OANDA is suitable for short-term trading approaches, be it scalping, day trading, or swing trading. Here are the reasons.
OANDA is a well-known broker among international forex traders, both novice and seasoned. They are famous for providing trusted currency data and an innovative proprietary trading platform through fxTrade. But prospective clients may be interested to know whether OANDA is suitable for specific trading styles, such as scalping and day trading. In this article, we will dig into the advantages and disadvantages of OANDA for short-term trading.
What is Short-term Trading?
Short-term trading is a popular technique that strives to open and close trades in a brief period of time, typically days or weeks, though the time span can be much shorter. Commonly known short-term trading strategies are scalping, day trading, and swing trading.
- Scalping is a remarkably short-term strategy in which traders may open and close positions in a matter of seconds or minutes. On a typical trading day, hundreds of transactions are frequently made by scalpers in an effort to turn small gains into a sizable profit.
- Day trading is the most common short-term trading approach for any instrument. Day traders will buy and sell a variety of instruments throughout the course of the day, then close all open positions before the market closes. This prevents them from holding positions overnight, which saves them money on swap (rollover) costs.
- Swing trading is a short- to a medium-term technique that involves keeping open positions for a few days or weeks. Swing traders will determine whether an asset has future profit potential by looking at the swing highs and swing lows of its price, probably through a combination of technical and fundamental analysis.
While long-term trading strategies seek to generate constant returns over a longer time frame, short-term trading focuses on the volatile price action of a financial instrument to gain rapid profits. Short-term trading is therefore viewed as a more speculative investment type than a conventional buy-and-hold strategy.
Retail and institutional traders that seek quick profits from slight price changes are particularly fond of this type of trading approach. However, short-term trading strategies are not suitable for all types of instruments. It also requires more stringent trading environments.
Here are some necessary items needed to apply optimum short-term trading strategy:
- Derivative financial instruments, such as forex and CFDs.
- Cheap fees, particularly slim spreads and low commission fees.
- High leverage (margin trading).
- Low latency and/or fast order execution.
- Low to no slippage.
Aside from that, scalpers must specifically confirm with their broker whether they can open and close trades within a few minutes. Luckily, OANDA allows scalping.
OANDA for Short-Term Trading
OANDA is undeniably suitable for short-term trading approaches, be it scalping, day trading, or swing trading. Trader testimonies in online forums such as Forex Factory mention that they can enter and exit positions even within seconds. There is a one-click button that enables traders to send orders as fast as possible, and order executions are nearly instant.
OANDA has slippages, but they apply a fair slippage policy under which traders may get slippages that are both good and bad for them. This is good news for short-term traders because some other brokers are famous for delivering only negative slippages to their traders.
OANDA offers two types of trading platforms: the proprietary fxTrade and the more popular Metatrader Both are available for desktop and mobile, equipped with advanced charting and myriad trading tools. OANDA's proprietary mobile app is also very satisfactory for anyone who prefers to trade on the go.
What about trading fees? OANDA offers two pricing options for no less than 100 trading instruments, namely spread-only and commission plus core spread. Core spreads start at 0.1 pips, while a commission of $40 is charged on every million USD traded.
Leverage may be the only downside that OANDA short-term traders have to deal with. OANDA's US arm is governed by the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC) which limit leverage to 50:1 on major currency pairs and 20:1 for all others. Needless to say, this ratio is far lower compared to other international brokers.
Traders looking for brokers with accurate precision, OANDA can be an option. That is because OANDA is a broker that provides quotes with 5-digit accuracy and active price movements that follow market developments. Order execution speed is also faster in this broker.
It provides benefits for novice traders, as they can trade with smaller volumes using the calculation system based on currency value, unlike other brokers adopting the lot system.
Founded in 1996, OANDA was built by Dr. Michael Stumm who is a lecturer in Computer Engineering at the University of Toronto, Canada, along with his colleague, Dr. Richard Olsen of The Olsen Ltd., which is one of the leading econometric research institutes. They have a head office in San Francisco, United States.
OANDA branch offices can be found everywhere. Some of these offices are located in the United Kingdom, Singapore, Japan, and Canada. With this number of offices spread, OANDA has increasingly attracted the attention of clients worldwide.
OANDA's company is registered under several well-known jurisdictions in financial trading. They are regulated by CFTC and NFA in the US, FCA in the UK, ASIC in Australia, and many others. Traders do not need to worry anymore about security when trading in OANDA. However, these advantages make trading rules at OANDA more stringent compared to other brokers.
