Oanda is a regulated broker offering the ability to trade in foreign exchange in addition to metals and commodities.
Their online service was one of the first in existence (dating back to 1995) and they set the benchmark for numerous others that followed. Unlike many of its offshore counterparts Oanda is regulated in all of the major financial jurisdictions. This means it accepts clients in nearly all locales including the United States.
Seventy currency pairs are available to trade plus a range of CFDs (contracts for difference) on metals, commodities and stock indices.
Oanda doesn’t hide the fact that it performs the dual role of broker and market maker. They aggregate client positions and offset their risk exposure through partnering banks. It is also worth noting that Oanda survived the Swiss franc debacle at the beginning of 2015, despite taking heavy losses. This event shook the foreign exchange markets and caused the collapse of several of the weaker retail brokers.
One of the things Oanda is known for is its comprehensive range of trading tools. These tools are free to use and you don’t need an account to access them. The order book, net position reports, and spread histories are all part of the company’s commitment to transparency. They are also very useful trading tools in their own right.
Oanda supports both live and practice accounts. Leverage levels up to 50:1 are offered. Both live and practice accounts can be created very easily. Once you create a primary user account, you can then add multiple trading sub-accounts (in any currency) for that user. This is useful if you want to test different trading strategies or if you want to experiment with various expert advisor setups.
Variable lot sizes
One unique feature Oanda offers is the ability to trade in fractional lot sizes. The smallest trade size is $1, but above that you can choose your exact position size to almost any precision. This is ideally suited to those trading with very small accounts or if you are using a strategy that needs to trade odd lot (or in very small) sizes.
Spreads on Oanda are competitive. Notably the broker offers a selection of tools to help you analyze current and historic spreads on each pair. This allows you to predict times where peak spreads are likely to occur – for example leading into weekends or around important news releases.
One thing to consider carefully when deciding to use Oanda as your broker is their handling of swaps – the interest payments which accumulate on your open trading positions.
Most brokers calculate interest once per 24-hour period. This process is called rollover and involves both parties “swapping” interest dues with each other. This process is done automatically and you simply receive a debit or credit once per day on your account. Oanda calculates interest on open positions continuously and in real time – second by second. This can either work against you or for you depending on your style of trading.
Continuous interest calculation • Having interest deducted (or added) by the second can clearly be a disadvantage. This would be the case if you usually hold positions for less than one day. Scalpers and day traders generally prefer not to pay rollover fees. Over long periods the interest spreads (the broker’s fee on carry interest) can bite significantly into profits.
The exception to this would be in the unlikely event that you are doing short term directional trading for carry interest. In this case you could in fact accumulate interest on your holdings which would otherwise be lost with nightly swaps.
Oanda’s Trading Platforms
This broker offers four different web-based trading platforms. You can also trade through Metatrader if you prefer.
FXTRADE Desktop • Oanda’s main trading platform is called FXTRADE. The tool needs Java which may require an extra installation. If you don’t have the latest plugins the advanced charts and analysis tools will not be available.
FXTRADE Web • The web version of FXTRADE is a trading interface that you can use directly on most web browsers – even older ones. It allows you to enter trades and manage your account. The disadvantage is that there isn’t any integrated charting or analysis tools – something most traders will be used to.
FXTRADE Mobile • The mobile version is a lightweight trading panel designed for smaller screens, mobiles and tablets.
FXTRADE Now • Finally this tool provides nothing more than a very simple trading panel. The panel gives you the ability to enter trade instructions and monitor your positions all from within a very compact interface. This can be useful if you’re doing your main analysis from another trading terminal and just need to be able to enter orders quickly and easily.
Analytical Trading – Oanda’s API
Oanda offers its clients access to a sophisticated application programming interface (API). The API lets you send trade orders programmatically and provides access to Oanda’s technical data and feeds. There’s also a large marketplace of ready-built apps and tools available from the website.
With the API you can build and test your own automated trading strategies. This can be as an alternative to the expert advisors which run on Metatrader (MQL programming). It can also be integrated within your existing Metatrader systems.
The basic REST API gives you access to:
- Events calendar – up to one year of events for any currency pair
- Oanda’s order book feed
- Position ratios feed
- Historical spreads
- Chart pattern analysis
- COTS reports
Unlike Metatrader, the REST API lets you build applications in any programming language you choose.
Oanda also offer an API specifically designed for Metatrader. To use this you’ll need to be able to write code in MQL (Metaquotes Language). You will also need to download the API components onto your desktop. If you are using a remote hosting service for Metatrader remember that the API will need to be installed (and runnable) on that remote machine.
