Forex Broker With Flat Commission
I received an email from a visitor this morning who had this to report.
I have been following your blog for a while. I enjoy your posts.
Interesting and informative. I just came across a forex broker – no
spread (practically) and $5 per lot commission. This beats the 3-5 pip
spread for most pairs (i.e. $30 – 50). Please check out Mbtrading.com at tell me what you think.
I don't know if he/she is affiliated with MBTrading but nevertheless, I looked at the site and responded back with the following email:
It
seems like it's a flat $5 USD for every $100,000 traded. So if you
trade 10 mini-lots (for a total of 100K), the total commission is only $5. The only thing is
3DForex, which is MBTrading's forex incorporation doesn't have a lot of excess
capital. Neither does MB Trading… I tend to want to put my money
into Forex brokers who have at least over 20 million. 3DForex has an
adjusted net capital of $544,000 with an excess of only $44,000 as of
November 2006. This makes it difficult to want to deposit money
there.
Are the reports that Forex brokers (FCM's) are required to submit to the CFTC any indication of financial health? I've talked about this in the past and the CFTC states that they are meaningful to a certain degree. If a broker reports month over month of declining Net Capital, does it mean anything? I don't know. It could be meaningful or it could just be their process of accounting. For instance, should we be concerned about Oanda's reported net capital for the last 5 months?
- July 2006 – 38 Million
- August 2006 – 31 Million
- September 2006 – 29 Million
- October 2006 – 32 Million
- November 2006 – 19 Million
I doubt it even though Oanda was pretty steady at 30 million the latter part of 2005. I'm just using Oanda as an example here. There are other brokers that show the same type of trend.
200 Pip Spreads at Oanda!
Oanda had an "operator" error this morning and the GBP/USD had spreads in excess of 200. Outrageous! Having open orders at NFP release is crazy. Supposedly Oanda are reversing their mistakes. A trader put a video on youtube that shows the spread was as high as 200.
You can view the video at http://www.youtube.com/watch?v=Z-ixPr8eJgM
The Oanda Spread Bites Me
I had a long position during the European session and was stopped out this morning. My profit targets "would" have been hit if it were not for the 27 pip spread Oanda had due to the GBP Core CPI announcement. I'm not complaining, just stating my frustration because in the months trading with Oanda, I've never had issues other than platform crawl. This could just be a coincidence. I'm also not making excuses for losing on this h-system trade this morning. They increased the spread, I was aware that they increased spreads during economic releases, I took my chances, and I lost this time. My perspective on Oanda spread increases has changed a bit due to an email that David sent me late last week. He has a very pro-broker view of spread increases. Though it is pro-broker, I find it hard to disagree with him. Thanks for the email David.
Another thing I'd like to address is that when you talk about the
spread being poor during news releases I think it might be misleading.
This is my take on it: because the FX market is opened 24/7 the majors
don't experience what is common in Futures and Stocks which is
gapping. Say overnight Microsoft Vista was hit with a major virus or a
major coffee producing country had a major eatrhquake or hurricane or
other smilar event the price would probably open at a significantly
different price than when it closeed. All limit and stop/loss orders
placed in that gap would automatically be filled at the open price when
the Stock Market and Futures market opened. The poor spreads during
news releases isn't soley based on an an abitrary descision by Oanda to
increase their profits by raising the spread, its just a reflection of
the volitility that comes during 15 or so minutes following the
release. Like gaps in Futures or Equities between market open and
close. Remember many other platforms will requote if you try to enter
at Market during a news release.
My losses today cut my profit/loss down to +3 pips halfway through January. This was a lot of work for a lot of nothing monetarily but for experience, this was priceless. I'll have to fight my way back. This should be fun….
Forex Rookie Oanda Issues
Thanks to Forex Rookie for his comments. I feel his pain. I have had more than the usual disconnects from Oanda this week. Their IT folks better find out the root cause this weekend. I can't say whether Oanda would have refunded my money if it was more than 16 pips but they're probably not even aware I have this blog. I wouldn't hesitate to throw the weight of this site around if any of you or I have issues that we feel are unfair.
I think oanda only refunded your money cuz you have this HUGE blog and
they don't want the bad publicity…lol:D…Anyways yesterday i think we
all experienced problems with oanda, i had a personal experience of my
own.
