Oanda or IB?

D

dtjohnson01

Long time lurker and I think maybe my first post?

(never had a live trading account and I don't like taking/posting unless I know what the hell I am talking about)

Brief backgound:

I am 24/married/no kids--house/cars/loans all paided off; so my wife has given me the go ahead with my live trading (I love it btw). Our joined monthly income is roughly $9k and all we have is living expenses.


Anyway, I have been demo trading oanda's platform for almost a year and a half now and feel quite comfortable opening a 50k account soon doing FX. I only look at my trades maybe twice a day and they usually run 10hrs-24hrs. This won't be for income and I am considering it as risk capital, so I don't think the emotional part will play that big of a factor (also why I am only starting at 50k)

I am not so much worried about my trading strategy as something like that is under my control as much as the fact my money is in someone's elses hands.

From the above threads such as "Proposed NFA Capital Requirement "--I am assuing Oanda is in the clear or I have missed anything?

I assume IB is doing quite well as I see ads for them on TV all the time. I know Oanda is a great broker from all the threads I have read but my concern is them having to close up shop due to things outside their control and my money being stuck?


Basically, I don't want to take trading serious and get an account all the way up to say--300k and all the sudden the broker disappears? (read a few threads over the last year where something happened to a broker and all these traders have their money tied up for years).

How am I protected..if at all..with any broker?

Any and all comments welcome.

Dan
 
There are better brokers out there. There are too many horror stories with oanda(stop hunting, putting you on manual).

Though, you might just do fine with oanda if you are only trading longer term(and not news). But still, they are a bucketshop.

I would go for brokers who use either Ecn or currenex: Some good examples: hotspot,IB,lava,dukascopy,capital forex pro.

So who is best? I've started threads asking that, and there doesn't seem to be a definite answer other than trying out the broker yourself, and do your own research first(read reviews and old forum posts).

I've done a lot of research. If you want reliability, IB is a great ECN broker with large capital, famous,you can trade allmost all instruments,wont screw you, low commision and spread. Bad things are complicated platform, and bad customer support.

I'm sure the best option for someone who has 50k to depsit would be a currenex type of broker that has even better luqidity than the ecn model, and also apart from IB offers great platform and customer support and even less transaction cost. But you have to research to find which currenex broker that is best. Capital forex pro is one promising currenex broker for instance, requiring only USD 35000 as initial deposit.

Oanda might very well be one of the better bucketshops, but a bucketshopt is always a negative, even if you have good things like fixed spreads(not during news though) and a guarantee that you can't lose more money than you have deposited.

Pro's use currenex,ecn,fxall,360t and fx connect. Newbies might choose the bucketshop model because of the guarantee that you can't lose more than you've deposited.
 
For your trading style, Oanda would be just fine and probably one of your best choices. And for your style, I see no real benefit of the ECN model over Oanda. I also have a ECN broker but prefer Oanda.

I've got more capital than you with Oanda and I trade 20-40 times a day with no problems. If anyone was a candidate for being put on manual execution, it would be me.

Oanda also pays a nice interest rate on your captial, not something all brokers do. With the amount you wish to start with that is $5.12 a day. That adds up fast.

In general based on your trading style, many brokers would suit you. But if you're used to the Oanda platform, you certainly con't go wrong with them.

I believe they also recently had some 100million invested into their company but I forget the details.
 
dtjohnson01 isn't asking about which broker is better from a trading perspective or for his trading style, he's asking about safety of his funds if the firm goes bust!

It's a grey area, no-one really knows how the Receivers would deal with client funds in the event of a broker's insolvency, you may end up just being at the bottom of a list of creditors and get x cents in the dollar when the firm is wound up.

Oanda offer no protection of client funds.

Interactive Brokers offer some protection through membership of SiPC (www.sipc.org) but how effective it would be is debatable, you may get some answers here http://www.interactivebrokers.com/en/general/about/ibgStrength.php?ib_entity=llc

Saxo also offer some degree of protection but again how effective it would be is unclear http://www.saxobank.com/?id=960&Lan=EN&Au=2)

There are other banks/brokers offering client fund protection and it's worth asking them outright what would happen to your money if they went broke.

But why keep that level of funds with a broker anyway, there really isn't any need to if you trade with conservative money management and take advantage of leverage offered. Transferring funds into your trading account if/when needed is usually fairly quick and inexpensive, it's better to have your cash in an insured and protected bank account. Profits can be regularly swept from your trading account leaving a minimum at risk if something does happen.
 
Oanda could disappear tomorrow.

