Oanda just another bucket shop

[MickMason]

Quote from misha7:

Anyone who is "shocked" at the wide spreads after the off-expectations NFP release on a holiday depleted Friday should seriously consider trading some other market... I don't care what Oanda does or does not, but the REAL bucket shop is the one the DOESN'T widen the spread or slip the orders. Why anyone expects the dealer to eat the loss while they make their easy cash is still a mystery to me.

I'm not sure anyone expects marketmakers to eat loss do they?

What options does a marketmaker have to protect himself from loss when data like NFP is released? Widen spread, requote, refuse trades, or freeze/disconnect the platform.

I trade with two marketmakers, Oanda and CMC, I can only relate my own personal experience.

Last Friday when the number was released I was unable to trade on the Oanda platform because of disconnections, something that has become a regular occurance with Oanda every NFP. During the brief period the platform was up their spread was 30 pips. Despite emails and posts on their message board asking what the problem was and when it will be fixed no-one from Oanda has bothered to reply which seems odd if the disconnects are unintentional, lost trades means lost revenue and potentially lost clients, surely someone from management would be interested if these 'problems' are not intentional.

By comparison CMC have fixed spreads. Their platform remained stable and market orders were requoted and filled without much delay.

I believe that requotes are the best way to go, the trader is quoted a price that exists (taking shade into account!), an automatic widening of spread by 30 pips seems a bit hit and miss to me.

I don't think it's so much a case of 'seriously consider trading some other market' but rather 'seriously consider some other marketmaker' if you want to trade fundamentals effectively, and why should we have to exclude ourselves from trading potentially profitable market-moving events like NFP?

It makes no difference to me who people trade with, that's their choice, I can only recount my own experiences, I wish I had known what they were like before I opened an account and I'm not just talking about not being able to trade NFP, there are a lot of other issues.

 

[MickMason]

Quote from Wallace:

Seems to me that retail fx traders would serve themselves better
by regarding all fx 'brokers' as bookmakers

In essence I suppose they are!

But what's wrong with that? They accept a bet and pay out when a punter wins, sounds reasonable to me.

 

[Trader KGB]

Quote from misha7:

Going with futures probably eliminates some of these problems but you will 'pay' with lower liquidity

Lower liquidity? If you're trading the size of a major bank maybe. Globex volume as of 3pm: Euro 131k lots, Pound 60k, yen 70k, franc 44k, loonie 38k, all have 1 pip spreads.

 

[Rocko1]

Quote from MickMason:

In essence I suppose they are!

But what's wrong with that? They accept a bet and pay out when a punter wins, sounds reasonable to me.

Nothing would be wrong with it if they can maintain the level of service that matches their demo accounts.
Interbankfx had started to disconnect me while open positions became profitable, NOT at news hours, after a few weeks of consecutive winning trades.
They treat you like card counters at the casino. Everything's all nice and dandy only if you lose consistently. Waiting til the industry gets regulated would probably be a good idea.
Besides, it's actually more fun trading stocks and futures

 

[late apex]

Quote from Trader KGB:

Lower liquidity? If you're trading the size of a major bank maybe. Globex volume as of 3pm: Euro 131k lots, Pound 60k, yen 70k, franc 44k, loonie 38k, all have 1 pip spreads.

"Lower liquidity" in this context refers to depth of market (DOM), rather than to daily volume.

Have you looked at an intraday futures chart lately, with volume bars on it? Currency futures daily volume is concentrated disproportionately during the US session.

Total daily volume doesn't help you (and is, in fact, irrelevant) when you need to trade into or out of as little as, say, a 40-lot of sterling futures, 2.5 Mio, any time during either the Asian or early European session, at the current inside quote.

You'll discover that the total cost of your transaction is going to be a multiple of that so-called 1 pip/tick, plus the usual ~0.8-pip/tick commission. All reassuringly transparent, regulated and risk-free. Right.

 

[Trader KGB]

Quote from late apex:


Total daily volume doesn't help you (and is, in fact, irrelevant) when you need to trade into or out of as little as, say, a 40-lot of sterling futures, 2.5 Mio, any time during either the Asian or early European session, at the current inside quote.

You'll discover that the total cost of your transaction is going to be a multiple of that so-called 1 pip/tick, plus the usual ~0.8-pip/tick commission. All reassuringly transparent, regulated and risk-free. Right.

True the trading volume drops off considerably outside of the US hours, but are you sure about the DOM dropping off too? I follow the Asian session and haven't seen DOM noticeably impacted. It's pretty heavily arbed. I would imagine working a 40-lot order wouldn't be that difficult. Especially if you aren't chasing price, you could wait to be filled on your side of the spread, thus saving another pip or two. Try doing that through an FX broker.

I pay $2.85 per side, $2.85 != 0.8pip, more like 0.2 - 0.3pip.

 

[late apex]

Quote from Wallet:

I would say that they got burned by traders straddling the news and they put a stop to it.

Straddling and otherwise. Oanda was (and still is... go figure) Felix's choice for his news-trading service. Wise choice... NOT. And he's apparently got thousands of subscribers.

Using the most conservative assumptions, that's got to be close to a yard (10,000 lots) of single pair orders hitting their price server at the same moment, in the same direction, a few dozen times every month. Yeah, good luck with that.

Why are Felix and many of his followers stubbornly sticking with Oanda, who has made it clear for ages that news-only traders aren't welcome to the party? (If you still dont' get the "hint" at 10 pips... 20 pips... 30 pips... maybe trading isn't meant to be your true calling, after all.)

Probably because most of them don't have the $25-$50K+ funds to go with a suitable platform such as Currenex, HotspotFXi, LavaFX, FXall or currency futures.

 

[late apex]

Quote from Trader KGB:

True the trading volume drops off considerably outside of the US hours, but are you sure about the DOM dropping off too? I follow the Asian session and haven't seen DOM noticeably impacted. It's pretty heavily arbed. I would imagine working a 40-lot order wouldn't be that difficult. Especially if you aren't chasing price, you could wait to be filled on your side of the spread, thus saving another pip or two. That won't happen in the FX market.

I pay $2.85 per side, $2.85 != 0.8pip, more like 0.2 - 0.3pip.

I found it difficult the last time I tried, especially during the early European session, my prime time. Unless you're playing with the Euro-fx, less thin than everything else. Maybe I should take another look.

You may be thinking $10 / tick, rather than $6.25 for sterling. The cost of the RT (not one-way) transaction in spot is the spread. In the same RT terms, $2.85 x 2 = $5.70; $5.70 / $6.25 = 0.91 tick, a bit more than 0.8 tick. (I had $5.00 RT commish in mind.)

 

[Trader KGB]

Quote from late apex:


You may be thinking $10 / tick, rather than $6.25 for sterling.

You're right, I was thinking euro and yen futures, which are both $12.50/tick. I haven't traded the pound futures, I definitely see where you're coming from with regards to tick vs commission.

I would trade spot if I traded fx more actively. Futures have fit me well as a swing trader. I try to get fills on limits rather than paying the spread, for that it works just like any other ECN. Also, I prefer earning the true IRD, rather than paying a broker spread. With the interest embedded in the price, it benefits from 60/40 taxation, no Sch A Form 4952 nonsense.
Outside the majors though, it's spot all the way.

 

[Wallace]

MickMason: "In essence I suppose they are ! But what's wrong with that ?
They accept a bet and pay out when a punter wins, sounds reasonable to me."

it would be reasonable, but for the 'manipulations'.