Oanda offers a selection of useful trading tools. These will be of interest to most traders even those not considering opening an account with this broker.
The value at risk calculator
The VAR calculator will tell you the probability of a certain pip movement over a given time interval.
After entering the instrument, you can plug in the trade duration and your chosen chart period. For example, when I check GBP/USD on the 1-hour chart and with a trade duration 10 hours (candles) it tells me that the confidence interval for this trade duration is 141 pips. What this means is that there’s a 5% chance that GBP/USD will move more than 141 pips within a 10-hour period.
It’s worth keeping in mind that the tool examines a fixed price window of 300 candles. So for the 1-hour time frame this corresponds to 1 week and 5 days. It just happens that this was a period of relatively low volatility. If I choose the daily time frame, it tells me that over a 5-day period I can expect movement of 565 pips (for more on this see my article on trade exit points).
To calculate VAR automatically for any Metatrader account you can use our VAR tool.
In the past Oanda had offered a copy trading service through the provider Curensee. This program was called “trade leaders”. Unfortunately this has now been withdrawn. As of the present time Oanda doesn’t allow traders to connect to Zulutrade. This means if you want to make use of copy trading you’ll need to create the mechanism yourself. This can be done through Metatrader and by using third party software.
This tool identifies various candlestick patterns and marks them on the chart for you. The markers are highlighted as either bullish or bearish. You can also filter the tool to look just for certain patterns. For example you can scan for an “inverted hammer” or “morning star” among others. The tool also marks crossings of the moving average lines. You can set these up as needed, for example you can use the SMA line (simple moving average) or EMA (exponential moving average). You can also configure other parameters such as the averaging period.
These are a good way to get an instant visual of price changes across a range of currencies. The graphs show a color representation of price movements (relative to a zero line which is set as the moving average). So for example deep blue represents positive movements and red indicates negative.
There are also various sub graphs including currency heat maps.
The recent spreads tool is a handy way to check spikes and other unusual activity in spreads. This is useful for monitoring fluctuations in spreads around news events or at market closing/opening times. The tool places markers at the point of news releases. This allows you to see the how the spread changed around that event.
Events and impact chart
This tool combines several displays into one chart. The main chart area plots a currency pair against economic news items. On top of this you can also plot several sub charts:
- Percentage price moment
- Changes in spreads
- Net position display (Oanda positions)
This lets you see instantly what kind of reaction a news release had on the market. The tool also lets you filter on news events. So for example if you want to check the reaction to the last nonfarm payroll release, you can enter the keyword to bring out that news item.
This collection of tools is useful for analyzing sentiment towards a currency. Admittedly, most of the data is from Oanda’s platform but nevertheless it does give you an idea of positioning among other traders. This can allow you to spot and anticipate movements in advance.
The main tools are:
- Order book/open positions
- Historical positions
- Position ratios
- COTS reports (the CFTC’s commitment of traders)
I’ll just explain the first here as the others are self-explanatory.
The first is divided into two graphs – open orders (left) and open positions (right).
Open orders • The open orders graph on the left side shows open orders and their corresponding price levels. This includes all orders – even stop and take profits levels, held on Oanda’s books. The chart is color-coded with one side showing buy orders and the other side showing sell orders. This can give you an instant visual on likely entry/exit points.
Most orders will be bunched around the current market price. But there will be others bunched around critical support and resistance areas. When planning a trade it’s useful to check these to try to assess the likely weight of response to the price reaching a certain pivot level. For example, looking at the left side of the chart shows that GBP/USD has a large number of sell orders around 1.54 and 1.55. The price is currently 1.52. There are also large groups of buy orders around 1.50 and 1.51. This indicates there could be big swings around these levels.
Open positions • This chart tells you about open positions (of Oanda clients) and when combined with the open orders book, it reveals a wealth of information. It will give you an idea of the volume of positions in drawdown or in profit.
For example by looking at the two charts together, I can see that there are a large number of long positions that were opened above the current price level. These are in drawdown. Then checking the open orders shows that the bunch of sell orders around 1.51/1.50 likely corresponds to this large group of long side positions. This suggests that breakouts below these levels could lead to a cascade of sell orders.
The academy is Oanda’s learning center. In this area of the website you’ll find videos, tutorials and webinars all designed to get new traders quickly up to speed. The trading tutorials cover trading basics and this follows through to a set of tutorials covering technical analysis. Each lesson has informative tips along the way – useful for skimming through lessons. At the end of each lesson there’s a set of multiple choice questions to test how well you’ve learned the topic.