OANDA Fees, Spreads and Commissions
- What is an OANDA broker?
- OANDA Pros and cons
- OANDA Pricing
- What are the fees charged by OANDA?
- OANDA trading fees
- OANDA leverages
- OANDA financing rates
- OANDA forex fees
- OANDA margin requirements
- OANDA non-trading fees
- What is the minimum deposit at OANDA?
- What is the procedure for getting the OANDA account approved?
- OANDA withdrawal fees
- OANDA Payment or Withdrawal Methods
- Spreads and margins
- OANDA Investment Assets
Since 1996, OANDA has been a forex broker based in the United States. The company is a privately held company and is therefore not listed on any stock exchange. It is regulated by top-tier authorities such as the US Commodity Trading Futures Commission, the National Futures Association (CFTC), and the UK's Financial Conduct Authority (FCA).
It offers two account types internationally, standard and premium, and a product catalogue with a wide range of CFD and spread betting offerings across a variety of asset classes, though not all are available in every region that it serves. In addition to forex, the broker provides indices, metals, commodities, and bonds for trading across financial markets.
Depending on the region, OANDA provides varying degrees of account protection to most clients. OANDA Europe Limited provides the ESMA-mandated negative balance protection, whereas OANDA Asia Pacific Pte Ltd. provides guaranteed stop-loss orders. Clients in the United States are an exception, as OANDA Corporation does not provide such protections for their accounts.
CFDs are a little bit complicated instruments that carry a high risk of losing money quickly due to leverage. When trading CFDs, 74-89 per cent of retail investor accounts lose money. You should think about whether you understand how CFDs work and whether you can afford to lose your money. Oanda's various entities provide slightly different services.
OANDA Pro’s and Con’s
Let’s discuss each one of them one by one.
● OANDA is one of the few global online forex brokers that accepts US clients.
● OANDA Corporation is a CFTC-registered FCM and RFED, as well as an NFA member. OANDA Europe is authorised and regulated by the Financial Conduct Authority in the United Kingdom, and clients are eligible for additional asset protection of up to £85,000 through the Financial Services Compensation Scheme (FSCS).
● fxTrade is an excellent trading platform because it is well designed and has an abundance of relevant tools and resources, such as Dow Jones FX Select news and various types of calculators. Furthermore, OANDA's desktop and web-based platforms now include TradingView, an advanced financial visualisation platform.
● OANDA provides a unique set of economic analysis, calendars, real-time news feeds, and advanced data analytics in a retail trading platform.
● OANDA does not provide negative balance protection to their clients in the United States. This means that traders in the United States with negative account balances may end up owing money to the broker.
● Does not provide guaranteed stop-loss orders (GSLO) to clients in the United States or the United Kingdom.
● Does not provide individual stocks, ETFs, industry sectors, or cryptocurrencies, limiting its total CFD offering to 55, significantly less than its competitors.
● In addition to fees for deposits/withdrawals, bank wire transfers, debit card, and ACH transactions, OANDA charges a monthly inactivity fee.
Clients will get two pricing options at OANDA:
OANDA’s commission is wrapped into the spread they offer with this account type, so the spread is the only cost you pay.
● Commission plus core spread
Access a lower spread than spread-only pricing account. You only pay a set commission per transaction. Each trade will cost the sum of the applicable core spread plus commission. The OANDA’s standard pricing spreads begin at 0.1, with a commission of $40 per million USD traded.
The OANDA’s pricing models are simple and straightforward. With the spread-only pricing option, clients can pay the spread or access lower spreads with the commissions model.
Here is the table showing the complete comparison between the pricing options.
Commission + Core pricing VS spread only
Here is the list of complete comparisons:
- Forex and metals CFDs
The forex and metals CFD pricing at OANDA is derived from liquidity providers, which are large financial institutions that provide with available spot pricing for FX pairs and metals. Pricing for various products/instruments is determined by different groups of liquidity providers.
- Indices CFDs
The indices CFD pricing is calculated by referencing a combination of the relevant futures prices and the underlying instrument's cash or spot prices. Adjustments are made to account for their own spread, liquidity in external markets, currency exchange rate differentials, and other relevant factors. Adjustments may also be made to account for market movement following dividend payments and other anticipated corporate actions.
- Commodities and copper CFDs
The commodity CFDs are priced using underlying futures contracts. When an underlying futures contract is about to expire, OANDA calculates the basic rate, which is the price difference between the expiring futures contract and the next futures contract. From then on, the CFD price is calculated as the present value of the price of the next futures contract, using the basic rate to calculate the present value. The present value is calculated in real-time, second by second.
It is done in this manner:
➔ CFD price is generally high to contract price when basis rate is positive and above zero.
➔ CFD price is generally low to contract price when basis rate is negative and below zero.
Here is the complete illustration list of the OANDA’s assets pricing available.
|Commission per 100,000 base currency traded
What are the fees charged by OANDA?
OANDA charges low forex fees but high CFD fees. Withdrawal fees are low, but not always, and there is a small inactivity fee. The First card withdrawal each month is free for all users.
➔ OANDA trading fees
Oanda's trading fees are reasonable. Oanda generally charges spread costs rather than commissions per trade. If a client does not use their account for more than a year, they are charged a monthly inactivity fee.
It is difficult to compare forex broker trading fees. So, here is a comparison of the brokers based on the total fees of a typical trade for selected products.
