Thursday, 7 July 2011

Oanda - Thievery Broker


Here came the day I stopped using Oanda forever. As a trader, you try to trust your broker, even when suspicious things happen. You try to play down critics of your own platform, you believe it's not that bad (hoping vainly your broker treats you better than other customers?). Then comes the moment it's OVER.
A long AUD/NZD trade hits stop loss at 5am, after a flash spike down to 1.2823. It happens, you think :

Out of curiosity though, you check the price at your other forex accounts. Then you check price data from the web. Amazingly, the lowest level you see everywhere else is : 1.2877



So you e-mail Oanda front desk:

Today, on one of my sub-accounts a long AUD/NZD position has hit stop loss level at 1.2831. The problem is the lowest level this pair traded today on my 2 other forex brokers accounts was 1.2877, check for yourself : www.ducascopy.com. Open AUD/NZD chart to see where was the price today. As your platform is the only to display this level of price I must say this was a system error to my detriment. Even if your spread was 35 points during news release - taken from your spread on Oanda website for Aud/Nzd for 5th of July - there is no way it could have reached my stop loss at 1.2831. Your spread, when the price was at 1.2877, must have been 90 points to reach my stop loss level!

After long 24 hours wait here comes the reply :

We have investigated your trade in question (ticket xxyy) as requested and found no error on the trade. Please note that OANDA is a Market Maker and our prices are determined by the rates we receive from our liquidity providers and our rates are not necessarily same or similar to the rates from other brokers. When your trade was closed by the stop loss, due to the news announcement released in Australia, our spreads on the AUD pairs were widened momentarily. Your long position was closed by the stop loss when the bid price on the market fell to 1.28312. At that moment, the ask price was 1.28382 making a spread of only 7 pips. During the period, the lowest price the bid went to was 1.28200.

This is incredible! There was no big 35 spread when the stop loss was hit, just the price was 50 pips off the market when it happened! Oanda - 1.2820, the market/other brokers - 1.2877.

Please note that OANDA does not trade against the clients nor benefit when they lose money on trades. OANDA hedges its exposure for trades made by clients by making corresponding trades with third-party banks. As a result, if you lose money on your OANDA trade, OANDA loses a corresponding amount to its third-party bank.

Oanda hedges its exposure, LOL. This is why during the busiest hours for AUD/NZD (Australasian session) on the most liquid market on earth - forex - there is 50pip difference from the spot market price! If your MM broker can be legally 50 pips off the market as their 'liquidity providers' dictate, this means it can do to your automatic exit and entry orders whatever they wish!

I am in the process of ending my relationship with Oanda. I've also promised them to write a review, so they lose more than they stole from me. Protect you money, there are many honest brokers around, even MM. Try a new platform and move on!

7 comments:

  1. I was about to open an account with Oanda, but doing some research I found your blog. Now I'm not sure.

    It seems that almost every broker has issues: spreads, withdrawal delays, unstable platforms, poor charting software, bad customer support, etc.

    I've been using etoro demo account for 3 months in order to learn and I already have consistent profits.

    What other brokers would you recomend for someone new in forex?

    ReplyDelete
  2. Hey,
    Choosing your broker you must take into account a few points. Firstly, funding options : this must be fast, easy and with no high cost for you, it will depend on where you live. Secondly, you may try to avoid taxation (if your country taxes fx profits), so pick one that will not care = foreign broker. Thirdly, this must be an honest broker. You will find many here :

    http://www.forexpeacearmy.com/public/all_forex_reviews

    Click on ratings so the best rated will be on top. Choose one with a good review score : more than 10 reviews and over 4 star rating. I am sure ATC Brokers (USA) and FX Primus (Eu), both ECN brokers are good, but there are many others. I personally use Intertrader (UK) spread betting broker with very tight spreads. Over the past 8 months, my stop loss was missed twice by one point then the price came back, so I trust them.

    Also be aware of this page :

    http://www.forexpeacearmy.com/forex-forum/scam-alerts-folder/

    where traders post scam alerts. From what I read, I would avoid at all cost Alpari, FxOpen, Saxo Bank.
    Etoro is well advertised but I would not risk my money with them.

    Oanda is a very popular broker with issues, but it is not the worst. The good points are : wide selection of pairs and they do pay interest on carry trades. Also their platform is good. Negative points : spread policy which hurts trades, and vicious price action on small time frame (1m, 5m) which is momentum biased, except counter main wave move, which is the best entry point for a scalper (definitely not a broker for scalpers). Then, they manipulate larger time frame price action so automatic orders (stop loss, entry orders) shouldn't be really used with them.

    Also be aware that trading with real money is different than demo experience because you really feel the punches, which affects your judgement and decisions, so even a good demo method may look differently in real trading.

    good luck
    m

    ReplyDelete
  3. hi,despe906, i dropped oanda several months ago. Now i am looking for a good broker. could u please tell me some options?

    ReplyDelete
  4. I cannot be an oracle on brokers because I don't have that much experience with them. Oanda - I've read recently that they are even able to remove a profitable trade from an account without a trace, so the idea that one might do using Oanda for long term trades without automatic pending orders while offline is no longer valid. I use IG Index for long term trades (I've had some minor issues but generally I appreciate their platform stability and variety of instruments) and Intertrader for scalping. Intertrader's platform had some hiccups in mid August due to extreme volatility but I trust them. Yesterday I entered long cocoa at 2082, went off-line while 33 points in profit with secured stop loss at 2085. Before the session closed, cocoa went down to 2087 at my account, but the trade is still there 20 points in profit, so definitely they don't rig prices against me.
    I had a go at FX Primus 2 months ago but I must say that I've seen some unjustified moves on USD/ZAR, aggresive moves down in an up-trend. This may only hurt traders' balance sheets by hitting stop losses and triggering other types of orders. At the same time, a negative post about them appeared on FPA.
    I think ATC Brokers (USA) are an option, they offer also a futures account separately.
    Sucden (UK) looks o.k. they offer a demo to try. Again, referring to my previous comment, I would use ForexPeaceArmy as a guide, there's a lot of guys there sharing their experience and posting scam alerts.
    There are a few top-rated brokers there looking great - I didn't consider them yet because they accept only large traders. In the future, who knows...
    Happy and profitable New Year!

    ReplyDelete
  5. Hi, despe906,
    Thank you very much! Now i use hotforex to trade. but i am also looking for other more security brokers, i found VarengoldFX but i can't find more comments of it. if you have heard of it, please say something about it and hotforex of course.

    Happy new year !! I am Goodz, i just change the nickname.

    ReplyDelete
  6. BEWARE US TRADERS

    CFTC has put up a very strict regulation for NON US BROKERS...If you do fund your money with Non-US broker mind you that you could easy lose all your money once they get sued by CFTC...CFTC has become very powerful as they were able to shut down brokers that don't comply with DODD Rules...

    If you are going to use US brokers make sure its not MARKET MARKER...

    ReplyDelete
  7. Have you tried Institutional Liquidity? I've been with them for a while now and they seem to be good. They only service professional directly but retail traders like us can sign up through beamfx.

    ReplyDelete