For example, OANDA only allows maximum leverage of 1:20, because the rules in the US and Japan do not allow leverage above that. Besides, the registration procedure is more complex due to various additional requirements that are not submitted by other forex brokers. On top of that, hedging is not allowed in one trading account as the client must open an additional account to hedge.
Nevertheless, OANDA is known for being a leading broker with many advantages offered. OANDA faces increased market risk during periods of price volatility, such as economic and political news announcements. When market spreads increase or decrease, their pricing engine widens or narrows spreads accordingly. That way, traders can get the latest conditions from price movements in the market more quickly.
Prices move very fast in the market. Especially when news releases have a large impact on market volatility. This condition is often exploited by brokers to take advantage of clients with Requotes. However, traders do not need to worry about additional costs when trading with OANDA.
The company never withdraws Requotes so traders can get maximum profit. When traders are unavailable to monitor open positions, they can set take profit orders to lock in profits and Stop Loss orders to help protect against further losses.
As an experienced and well-known online forex broker, OANDA is committed to maintain an efficient trading environment that reduces latency and provid tools to help clients manage the degree of acceptable slippage.
With a fast & reliable trading platform by OANDA, clients' trades are executed in 0.012 seconds. This suits traders who choose brokers based on execution speed.
Because of this exceptional execution service, it is not surprising that OANDA won many awards, including the winner of the world's Best Retail FX Platform at the prestigious e-FX awards. The broker is also voted number 1 for Consistency of filling trades at quoted prices, Execution speed, and Reliability of platforms.
There is no minimum deposit or minimum balance required to open an OANDA account. Deposit and withdrawal can be done easily. OANDA provides a variety of payment method facilities, including Paypal, Wire Transfer, Credit Card, and Debit. Traders can adjust it to the region where they live.
OANDA provides more than 100 trading instruments, including 71 currency pairs, 16 indices, 8 commodities (Brent Crude Oil, Copper, Corn, Natural Gas, Soybeans, Sugar, etc.), 6 Bonds, and 23 Metals.
The fxTrade and MetaTrader platform are available at OANDA. These platforms can be used for Desktop and Mobile. Another plus is they have an OANDA Technical Analysis that exists in collaboration with a technical analysis provider called Autochartist.
With these platforms, clients can monitor price movements easier and automatically recognize patterns created on charts, as well as receive alerts when the awaited patterns appear. Access to this technology can be enjoyed free of charge.
In conclusion, OANDA is an ideal broker for traders in need of fast execution backed by many years of experience. The company is also a good alternative for those looking for a well-regulated broker with flexible trading and deposit conditions.
27 Comments
Dec 1 2022
As a new user of OANDA, it is true that we can place an order in a second, the order is executed back to the broker and with his scalping method. Slippage can happen at any time, so I won't complain about it. But I doubt their slippage policy which this article has not said. And I haven't experienced it yet For leverage, 50:1 and 20: 1 are too low. I was expecting a leverage of 200:1 so I can trade more without depositing too much money. In the other side lower leverage mean can limit my trading and actually good for money management. Sometimes I need to change my money management because of lower leverage. But so far all OANDA offers are good and no problem. As far as possible.
Jan 20 2023
Mcallister: Yes, I agree with the slippage that you talk about. I have same feeling and same doubt about slippage policy. This article has discussed fair slippage policies, but if the market is very volatile, slippage is not the broker's fault and therefore cannot control slippage and the broker also can't prevent slippage during that time.
It's just like this:
"It's not our fault if you fall into a wet pool on a rainy day. So the best way to avoid slipping is to avoid walking in the rain"
This means that as a trader it is better to avoid slippage moments such as: B. We have become aware of news, some reports or other things that may affect the market during this period.
Jan 20 2023
In fact, OANDA's trading terms are quite unique. If you read carefully and visit review brokers on this site, you will find that the minimum deposit amount is up to you.You can easily deposit from as little as $1, but the fees are also unique. Did the article say $40 to millions of dollars traded? Since it is 10 lots, you will be charged if you trade 10 lots. It takes a lot of time for a beginner to reach 10 lots.
Looking at the size trades, it is quite unique as the smallest size trade is 0.00001 lot! Thus, it offers traders the freedom to set their own trading conditions that most brokers do not offer. For traders who want to try OANDA and want "custom trading terms", OANDA is for you.
Jan 20 2023
Scalping in OANDA? For me there is some terms that needed to do scalping which is need more lower spread. But most of brokers offer spread zero spread but it floats. Meanwhile at OANDA, the spread is fixed depending on which currency pairs. It started at 0.1 pips and fixed one. It will be very good trading condition for scalping meanwhile the commissions only $4 per 1 lot which is good choice.
SO, Scalping in OANDA very fulfill the terms that I needed.
