OANDA Review: We Weigh the Pros and Cons (2024)

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. Its headquarters is in New York.

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."

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 Explained

• OANDA accepts U.S. clients, making it one of the few global online forex brokers to do so.
• OANDA Corporationis a registered FDM and RFED with theCFTC and a member of theNFA (No. 0325821). OANDA Europe is authorized and regulated by the United Kingdom's FCA (#542574). Clients in the U.K. are entitled to asset protection up to £85,000, should the firm fail, through the Financial Services Compensation Scheme (FSCS).
• An abundance of relevant tools and resources, including Dow Jones FX Select news and various types of calculators, make fxTrade an excellent trading platform. Furthermore, the inclusion of TradingView, "an advanced financial visualization platform," into OANDA's desktop and web-based platforms is a big plus.
• OANDA offers an impressive array of economic analysis, real-time news feeds, calendars, and advanced data analytics that are unusual to find in a retail trading platform.

Cons Explained

• OANDA does not offer negative balance protection for U.S. clients. This means that U.S. traders with negative account balances can end up owing money to the broker.
• OANDA does not offer guaranteed stop-loss orders (GSLO) for U.S. or U.K. clients.
• For U.S. customers, OANDA does not offer CFDs on individual stocks, ETFs, or industry sectors. U.S. customers are limited to the more than 70 currency pairs in terms of CFDs at OANDA and can also directly trade cryptocurrencies through a partner company.
• OANDA charges a monthly inactivity fee in addition to fees for deposits/withdrawals, bank wire transfers, and if multiple debit card withdrawals are made in the same month.

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.

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.

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.

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)."

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.

Customer Service

OANDA's customer support is available 24/7 via email. The broker lists its business hours for phone and live chat support as Sunday 4 p.m. Eastern Time to Friday 6 p.m. Eastern Time. OANDA's representatives were courteous and knowledgeable when they were accessible.

The support website also has a good knowledge base and searchable archive that should answer most questions about the trading platforms and order types. But both very experienced and very inexperienced investors are likely to find this experience inadequate.

Education

A series of educational videos and articles are available for new and experienced investors alike. Live webinars are also available and cover a wide range of subjects, including market analysis, platform education, economic analysis, and Q&A sessions. Minor annoyances include the fact that the images and videos use inconsistent platforms, and some information is out of date compared to current trading platform releases. Not all of the education is in a single place, and navigation can be difficult.

New investors will need some patience as they try to navigate their way through the educational material. Material for beginners is good but poorly organized. Clients seeking to create a plan and track progress will find it difficult to figure out what education was complete and what should come next.

The OANDA classroom, which is a series of webinars, focuses mainly on live market analysis but also includes plenty of basic platform navigation and analysis that should help fill in the educational gaps. Much of the advanced content was geared toward individual tools rather than investing skills. To summarize, the educational resources were adequate but weren't organized as well as they could have been.

Portfolio Analysis

OANDA advertises that it offers a trading analysis application powered by Chasing Returns, which analyzes the client's trading history. Basic real-time information about client activity, such as transaction activity and profit/loss breakdown, is available on the platform. OANDA does not provide tax accounting tools on the platform.

Trading is no longer a solitary task and more traders have come to rely on the opinions and insights of other traders. Social traders will find their experience lacking on the OANDA platform. Other than a forum, OANDA doesn't offer any social investing tools.

Research Amenities

OANDA ticks all the boxes here as they offer an impressive array of economic analysis, real-time news feeds, calendars, and advanced data analytics that are unusual to find in a retail trading platform. Its order book provides insights into trader sentiment and behavior. MarketPulse, Autochartist, Dow Jones news, and calendars all serve to provide the trader with a comprehensive analytical tool set. More experienced traders will find the pattern-matching engines and volatility analysis particularly helpful.

OANDA's analysis tools allow traders to test their strategies using common coding languages and analyze the effect of economic news directly on charts. The target market for such features tends to be experienced traders who need advanced analytics and resources to deploy, test, and manage trading strategies in real time.

It's no surprise, then, that Investment Trends research awarded OANDA multiple Highest Customer Satisfaction awards. One possible drawback to such a wide array of tools and research is the education and training required to fully take advantage of them. OANDA does offer education and help for most of its tools and features, but it is fragmented and difficult to locate.

In all, it's a very robust offering and an area where OANDA ranks above the industry standard, but if there is one criticism, it is that the material is scattered across OANDA's website and trading platforms. Traders should expect a learning curve as they try to find everything.

Security

OANDA Corporationis a retail foreign exchange dealer (RFED) with theCFTC and is a registered Forex Dealer Member (FDM) of theNFA (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).

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.

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. 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."

Final Verdict

OANDA is well known to experienced traders in the forex market. Its proprietary platform, fxTrade, offers an excellent web browser-based desktop trading experience which, when coupled with superior research and analysis features, is well suited to traders who already know what trading the retail foreign exchange market entails. The broker's stated goal is to differentiate itself with superior trade execution and transparency, and all data points to that being the case.

Though the research offerings are comprehensive, their organization leaves a bit to be desired as the material is scattered across OANDA's website and platforms. Moreover, despite OANDA's longevity in the online brokerage arena, the limited number of product offerings, especially when compared to its competitors, is a bit surprising. Its NFA/FCA regulations are a plus, but the lack of slippage protection or additional deposit protections beyond what regulators mandate is concerning.

That said, OANDA's pricing transparency, platform technology, and global regulatory oversight should give investors comfort. Seasoned traders looking for a well-designed web browser-based platform can find what they are looking for with OANDA.

Frequently Asked Questions

Is OANDA Good for Beginners?

Not really. It requires a significant learning curve and is much more appropriate for seasoned traders as a result.

Which Is Better: Forex.com or OANDA?

According to most research, the differences between them in terms of quality are more or less negligible. Both are top-tier global leaders in the forex services sphere and offer traders an all but equally comprehensive array of tools and services.

Is OANDA Regulated in the U.S.?

Yes. OANDA is subject to regulation by both the NFA and the CFTC in the U.S.

Does OANDA charge a fee?

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" (as OANDA notes on its website), the broker also lists fees for deposits/withdrawals, bank wire transfers, and multiple debit card withdrawals in the same month.