Oanda Forex Review
Is Oanda a company you should be doing business with? That is a question you will need to answer for yourself. My previous articles on the Forex market clearly show my opinion on the Forex market but the fact remains that the Forex market is a trillion dollar market. If it is possible to earn money in the Forex market is questionable and statistically improbable. I trade in the market primarily to enhance my financial management skills and to maintain a focus on the global market environment. My previous article on the subject shows that it seems to be possible to take a profitable position while losing money by focusing on the politics involved in the Forex market. In my trading experience I have dealt with FXCM, Forexyard, and now Oanda.
I chose Oanda based on their status at www.forexpeacearmy.com which is probably the most useful resource on the internet for choosing a Forex broker. My experience so far with Oanda has been horrible, I walked in fully knowing the risks of trading and the potential for brokers to manipulate the market, but nothing could have prepared me for the Oanda experience.
My problems with them started the minute I attempted to open a live trading account. Oanda was unwilling to verify my ownership of my bank account based on the fact that BDO bank doesn’t normally have their logo on the printed statements that you can request in person. I had already provided them with copies of my stamped passport, I-Card, and Globe telphone bill, but that wasn’t enough for them. After talking with the bank we were able to come up with a solution that Oanda couldn’t deny, a certified account statement. For a small fee BDO will give you a certificate letter addressed to Oanda that certifies your ownership of the account, and certifies the bank statement itself. Now that my identity was verified the next problem would be funding the account.
Originally I thought I would be able to use my paypal account to fund my forex trading but I quickly discovered that was an illusion. Oanda only accepts paypal transfers to/from a paypal account that is in SGD (Singapore Dollars). As my paypal account is in USD (U.S. Dollars) I quickly discovered that Paypal wouldn’t be my solution.
What about using a credit card? After reading Oanda’s terms of service it is very easy to see that funding an Oanda account with a credit card is an absolute scam. Oanda’s policy is that you can only withdraw funds using the same source where the funding came from. If you fund your account with a credit card, your simply out of luck. Credit card companies have limits on how much can be credited to your card so if you made a reasonable amount of profit from your trades you would never be able to withdraw the money.
This leaves the only option as funding from a bank account using a wire transfer, but even that isn’t as simple as it sounds. To fund a USD trading account, you need a USD bank account to wire the money from based on Oanda policies. I’m unable to wire money from my U.S. accounts because banks require that you deliver the transfer requests in-person. I couldn’t wire the money from a PHP bank account because Oanda’s policies won’t allow it. Oanda policy only allows you to fund a USD account from a USD account so my only option was to use the joint BDO USD account that is shared with my wife and used primarily for client deposits and paying our sub-contractors. Getting money into that account is somewhat problematic, an issue that has nothing to do with Oanda, but if your in the Philippines trying to fund an Oanda account make sure you have a USD account that is fully prepared, and capable of wiring money to Singapore, before you even start trying to deal with Oanda.
I then logged into my Oanda account, entered the wire notification and wired the money from my bank, so can I start trading? Apparently not! A few days later I receive a request for more information from Oanda. The wire transfer arrived and since the bank used an intermediary account for the wire transfer Oanda wanted additional proof that I had sent the money. Aparently the fact that it was sent by me wasn’t enough proof that it came from my account since the account number didn’t match. They had my money, and were refusing to fund my account. This was the last straw for me, I called their customer service and spent about 45 minutes yelling at them. I ended up having to send them a picture of the wire transfer form, and a screenshot of my only bank account transactions to prove I had sent the money. Just to add some salt to my wounds when the money was finally applied to my account, $41.00 was missing. I had wired $300.00 and paid the $10 transfer fee to my bank, but it seems the intermediary bank, or Oanda, charged a fee of $41.00 for the transfer as my account was only credited for $259.00.