About the terms, I have read in this website's article, you can read in here : The secret of succesful Trader
Jan 20 2023
I think all the comments here point to the benefits of OANDA. In other words, where there are advantages, there are also disadvantages. Beside leverage 1:20, What is another drawback you may have encountered with OANDA? I know US brokers, in this case OANDA is regulated in a country that is very strict on financial matters, so they may prove to be very good and trustable..
Jan 20 2023
Vincent Yo: I think the other downside is the trading terms that give the trader too much freedom. I am saying about person that in the comments section above were talking about customizable trading terms. If you are experienced trader, you may understand and know how to set your money management in such condition but if you are beginner? How can you swim in the ocean meanwhile you can't swim well?
Why do some brokers set deposit terms and leverage terms? Of course, to introduce traders to money management and risk management. If you have some restrictions, you can make them more directional and avoid many mistakes while trading. If you come across a broker that applies a minimum deposit of $100 at 1:500 leverage means the minimum trading balance is $100. Can you guarantee that your $34 will survive trading on a standard account when you come across a broker like OANDA?
read about managing risk in here
Jan 20 2023
Jonathan Spade: I also think same as you think, If high leverage can be the problem, what about your trading limit, right? If something that can you so much freedom become the tools that killed you at trading, it will be very dangerous with such condition trading that gives you customable trading condition.
About the leverage at OANDA also very low which is 1:20, to gain profit like standard account, you need at least $50,000 to trade with much more freedom with 0.1 lot size trading. But since it can 0.0001 size, all trader that have no experince may trade with that size but once again for beginner it will be hard to determine the limit of your trading rules.
Feb 14 2023
it's rare to find a broker who can have low costs, low spreads. But I'm a bit suspicious because OANDA provides a proprietary trading platform. Some say that the broker's default trading platform is prone to manipulation, even worse, it can even be repainted. So scary.
For those who have joined OANDA for a long time, can you share your experience using this broker? Is it better to use a proprietary platform or use the more common metatrader? What account did you try to open when you first started?
Feb 18 2023
Kimberly Havoz: If you are not an iOS user you can trade with metatrader 4 and metatrader 5. And if you are iOS and live in the US you will only be using a proprietary platform and having a broker is Popular things in the United States offer to trade. only their own trading platform.
And because OANDA is regulated by the US regulators CFTC and NFA; I can guarantee that the broker is very safe to trade. Since the US regulator is very strict with the broker, if OANDA goes wrong in a small case, it will be severely punished. And in order to be regulated in the US, a broker must also meet some very strict conditions and not all brokers can be regulated in the US. Account type in OANDA only standard account and you can deposit from $1 and you can choose the leverage you want from 1:1 to unlimited
Feb 18 2023
Both scalping and day trading are one-day trade which is very short time. And it's great for little money like me for traders. Meanwhile, OANDA seems to offer good trading conditions for scalping and day trading.
Speaking of OANDA deposit, we are very free to transact with our own money. I can even deposit for $1 and choose the leverage that suits my conditions. The question is how much margin do I need to open an account and be able to day trade. Also, what leverage can I use for day trading and is it suitable for a beginner like me? Thank you!
Feb 18 2023
Jorgun: I can say, the only broker that allows you to freely deposit and leverage, only at OANDA. I mean, you can even choose your own deposit amount and the leverage you want. However, for a novice trader, it may seem difficult to determine the deposit and leverage.
In my opinion, do you want to follow it or not. If you have enough money just deposit $100 with leverage 1:200. This is very enough for trading as you can open 0.01 lots for trading. The amount of margin used is really small. For example, you open EUR/USD at 1.0685, the margin you can use is 1.0685 x 1000 units (0.01 lots) divided by 200. The margin used for each the transaction is just 5 dollars.
But if you have less than $100 try depositing $30 with leverage 1:300 or 1:400. I think that's enough of a trade-off. And be careful not to open too many trading positions
Feb 18 2023
Since i have had a bad experience with market maker broker, i really want to know and suspicious about broker even though they say they are STP broker, I still dont believe it faster until I read the broker's review. But actually, I really want to determine if the broker is STP or not by myself. So, I can easily find the right broker for me without any doubt!
This might be a bit off-topic. What is OANDA's Broker Type? Is it a non-commercial broker or a commercial broker? If the broker itself says it is a broker with no dealing desk, what factors are needed to say that it is a broker without dealing desk?
Feb 18 2023
Jesisca: In fact, not all market-making brokers are bad. You just need to see the broker regulation. If they are regulated by a weak regulator there is no strong regulator like USA, Australia, Tokyo, London etc. then it is best to avoid brokers even if they are NDD brokers. (read here : Broker Fact Check : Are Market Makers Always Bad)
To see if the brokers are NDD or not. Just see if they allow replication or not. Because the market maker has limited liquidity since its own market is not large, the market maker prohibits scalping.
