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As OANDA enters the spread betting market we take a look at the company in a little more depth to see if they are worth opening an account with.

OANDA has always been one of the those retail brokers in the UK that has sat in the back ground with a slightly odd name not offering spread betting. Where does the OANDA name come from?  Nowhere apparently, it can mean a bunch of things or nothing at all…

As such and with a quick glance at the higgledy piggledy website you’d be forgiven for not giving them a second look.

However, thankfully, OANDA now offers UK clients the option to trade Forex (and other markets) via the tax efficient spread bet instead of just SPOT or CFD trading.  If as a trader you’ve shied away from OANDA in the past because of this, it’s now worth opening an OANDA spread betting account, diversifying your counterparty risk and giving them a go.

Reputation in the industry

Now that the FSCS protects account balances up to £50k, this is probably the most important point when looking for a new broker.

OANDA is well respected in the industry, a quick search of spread betting forum discussions suggests that customers are generally treated well by the traders and that support deals with issues quickly and efficiently.

Awards and recognition

OANDA won “Best Value Forex Broker” and “Best Forex Media Resource.” in the 2014 UK Forex Awards.  This can be largely ignored…

However, they were awarded “Highest Overall Client Satisfaction” and “#1 in Customer Service” in the 2014 Investment Trends Report.  For those that are not familiar with the Investment Trends Report, it is not an awards service, but a serious exercise in market research into online trading worldwide.

Investment Trends run surveys, conduct up to 20,000 phone interviews and have a team of analysts that sift through the data collected to produce a report that covers the entire industry in great detail.   The results come from talking to both clients of OANDA and their competitors and is worth paying attention to.

Margin rates

OANDA also have a fairly healthy attitude to risk, both theirs and clients.  They highlight this by keeping leverage at a max of 100:1.  So unlike some brokers who offer clients the ability to trade on 500:1 they reduce the amount of exposure their clients have to the market.

They claim this is because anything above 50:1 is too much leverage for retail clients and results in an excessive amount of trading losses.  By only allowing 1o0:1 leverage, they are able to save Forex traders from themselves and keep longer term and more profitable relationships with their customers.  After all, not over leveraging is one of the golden rules of trading.

Of course when brokers raise their margin rates, it’s to protect them from clients defaulting on negative balances.  But also helps maintain healthy trading strategies.  This also meant that when the CHF cap was removed and clients with excessive leverage were left in negative equity, OANDA were able to forgive the debts.  A decision that no doubt was made easier by the fact that the debts were not as severe as other brokers offering 500:1 leverage.

Trading platforms

oanda mt4OANDA offer four trading platforms, the two most popular being MT4 and fxTrade.

fxTrade is their own in house platform.  And whilst being a little dated looking does the job well.  In reality, traders benefit more from simple, clean and functional platforms rather than a platform with bells and whistles and a load of stuff you don’t really need.  In finance the old adage, the more boring it is the better it is rings true.
For clients that do want the bells and whistles OANDA offer MT4 for spread betting which is and probably always will be a market leader.  OANDA MetaTrder 4 offers around 50 built in indicators and clients can upload their own expert advisors if needed.

OANDA also have a full suite of apps for mobile trading and clients can trade on the move via iPhone, iPad, and Android devices.  You can see a demo of the fxTrade platform in the video below:

Spreads and Pricing

The spreads on offer from OANDA are pretty decent. 1.6 on EURUSD, 1.9 on Cable and 1.5 on the DAX.  They are not market leading, but they are good enough to be competitive.

If you’re a big trader, the cheapest broker is not always the best and if you want good tech, excellent customer service from an established broker, you get what you pay for.

oanda spreads

Regulation and protection of funds

OANDA has been authorised and regulated by the FCA since 2011 and although founded and HQ’d in the US and operating all over the globe does have a small office in London.  You can see the regulatory status of the firm by looking at the FSA register here.

OANDA is not a public company so you can’t keep an eye on the share price to see how well the company is doing as a whole, but some funds are protected by the FSCS if things were to go wrong.  Being regulated by the FCA they are also bound by their reporting, marketing and treating customers fairly guidelines.

Welcome bonus

No welcome bonus with OANDA.  Not necessarily a bad thing as the more serious brokers that cater for bigger traders let their service and tech win new business.

Added Value

You get a few bits with OANDA, they have some in-house analysis that is fed through to marketpulse.com and clients get access to Autochartist.  They have a few market sentiment tools that measure market sentiment in real-time and a nice indicator that gives direct feedback on the trading activity of OANDA most profitable traders.

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