OANDA negative balance policy is particularly attractive because it will guarantee traders to never be in debt against the broker. Or, will it?

OANDA Negative Balance Policy

There are a lot of reasons why beginners may seek OANDA. Since OANDA allows deposit as low as $1 and lot sizes as small as 0.00001 lot, it is possible for us to start trading with whatever is left from our monthly expenses. OANDA's negative balance policy is particularly attractive because it will guarantee traders to never be in debt against the broker. Or, will it?

There are some important facts regarding OANDA's negative balance policy that you need to know. Here are three summaries to expand your insight:


1. Read the Fine Prints

OANDA United States Legal Documents hide some fine print. Its Risk Warning page is full of common tropes such as "foreign exchange transactions carry a high degree of risk" and "trading on a margin basis means that any market movement will have a proportionate effect on your deposited funds". You won't see any notes about the negative balance policy until you explore the extremely fine prints on the footer.

Right below the "all rights reserved" annotation, you'll see this paragraph:

"Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and may not be suitable for everyone. We advise you to carefully consider whether trading is appropriate for you in light of your personal circumstances. You may lose more than you invest (except for OANDA Europe Ltd retail customers who have negative balance protection)."

With that said, you may get into debt against OANDA if you suffer losses in a higher amount than your capital. That is, unless you specifically sign up through OANDA Europe Limited as opposed to other entities under the OANDA brand.

🌐 Website
💼 Regulation
💲 Min Deposit
Year Established

Islamic Accounts available
US traders are welcome
Negative balance protection
Segregated accounts
Compensation scheme
VPS Affiliate program
Trading via API
Wire transfer

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.


2. OANDA's Margin Rules May Prevent Negative Balance

After learning about those fine prints, do you feel cheated? No worries. OANDA enforces one of the strictest margin call policies in the industry. Therefore, it is quite difficult for any trader to suffer negative balance apart from exceptional cases such as the SNB Black Thursday 2015.

What does margin call mean? It is a notification from the broker that will be sent when your account fails to comply with margin requirements. OANDA's US entity establishes margin rates and maximum leverage in accordance with US National Futures Association (NFA) requirements. The rule may change from time to time, but it is still stricter than any margin requirement required by a non-US regulatory body.

Furthermore, OANDA's margin call policy is also quite emphatic. As mentioned in its website, OANDA will send daily margin call emails to all accounts that fall below margin requirements at 3:45 pm ET. When an account remains under-margined for 2 consecutive trading days, all open positions will be automatically closed using the current fxTrade rates at the time of closing.

If trading is unavailable for certain open positions at this time, they will be automatically closed using the current fxTrade rates when the markets for those instruments re-open.

OANDA will observe margin requirement compliance every 3:45 pm ET. If you managed to fulfill the margin requirement during the day but it falls below the threshold at 3:45 pm, your account will be considered undermargined.

With all things considered, OANDA traders are more likely to suffer margin call terror and forced sell rather than negative balance. You may not need to care about OANDA's negative balance policy at all.


3. Inactivity Fees Won't Result in Negative Balance

OANDA charges inactivity fees for accounts with no trading activity for a period of 12 months. It will be applied on the third last weekday of each month until the account is closed, you resume trading on your account, or the balance on your account is zero.

Therefore, OANDA's inactivity fees won't result in negative balance. You can even claim rebates for up to 3 months' worth of inactivity fees when you are starting to trade again. Otherwise, you can just withdraw all of the available funds when you are losing the passion for trading or looking to move your trading plan elsewhere.


Bottom Line

Well, those are some important facts that you need to know about OANDA before signing up. Are you still interested in joining this world-famous forex broker? Or will you compare their policies to other top forex brokers first?

There are a lot of things that one needs to consider before committing to any forex broker. Apart from the negative balance policy, there's also the issue of customer support and trading fees. Look for more information on OANDA, and make sure you are confident with your choices.