Yesterday
At BOE news release i was in a USD/JPY trade that was in profit of 130+
Pips. due to the unexpected resuts it fell 50 pips where i decided to
take profit before things got worse, So i pulled the trigger to close
the order for 84 pips, and in that split second i was disconnected from
the server, When i finally got back into my account i was in profit of
111 pips..LAMO….I exited the trade this morning for a lesser profit
of 90 pips….The moral of the story???? IDK..lol..I just wanted to
tell my story.
Oanda Credited My Account
Oanda credited my account for the 16 pip loss that occurred with an h-system trade yesterday. It occurred because my take profit order fell within the spread due to major slippage. When my order executed, Oanda had raised the spread to 20 pips. I don't like when Oanda raises spreads but if I don't like it, I should make sure that I don't have any open orders during economic releases. Oanda credited my account but they didn't have to according to the following email:
Yesterday morning at about 07h00 EST the Bank of England announced that
it was hiking Interest Rates 25 basis points. This decision surprised
the market sending the Pound sharply higher against all major
currencies. As the market sought new equilibrium, global liquidity
essentially dried up, resulting in large price gaps as prices literally
jumped to new levels, in a matter of seconds. This action caused
considerable slippage to ensue on your GBP orders. While it is
unfortunate that such slippage occurred, these orders were executed in
accordance with our execution policy on the price available on our FXTrade servers when the order arrived for execution.
- Ticket 1 was filled by Ticket 2 and was closed by Ticket 3. When 2 was executed, your embedded Take Profit Order fell within the spread, resulting in a loss upon the execution of 3.
Due to the unfortunate nature of this circumstance, we have credited
your account in the amount of this loss. This credit is reflected by Ticket 4. - Ticket 5 was cancelled on a BV:TP (Bounds Violation of your embedded
Take Profit Order). This means that the price had exceeded your Take
Profit level when it arrived for execution. The server cancelled this
order with no action taken, as you had indicated in your instructions
that you no longer wished to be in that trade when the price rose
beyond 1.9457.
Oanda Issues and Comments
Thanks for the comments on Oanda everyone.
Terrence says:
I recently discovered your blog and think it's excellent. You have
inspired me to create my own blog that I will link to my website
www.forexnetworth.com. I use the OANDA trading platform to trade and
like you, I experienced serious problems with the trading platform this
morning. I emailed them about the problems and they replied stating
that the system did in fact experience some technical difficulties this
morning prior to the GBP rate meeting. I still managed to capture 68
pips, but really missed out. I am awaiting further updates from OANDA.
Apart from this morning, how have you found OANDA so far? All the best.
Terrence,
I have yet to hear from Oanda regarding this morning. I just sent them
a follow up email to get some sort of explanation. Oanda was also
having disconnects during the Japanese session yesterday and into the
European session. I'm not one to complain much about brokers. If you
want to trade Forex, you accept what you get right now with hopes of
future improvement for the retail trader. Oanda has been O.K. but I
really do think that the slowdown of their platform during busy times
is totally unacceptable. In addition, they really don't have features
with their platform that help you in succeeding. You take the good
with the bad because no broker has had all the features I'm looking
for. If you want all the features, you use the API and write your own
software.
Michael D. says:
That's troubling to hear. I use Oanda to trade GBPUSD as well. Oanda is supposed to be pretty reputable.
My
guess as to what happened is that Oanda probably widened spreads and
your order got filled above your take profit, making your take profit
below your entry. That's just my best guess though. Good luck dealing
with the issue and keep us updated on it. I'm very interested in
hearing how it turns out.
Michael,
I agree with you. They probably widened the spread on the GBP/USD to
30 pips due to the BOE interest rate statement. To be honest, I wasn't
following any fundamental news and wasn't even aware of the interest
rate statement coming out. In addition, the interest rate hike was a
total surprise. Thanks.
I'll let everyone know what happened this morning when Oanda responds.
What Happened With My Oanda Account
The big GBP/USD move that I was talking about yesterday did happen this morning but I'm a little disappointed with what happened in my Oanda account. I had 2 orders in last night to go long on the GBP/USD. (h-system) The 2 lot order was canceled by Oanda. The 1 lot order was executed and then immediately closed at a loss. According to Oanda it was a TAKE PROFIT. A loss of 16 pips doesn't seem like a TAKE PROFIT to me. If my orders were executed and take profits executed as I instructed, it would have been a 120 pip profit. The fact is, there was a large spike in the GBP/USD due to the surprise rate hike by the Bank of England. I'm not sure how Oanda treats these types of things due to this fact but I'm waiting to hear back from them.
