research – “Market Pulse”

There is a strong research team of currently six analysts at OANDA covering markets and timezones around the world across a range of asset classes.

Content available:

• News reporting, commentary and implications
• Technical analysis on markets
• Podcasts
• Video analysis and commentary
• The week ahead on key markets
• Economic calendar

Education – “Learn”

The education tab has a whole raft of free-to-all topics to digest on how to increase your knowledge as a trader. This includes how-to guides on web pages and video content. Topics covered include:

• Platform tutorials
• Getting Started – learning the basics
• A broad guide to fundamental analysis
• Technical analysis indicators
• Capital management – leverage and stop-losses

Webinar content

We believe that webinars are an important way for traders to develop trust in the broker and to expand their knowledge base. OANDA have a whole series of webinars to take part in. Some are available to everyone, whilst other premium content you will need to have a trading account to attend.

There are weekly live market analysis webinars, in addition to educational webinars on several topics. Historic webinars are available (in exchange for contact details), whilst premium content is available for account holders.

Security and Money Guarantees

When trading with any broker, the safety and security of your account are of paramount importance. This is why at BestBrokers.com we say that you should always trade with a well-regulated broker.

At OANDA, with the strong and wide regulation, comes the added element of security for your trading.

If OANDA goes bust, how safe your funds are will vary according to the regulator the entity the account holder is registered with. Traders who come under the umbrella of the UK’s Financial Services Compensation Scheme covers accounts up to £85,000, whilst in Canada, compensation is C$100,000 (Canadian dollars). Other regulators offer traders little protection.

As an added element of security, OANDA also segregates its clients’ funds from its resources. All decent brokers would do this anyway, but this also helps to protect clients’ money if OANDA became insolvent.

Retail clients trading under OANDA Europe and OANDA Europe Markets (from the UK and the EU) are also able to benefit from negative balance protection. This means that clients cannot lose more money than they deposited.

Conclusion

BestBrokers.com believe that OANDA deserves to be considered amongst some of the world’s best forex brokers. With its strong regulation (trust), excellent platforms (functionality), and impressive research (informative), OANDA is a broker that ticks a lot of boxes.

Our only real negative is the lack of selection in trading instruments. Unlike crypto brokers, OANDA do not offer stock trading CFDs and has a minimal crypto selection. Aside from that, we believe OANDA is an excellent broker.

R. Perry