Another factor you need to pay attention to is the spread. Most market makers only offer a fixed spread, but in reality, the forex market actually offers a variable spread.
With these two factors, you can determine if the broker is an NDD or not. Hope this helps you figure it out!
Mar 6 2023
Dude, what can determined that we can use these threee types of trading style? Okay, based on the article, OANDA can be perfect to beginner since the spread it very low and the commissions is not so heavy for beggnner. It said we can be charged $40 for every million dollar traded. It mean the commissoin only $4 per lot (1 lot = $ 100,000). SO, I think all trading styles may suitable to the OANDA because of terms that really good and friendly. And also because of that, I confused to decide which trading style that may suit to me.
Mar 6 2023
trader555: The most suitable trading style for you depends on factors such as your personality, trading objectives, experience, and availability. The three main styles of trading are scalping, day trading, and swing trading. Scalping involves quick trades and profiting from small market movements, while day trading focuses on short-term moves within a day. Swing trading, on the other hand, targets medium-term market movements lasting several days to weeks.
To choose the best trading style for you, it's important to consider your unique circumstances and preferences. You can also read this article : (4 forex trading styles in nutshell) to help you figure out which trading style might suit you best
Mar 6 2023
My main concern about trading with OANDA was their low leverage of 1:20, especially since many other brokers regulated by top tier regulators offer higher leverage. I don't understand why the US regulator has this policy, although I do recognize that it's not easy for brokers to become regulated in the US due to the high cost of operations and the need for sufficient funds. This does show that OANDA has good money management and is safe to trade with, but the low leverage still seems unfriendly to me.
Mar 6 2023
Weghorst: Man, the other brokers can offer higher leverage because they may be operating in countries with different regulatory requirements and guidelines. For instance, ASIC-regulated brokers in Australia are limited in the amount of leverage they can offer to traders, but they may be able to offer higher leverage to traders outside of Australia where they are not subject to the same regulations.
On the other hand, the CFTC and NFA in the United States have established rules and regulations that limit the amount of leverage that brokers can offer to traders. The reason for this is to protect traders from excessive risk-taking and to maintain a stable and fair market. By offering low leverage, traders are encouraged to trade with smaller positions, which helps to reduce their exposure to market fluctuations and potential losses.
Mar 6 2023
Vega: So, based on what you said about the the leverage is higher, the brokers that regulated in Australia can give other trading rules based on other country rules. It means I actually trade with brokers that regulated from other country. If you give example the ASIC broker; If I trade with them, I will get other countries rules such as SEychelles, right??
I see now. And because OANDA is not regulated in other countries that is not so strict, the OANDA cannot gives us the higher leverage. By the way, thank you for the explanation!
Apr 11 2023
Leverage 1:20 is obviously a joke for small capital traders. I can't imagine how to open position with such tiny leverage. Beside of that, short terms trading needs us to be aware with any slightest movement in the market.
I hope OANDA have some solution for this barrier. Is there any copytrading features or promotion to enable us to get more capital?? I also interested in affiliate programs that offered by some forex brokers, can oanda provide it? If it's available, might consider to try the service.
Apr 23 2023
How does Oanda's platform enable traders to engage in short-term trading using derivative financial instruments, such as forex and CFDs, and what tools are available to help them manage the associated risks, such as market volatility, leverage, and the impact of global events on the markets? Additionally, what role does Oanda's compliance with regulatory bodies and customer support services play in enhancing the overall trading experience for those interested in using derivative financial instruments for short-term trading strategies? Furthermore, is Oanda's platform suitable for both novice and experienced traders looking to engage in short-term trading with derivative financial instruments?
Apr 23 2023
@Ferran: Alright, le me answer ur question, mate, so Oanda's platform is a ripper choice for those who want to get involved in short-term trading with derivative financial instruments like forex and CFDs. The platform's got all sorts of features to help traders stay on top of market data and make informed decisions, like customizable charts and analysis tools. And to manage risks associated with short-term trading, Oanda's got stop-loss orders, negative balance protection, and some handy educational resources too.
The best part? Oanda's compliance with regulatory bodies and customer support services mean that you can trade with peace of mind. The platform is regulated by financial regulatory bodies and follows strict standards of transparency, fairness, and security. Plus, their customer support team is always on standby to help you out with any issues you might run into.
