gcitrading.com - Market Makers Reviews

Residence, regulating and company management.

As written on the site, OANDA was established in 1996 and is headquartered in New York with offices in Zurich and Toronto, although neither real, nor mail addresses are stated on the website. It was co-founded by Dr. Michael Stumm, and Dr. Richard Olsen. Communication with the management is impossible. The company is registered with CFTC as a Futures Commission Merchant (FCM), and OANDA is a member of the National Futures Association.

Company's Market Position

The company names itself a 100% online broker, specialized in Forex. As follows from the chart presented on the site, OANDA is ECN in fact. No banks-partners (liquidity suppliers) are mentioned on the site. The company conducts individual accounts, corporate and LLC's, partnerships (Regular, Investment Clubs). Trust services are not offered.

Types of Services Offered

OANDA trades in 32 currency pair, with gold and silver. The term-of-trades are different from many other brokers.

There is no minimum deposit, and you can start trading with as little as $1.

There is also no fixed lot in OANDA, the size of a lot begins with $1.

The company applies narrowing spreads. Spreads on major currency pairs, such as EUR/USD, went from 5 pips initially to 3 pips, then to 2, and finally to 1.5. The process of diminishing of spreads is described on the site, but no exact rules are mentioned.

Traders can choose account leverage from 10:1 to 50:1 for majors. Marginal requirement for exotic currencies are set in size of 4%. The summary table of marginal requirements is placed on the site and repeated on several pages. There is a detailed description of all margin rules on the site, but the link to it can be found only after browsing FAQ.

OANDA pays interest on long positions and charges interest on short positions, all calculated second by second while the positions are open.

The company gives unlimited streaming quotes with possibility of fully hedge clients' positions.
Trading accounts can be opened in USD, EUR, GBP, CHF, CAD, AUD, or JPY. Depositing an account may be done by paper check, PayPal, or wire transfer.

Opening an account is made from the site only.

Traders Support

There is no page for beginners on OANDA site, but the company offers unlimited in time demo accounts both for spot and option trading with detailed user guide, collection of advices and a bookstore with over 4000 Finance and Investment books

Clients may ask for any kind of support though interactive forms and forum. The FXTrade Statistical Information section may be of a great interest. It contains FXTrade Open Orders, FXTrade Open Positions, Long-Short Ratio and OANDA Interest rates. The company does not conduct it's own analytics, but clients are offered to use free or subscription analytical sources of other firms.

In spite of the lack of any news sections on the site, there are links to such sources as The Economist, Financial Times, Reuters, CNN finance. There is also a Economic Calendar on the site.

The Trading Platform

OANDA offers a Java trading platform. It gives the clients an opportunity to enjoy unlimited streaming quotes, professional tools, including real-time graphs and indicators, professional-strength real-time news and analysis and an economic calendar

Site Design and Ease of Navigation Comments

The design is quite standard and navigation seems comfortable at first. However, finding exact information turned out not to so simple. Despite the fact that the company has an office in Zurich, there is only an English version of the site.

Advantages and Disadvantages

Advantages of OANDA don't seem to be obvious.

Above all, it is impossible to estimate the real cost of trade, firstly because of complication in determining a size of spreads and secondly because the information about term-of-trades is rather obscure. Such kind of confusion could have been done on purpose. Moreover, a complete absence of information about the underlying structure and addresses of offices doesn't make it any better.

The company seems to have the only strong side which is it's help-analytical support. But there is a weak point even here and this is a very poor technical analysis available for a public view. Although a high-quality technical analysis may be available on a payment basis.

Reviewed 05/05/2007 14:34:38, by Darius Royle

(3.98 out of 10 - 36 votes)

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A Look at Forex Market Makers

The investor in the currency market takes for granted that a pair of currencies can be bought or sold at a moment’s notice. Once an order is placed with a broker, the trade is executed within seconds. It is, of course, not as easy as that. Whenever a pair of currencies is bought or sold, there must be someone at the other end of the transaction. It is very unlikely that the investor will always find someone who is interested in buying and selling the same two currencies at the same amount, and at the same time. Hence, the question remains, “How is it possible that the forex investor can buy or sell at any time?” This is where the forex market makers come in. The forex market maker is a bank or brokerage company that stands ready, every second of the trading day with a firm bid and ask price. This is good for the investor because when the investor chooses to buy and sell a pair of currencies, the market maker will purchase from and sell to the investor, even if they do not have a buyer and seller lined up. In doing so, they are literally “making a market” for the currencies. Forex market makers ensure that the market is always functional and that the currencies in it will always fetch the market rate. Forex market makers do so by updating their prices at intervals of at least 30 seconds and undertaking to trade if this is requested. Forex market makers must fulfill their obligations irrespective of whether the economic situation is favorable or unfavorable, or whether they lose or profit by doing so. Typical forex market makers include Gain Capital, CMS Forex, Forex Capital Markets (FXCM), and Global Forex Trading, all of which are regulated by the Commodity Futures Trading Commission (CFTC) of the USA. Another prominent forex market maker is Saxo Bank, which is regulated by the Financial Services Authority (FSA) of Denmark. Until recently, central banks, commercial banks and investment banks dominated the forex market. Due to the entry of forex market makers, other market players like international money brokers, large multinational companies, registered dealers, global money managers, and private speculators have entered the market in large numbers.