This is an attempt to estimate the cost differences for investors between Hotspot retail and Oanda. Rollover Hotspot's daily rollover costs seem to be slightly lower. Two examples below: long 100,000 EUR/USD Hotspot daily forward point: 0.85 pip = USD 8.50 Oanda EUR bid: 2.35% USD ask: 5.00% daily swap = USD 9.08 (approx) long 100,000 GBP/USD Hotspot daily forward point: 0.29 pip = USD 2.90 Oanda GBP bid: 4.25% USD ask: 5.00% daily swap = USD 3.71 (approx) (Hotspot retail demo swap rates on April 21 are used.) Credit Interest on Margin Deposits Oanda wins, hands down. https://fx1.oanda.com/mod_perl/user/interestrates.pl http://www.hotspotfx.com/openacct/faq/ Spreads Comparable, with Hotspot's sometimes lower. Commissions Hotspot charges USD 3 per 100,000 base currency units, negotiable for larger volumes. Oanda does not charge commissions. There are, of course, other considerations due to the two companies' different nature as ECN and market maker respectively. I'd appreciate it if fellow ET members could confirm the accuracy of my Oanda daily rollover cost calculations in the above examples. Any feedback would be most welcome!
Your Oanda numbers are slightly off, but pretty close. A few comments: 1. You don't need to do manual calculations, you know: http://www.oanda.com/products/fxmath/interest.shtml 2. Compare interest debits and credits for both long and short trades, for each currency pair you plan to trade. 3. Like most forex dealers, Hotspot does a rollover once a day. If you open and close a trade within their trading day, you will have no interest debit or credit for that trade. So, if you are an intraday trader, you might rarely or never see rollover costs. By contrast, Oanda computes interest debit and credit by the second, for better or for worse, and posts them at 4 pm EST, 7 days a week, or when a trade is closed, in part or in full. 4. As you alluded to, interest is simply not going to make or break most forex traders. Unless you intentionally play an interest driven strategy, e.g., carry trades or a diversified, hedged carry trade basket a la ElectricSavant, or hold leveraged positions for long periods of time, I would put interest fairly low on your list of the key comparison factors. As always, your choice depends a great deal on who you are and how you trade.
Thanks, late apex, for your helpful pointers, especially the intraday implications in #3. At the moment, I do very little daytrading, which perhaps explains my personal mental bias.
I haven't traded with either of these firms, but have done both the ECN model vs the MM model. For me, the ECN model wins hands down. Main reason, no requoting. They are going to get you the best spreads/ fills that they can. Spreads as low as half a pip. Adds up big time when paying 2 pips elsewhere. Then again, you aren't a day trader, so probably not important to you. My ex partner uses Hotspot. He's a pro, and likes the firm. Jay