While waiting for the account to be setup I did some demo trading using Metatrader 4. This is where I discovered one additional problem with Oanda. They have a daily maintenance of their metatrader accounts where you cannot place trades. On the day I discovered the issue it seems they had some technical difficulties because their demo accounts were blacked out past their maintenance window. Their chat support agents assured me that live accounts were up and running and there would be an additional delay before the demo accounts would be available.
So the trading begins, finally. I enter my trades and everything seems to be going smoothly. I started to earn back all the money I had lost by from the wire transfer and interbank fees and then the market turned against my positions, which was fine with me, it was exactly what I was expecting and hoping for. I decided it was time to pull out of the market when my balance dropped to about $251.00. I was expecting another war with Oanda regarding the withdrawl but amazingly this is the only thing they got right. On the withdrawl there was no interbank fee, so the only additional cost here was the $20 withdrawl fee, that I had been expecting. I was actually expecting another $41 interbank fee so it was a relief to see that I was able to get most of my money back out of Oanda’s hands and safely in my BDO account.
With my money safely tucked away in the bank I have decided to further my Forex education and test some new trading strategies. I have been going through the school at babypips.com. As of now I’m nearly half way through their school and haven’t really learned much new yet, but have picked up a few trading tips from the school that I hadn’t learned else-ware. In my original trading in the Forex market I had purchased some books on Forex trading and already have a few months of trading experience under my belt so I really don’t expect to learn much new from the babypips school. What I can say about it though is that their training course is very good. I completely disgree with some of their opinions and the fact that they mislead you into believing you can make a lot of money in the forex market but other than that their training course is very good.
If you read my previous article than you know that China is one of my political targets. No one likes a bully and the Forex market gives you the opportunity to fight back. The USD/CNY pair has an extremly low volume and the charts are very difficult to read. Because of this I based my analysis on the daily candle-stick chart and planned my entry on the lower charts. So I entered my sell order on my demo account and watched the trade. No big surprise that I was losing money in that position but I had placed a stop loss, and fully expected the price would increase a bit before returning to its downard trend. The big surprise was when I woke up to check the charts and I had been stopped out at a price the charts never reached. Did Oanda cheat me on a demo account? Now that would be completely insane, but I returned to their online chat support to get details on what actually happened. It turns out that the truth is worse than I could have expected. Their spreads in the USD/CNY increased to over 80 pips so I was stopped out and since metatrader 4 doesn’t make it possible to chart for the ask price the only way to see it is with their custom trading platform. They were kind enough to provide me with this link (http://fxtrade.oanda.com/why/spreads/recent) where I was able to see for myself that their spreads in USD/CNY reach as high as 150 PIPS. I’m new to USD/CNY trading and I never would have expected this. I know the “bankers” can see my order, and bring the market out of its normal range to take money from my position but I’ve never seen a position evaporate before without any sign of it in the charts. After further review of this problem it is clear that trading USD/CNY without stops may be the only real solution, but since metatrader is programmable I intend on making a custom indicator so I can see approximately where the ask price would be in the market. Losing money consistently doesn’t stop me from playing with the Forex market, if you aren’t ready to lose money than you shouldn’t be in the market in the first place.
Overall I would give Oanda a score of about 2.5 stars out of 5 stars. There is no joy in doing business with them but they provide telephone and chat support, and have physical offices in NY and Singapore. Getting their online help widget to provide you with a link for chat support isn’t easy but I found doing a search for new accounts will usually work. Entering a few different search terms is sometimes required to get the chat option to become available. Setting up an account with them and funding it is a bit of a nightmare, but if you are able to get through all of the red tape, and are careful, you can get your money back. Anyone in the Philippines that wants to do business with Oanda should expect some problems. Have a USD bank account prepared ahead of time and expect some complications. You will also need a realiable cell phone number as every time you try to login to their web site on your live account they will require that you verify your identity via a text message code they send. While Oanda makes it difficult to get money in and out of your account, it is possible if you are able to deal with their excessively strict policies.