IB routinely is ranked #1 futures firm on Earth for financial stability. This is done annually by the NFA and based on capital on hand to total customer funds. No, I don't have a link for this, but doing a Google search you can probably find it.

I have lost an account due to a firm going under (Futureswise trading a few years back), so I am also very paranoid about this.

Also, it will be cheaper using IB. Yes you pay a commish, but the tighter spreads more than make up for it. Oanda makes their money on the spread. I would never use a non commish FX dealer. You will often see half a pip spread on the Euro with IB, never with Oanda. And they always honor the trade because they make no money off the other side.
 
Quote from cabletrader:

he's asking about safety of his funds if the firm goes bust!
More...

yes, and he said he would "trade", thefore bucketshops aren't safe, if you lose money because they stop hunt or put you on manual. Ecn might not be 100% safe because, of widening sprades, and in that perspective fixed spreads might be more safe and so on.
 
*update*

I am not so much worried about the trading aspect with oanda being a "bucketshop";as I feel I am being "stop hunted", cheated, or other fraudulent type things, then I can see it, maybe take a small loss and I can then make that decision whether or not to stay.

It's things I can't see that are "behind closed doors" at a company that are out of my control that would put my ALL my money at risk in one instance, that worry me.

I have done enough research to narrow down my choices to Oanda or IB. Each have their pros and cons, so the deciding factor for me is my above concern,which I have not been able to find much talked about on the web.

I did see Interactive Brokers Group Strength and Security web page, but it's not like they are going to put any negative information on there.

Between the two (from what I have read over the least year+):

IB:

Has horrible customer service (least for the most part). It should not matter what size the customer'saccount is, you opened it for them, you should treat them with the same respect as a large account holder. To me customer service directly relates to a company's business ethics. So what happens if things start to go bad for IB?

Oanda: Great customer service, but with all this new legislation in the works, will they be able to survive? Sure they are doing fine now, but what happens if all the sudden they realize they won't be able to keep in business--as a buckshop, do they all the sudden start turning "bad" to rake in as much profit as possible before people start realizing it and jumping ship?

I hate to think that but money can do that to people/companies; especially when your talking millions.
 
Quote from dtjohnson01:

*update*

Oanda: Great customer service, but with all this new legislation in the works, will they be able to survive? Sure they are doing fine now, but what happens if all the sudden they realize they won't be able to keep in business--as a buckshop, do they all the sudden start turning "bad" to rake in as much profit as possible before people start realizing it and jumping ship?
More...

Heh...have you seen how much capital they have? Why not check this thread first. If any market maker is going to survive, it will be Oanda.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=97890
 
A better link is to check out the financial soundness of each firm here:

http://www.cftc.gov/marketreports/financialdataforfcms/

As you can see, both have over 100MM in excess net capital requirements as stipulated by CFTC, so from a financially sound basis, both are good choices.

Why Oanda over IB?

It offers more tradable currency pairs than IB. Has interest payments from dollar 1. Has true 50:1 margin, as opposed to IB where they charge 50:1 on both sides of crosses if not in native currency (i.e. GBP/JPY in account denominated in USD), you can open account with $1 vs IB's minimum 10K, trade size as little as $1 whereas IB switches trades less than 25k from IDEALPRO to IDEAL, where spreads are wider, ease of trade using platform over IB's TWS

Why IB over Oanda?

ECN model vs dealing desk, larger liquidity base than Oanda, ability to trade futures vs spot in same account thus maximizing leverage, cheaper costs, accounts SIPC protected to 30MM (http://individuals.interactivebrokers.com/en/accounts/accountProtection.php?ib_entity=llc), more platform security (or not a plus if you read some of the posts in retail forum), better connectivity (you can have a direct line to IB's servers if you want)

As you see there are pluses to each, but depending on your trading style and your comfort level with each determines which one you should choose.

* above comparative "opinion" based on experience with both brokers
 
Quote from dtjohnson01:


I am not so much worried about the trading aspect

It's things I can't see that are "behind closed doors" at a company that are out of my control that would put my ALL my money at risk in one instance, that worry me.


I have done enough research to narrow down my choices to Oanda or IB. Each have their pros and cons, so the deciding factor for me is my above concern,which I have not been able to find much talked about on the web.
More...

If that's your only concern and you've narrowed the choice down to Oanda or IB then there is no choice, IB offer at least some form of protection for client's funds, Oanda don't.

You still don't say why you need to deposit all your trading capital with a broker though, it doesn't make sense if you're so concerned about safety of funds :confused:
 
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