BOE Shocks With Rate Hike to 5.25%
Trade with a Flexible Lot Size
I'm now with my third different broker in the one year since I started trading. My first was FXCM, which I still use, my second was Gain Capital or http://www.forex.com, and the third which I most recently opened an account with, Oanda. If I had to describe each in one incomplete sentence, it would go like this:
FXCM – Comfortable platform with industry standard spreads.
GAIN – Offers a decent free API to standard account holders with at least $10,000.
Oanda – Lower than usual spreads during non-news events that allows any size lot trades.
It's pretty much impossible to describe in one sentence but I thought I'd give it a try. What I'm finding is that there really isn't a hugely noticeable difference between them. I've heard traders say that FXCM artificially spikes prices or that Oanda's spreads during economic releases turn news trades into news untradables but each have their issues and there is no perfect broker platform. If I had to make a semi-perfect broker platform, it might be a combination of the three.
- Spreads from OANDA
- Currency pair selection from OANDA
- API from GAIN
- Order types from GAIN which provide limit, stop loss, OCO, If/Then single, If/Then OCO, and trailing
- News from GAIN and FXCM
- Money transfer options from GAIN and FXCM
- Interest on balance from OANDA
This is just a list by quickly brainstorming but it might be beneficial if I created a feature matrix unless someone knows if someone already did on the web.
Originally, the whole point of this post was to mention FXSol's Flexi Contract options that I stumbled upon today. I thought Oanda was the only broker that offered variable sized lots but this is not the case. FXSol offers lot sizes of 1K, 5K, 10K (Mini), 50K, or 100K. Nice….
At this moment, my wish list of features that are not provided by any broker are both related to order scheduling:
- Ability to schedule an order at a specific time. This is provided by FXEngines and can obviously be done via an API
- Ability to receive alerts if and when this order is triggered also provided by FXEngines
Like I said, FXEngines can do both but what FXEngines really provides to you is a front-end to their API that communicates with FXCM. This front-end is web-based and slow. They really need to update their technology and offer a front-end to brokers other than FXCM.
I Am Oanda
My funds finally cleared at Oanda yesterday. I traded using their FXTrade platform for the first time this morning when I went short on the GBP/USD. Anytime I've traded this pair in the past, I've just expected to hand over 4 pips per lot to do so but with Oanda, the spread on each my lots were less than 3 pips; I believe it was 2.8 pips. I understand that Oanda though just makes this up by charging higher spreads during news trades and less volatile times.
First impressions are good with the exception of the reporting. I've been trying to find where I can get a P/L statement that shows each of my trades with their respective profit/loss. It doesn't seem to exist so you just have to go through the transaction report and calculate yourself. I knew this going in but don't expect to trade using their charts unless you are a scalper. You want to use an external chart solution. The fact that you can enter a trade of any size is unbelievable and during the upcoming week, I may decide to decrease the size of my trades while my H-system is still in its infancy.
I pulled off my second straight win this week with the H-system capturing 67 pips this morning. I'm happy that I was at least able to end the week on a positive note. The H-system (name change is in the works) lost 94 pips for the week but for the month of September, the system ended with a PROFIT of 294 pips. This was the profit from mid-September when the system was put in production. From my backtesting, I'm not surprised that it has been profitable but I never paper traded the system so you never fully know until you start throwing real money at it whether the results would be similar. This type of profit for a half of a month is the type that I can probably live on. It won't be more than what I make from my full-time job but it could be sufficient. Nevertheless, this system would have to consistently produce these results for at least a year before I considered trading it full-time.
Considering I squeezed whatever I could get out of the GBP/USD this morning on its limited movement, I'm going to end my trading week now. It's like walking away from the poker table. Don't ever think that just because you won a trade, you can be riskier with your winnings and place a trade that breaks your rules. This is what get people in trouble. I've never had a problem walking away and I'm going to do that until Monday.
Hope you had a great week.
Oanda Account Opened
I finally opened up an account at Oanda today and transferred funds. Hopefully I'll be trading through this account by today or tomorrow. I'll let everyone know how it goes.
On a side note, why must my spammers barrage my website. I find that I'm in a constant fight to keep them from posting their forex advertising and forex promotional material here. What a waste of time. I'm going to start another section called FOREX SPAM SITES that explicitly list the sites that they are trying to promote.