Whether you're a newbie or a seasoned pro, Oanda's platform is suitable for traders of all skill levels who are keen to get involved in short-term trading with derivative financial instruments. With a user-friendly interface and advanced trading tools, you'll be sure to get the most out of your trading experience. Cheers!
Apr 23 2023
Slippage is an inevitable part of trading forex due to the market's constant fluctuations. However, what strategies and techniques can traders use to minimize slippage when trading on Oanda's platform, and how does Oanda's technology help traders to achieve the best possible execution of their trades? Specifically, how does Oanda ensure price transparency and prevent price manipulation, and what types of orders are available to traders to help mitigate the impact of slippage? Additionally, how does Oanda's execution speed factor into slippage, and what measures does the platform take to ensure speedy and reliable order execution for its users? Overall, how can traders optimize their trading experience on Oanda's platform to reduce the impact of slippage and maximize their profits?
Apr 23 2023
@Shin: Slippage is a reality of forex trading because the market is constantly changing. However, there are things traders can do to minimize its impact on their trades when using Oanda's platform. Oanda provides tools like limit orders and stop-loss orders to help traders manage slippage, and the platform is designed to provide price transparency and prevent price manipulation.
Oanda's execution speed can also affect slippage, but the platform is built to be fast and reliable, which helps to minimize anys that might lead to slippage. To optimize their trading experience and reduce the impact of slippage, traders should stay up-to-date on market events that may impact their positions, use risk management tools to manage their trades, and only trade with funds they can afford to lose.
Overall, while slippage cannot be completely eliminated from forex trading, traders on Oanda's platform can take steps to minimize its impact and maximize their profits.
Apr 23 2023
When it comes to trading forex and CFDs on Oanda's platform, which trading strategy - scalping, day trading, or swing trading - is considered to be the riskiest, and what factors contribute to this increased risk? Additionally, how does Oanda's platform facilitate each of these trading strategies, and what tools and resources are available to help traders manage the risks associated with each strategy, such as volatility, leverage, and market events? Finally, what steps can traders take to minimize risk when employing these trading strategies on Oanda's platform, and what role does Oanda's regulatory compliance and customer support services play in mitigating the risks associated with trading forex and CFDs?
Apr 23 2023
@Brandon: When it comes to trading forex and CFDs on Oanda's platform, different trading strategies carry varying levels of risk. Scalping, which involves making multiple trades in a short period of time to capture small price movements, is generally considered the riskiest trading strategy. This is due to the high number of trades involved, which can make it challenging to manage risk effectively. Day trading, on the other hand, involves opening and closing positions within the same trading day and may be less risky than scalping due to the lower frequency of trades. Swing trading involves holding positions for several days or weeks to take advantage of longer-term price movements and is typically the least risky of the three strategies. (read : 4 Forex Trading Style)
To help traders manage the risks associated with each of these trading strategies, Oanda's platform offers a range of tools and resources. These include stop-loss orders, which allow traders to limit potential losses, and margin closeouts, which help prevent traders from overextending themselves. Additionally, Oanda is regulated by several major financial regulatory bodies, which helps to ensure that traders' funds are protected and that the platform operates in an ethical and transparent manner. Customer support services are also available to help traders with any questions or issues that may arise while trading!
Nov 23 2023
A leverage of 1:20 appears to be inadequate for traders with a limited capital, almost like a jest. It's challenging to comprehend how one could initiate a position with such restricted leverage. Furthermore, engaging in short-term trading necessitates a heightened awareness of even the most subtle market movements. While it's true that OANDA is regulated by the robust US regulator, which is commendable, the fact remains that leverage ranging from 1:20 to 1:50 may not be sufficient, especially considering that some other brokers offer higher leverage.
However, I am hopeful that OANDA might have strategies to address this challenge. Are there features such as copy trading or promotions that could assist in accumulating more capital? Additionally, I'm curious about affiliate programs commonly offered by certain forex brokers – does OANDA have such programs? If they do, I would certainly be open to exploring and considering their services.
Nov 25 2023
Regarding leverage concerns, OANDA is aware that a leverage of 1:20 might seem limiting, especially for traders with smaller capital. While they are regulated by the robust US regulator, which is commendable, it's true that some other brokers offer higher leverage, ranging from 1:20 to 1:50.
However, OANDA is continually working to provide solutions. They do offer features like copy trading and promotions that can be beneficial in building up capital. Moreover, affiliate programs, a common offering by forex brokers, are available with OANDA. If you're interested, exploring these features and programs could be a promising avenue to enhance your trading experience with OANDA. And based on my experience, OANDA really offer promotion bonus with Deposit Bonus. If you are interested, you can click in this article to learn more about it : Does OANDA Offer a Deposit Bonus?