- Forex: EURUSD, AUDUSD, GBPUSD, and EURCHF
- Stock index CFDs: EUSTX50 and SPX
The typical trade entails buying an instrument, holding it for 1 week, and then selling it. For volume, let’s consider a forex position worth $20,000 and a stock index CFD position worth $2,000.
➔ OANDA leverages
Let’s consider the following calculated leverages:
- 20:1 for stock index CFD
- 30:1 for forex
Brokers are charged spreads, commissions, and financing costs as a result of these catch-all fees. Let's take a look at Oanda's charges.
➔ OANDA financing rates
Individuals need to pay interest on positions held overnight. These are known as financing rates. The rate's value is determined by a number of factors, including daily rates, the size of the position, the product is chosen, funding rates, and so on.
Oanda's interbank rates range from -3 to -0.16 per cent for long forex positions and from -0.46 to -2.55 per cent for short positions. These, however, change on a daily basis, and some may fall outside of the above-mentioned ranges. These rates are factored into fee calculation.
➔ Forex fees
In the case of most forex pairs, OANDA charges low forex fees, matching its closest competitors.
Some brokers offer PIP calculators to assist you in assessing and managing your risks. You can use a PIP calculator to determine the value of a pip in the currency one is trading.
Unfortunately, OANDA does not have such tools. They do, however, provide a Spread Cost Calculator that one can use to calculate annual absolute spread cost. There is also a Currency Pair Units Calculator that can help to determine the maximum number of units can trade with your available margin.
➔ Oanda margin requirements
OANDA's platform allows for margin trading. It implies you can open positions that are larger than your account balance. The margin requirements differ from one entity to the next. They are also affected by the leverage you select as well as whether you have a professional or regular account.
➔ Oanda non-trading fees
Non-trading fees at OANDA are mixed. No account or deposit fees apply. If one do not use their account for trading for more than a year, OANDA charges a reasonable $14 (£10) monthly inactivity fee. The first debit/credit card withdrawal in each calendar month is free, but subsequent withdrawals are charged. The withdrawal fee for bank transfers and PayPal is quite high (GBP, EUR, USD only).
What is the minimum deposit at OANDA?
There is no such thing as a minimum deposit at OANDA. It totally depends on the individual what amount they want to keep in deposit.
What is the procedure for getting the OANDA account approved?
You can open an account in less than 10 minutes from start to finish. Account approval, on the other hand, may take several days because we were asked to send some of our verification documents via email; however, it is still quick if you respond to their emails on time.
Oanda accounts can be opened in six steps. These are mentioned here:
Step 1. Set up your account details. You need to set up a username and password.
Step 2. Complete the personal information including name, residential proof and address.
Step 3. Provide the employment relevant information.
Step 4. You need to answer certain questions regarding the trading experience.
Step 5. You need to fill out a small quiz for evaluating your past knowledge about the same.
Step 6. In the end, you have to upload a scanned copy of your ID or passport for the verification of your identity.
OANDA withdrawal fees
Withdrawal fees vary and it depends on your location and account currency. The main withdrawal options are the same as the deposit options. Withdrawals to credit/debit cards are typically fee-free, as are withdrawals to PayPal or other electronic wallets. However, most withdrawals via bank transfer are quite expensive. Withdrawals from USD or EUR accounts, for example, cost $/€20; however, in many regions, subsequent withdrawals within the same calendar month cost even more, typically $/€35.
OANDA Payment or Withdrawal Methods
One can request a withdrawal by transferring funds from your trading account to their landing account and then requesting one. You can withdraw funds using a variety of methods, including debit cards, credit cards, and bank wire transfers.
There is one thing to keep in mind withdrawals are subject to the OANDA’s rules of hierarchy. If you deposited funds using multiple methods, you must withdraw the total amount deposited by each method in the following order: debit cards first, then credit cards, wallets, and finally bank wire transfer.
Spreads and margins
OANDA provide competitive spreads on all of its CFD markets, including assets, indices, forex, and metals.
OANDA takes the security (mainly in form of deposits) against any losses you may incur when trading with leverage. This collateral is commonly known as margin. Margin rates and maximum leverage ratios differ according to the instrument traded.
➔ Margin tiers
In case if the instrument has margin tiers, then following principle is applied:
● Higher the applied margin rate then position you hold over a given size would be larger and vice-versa.
Different margin rates will be applied that is solely depending on the size of the one’s position; on a tiered basis, the incremental margin rate increases as the size of your position grows.
There are several events that can bring the fluctuations in a spread.
OANDA spreads may be wider than usual at times and in certain market conditions. This includes the following:
- Market openings and closings
- International or geopolitical events of major importance
Margin: OANDA provides their clients with the option of trading with leverage. This means the clients can open trades with a value greater than their account balance without having to deposit the full amount of the trade. One of the advantages of trading with leverage is that they can potentially make a lot of money for a small investment. Trading with leverage, on the other hand, can result in significant and rapid capital losses. Your losses may be greater than your deposits.
OANDA take the form of collateral (or deposit) to protect clients from any losses they might have when you trade; this collateral is commonly referred to as margin. The leverage limit associated with each trade determines the amount of margin required to open each trade.
OANDA Investment Assets
OANDA does not provide and offer individual stocks, ETFs, industry sectors, or cryptocurrencies, limiting its total CFD offering to 55, significantly less than its competitors. In addition to fees for deposits/withdrawals, bank wire transfers, debit card, and ACH transactions, clients have to pay a monthly inactivity fee.