I just opened and verified an account with OANDA... I can't seem to find their FAQ. Never traded direct FX before. Just options, forex futures, and equities. As far as I know FX brokers have no commissions, correct? They just make money off the spread. Anyone know what the minimum account size and how their lot sizes work? Just going to try some small stuff while I get used to FX.
Ok, Oanda is not your 'average' FX broker. They do things a tad differently: Most FX brokers have a minimum deposit of a few hundred, some a few thousand, but Oanda's is just $1. Can't do much with just $1, but Oanda says that's their minimum. Lot size wise, most brokers follow standard lot sizes: $100k standard, $10k Mini, $1k Micro... but Oanda's minimum lot size is 1 unit of the base currency of the quote (basically $1, some exceptions.) Can't do much with $1 worth of exposure, but if you want to define your risk through lot size down to the penny, Oanda let's you do this (eg. opening a $34,123 sized position instead of having to round down to $34k at other brokers.) Positions sizes are really exposure sizes. If you've traded FX futures, think contract specifications in size of the currency in question. Match the total exposure to a given currency, and you've matched the lot size you need to equal one contract in futures. Oanda has no commissions, just the spread is paid. However a growing trend in the FX broker wold is to go spread + commissions. Brokers will pass on their spread feed from their liquidity providers for you to trade on, and make their cut in commissions instead of marking the spread up and passing it along. But as I said, Oanda is just spread, no commissions, so what you see is to the total cost up front. Hope that helps. Oanda's a good choice. Just keep an eye on news release, they will widen the spread by a lot during the few seconds leading up to major releases and for a few minutes after... not the best for people who trade news releases.
Hmmmm... Ok... Sorry... Still confused, could someone explain this little detail... In futures you have a certain amount per tick... $5, $12.5, etc... If you have say $1000 and you capture 10 ticks at 10-1 leverage... You get $10? And at 50-1 that would be $50? Wait a minute... That doesn't sound right... Sounds far under futures leverage... Then there is a daily interest rate for margin?
leverage is always the same, how much of it you use is up to you. So for instance in EUR/USD on 100k it is $10 per pip, if you only put on 10k it is $1 per pip. If you put on 125k like a futures contract, it is $12.50 per pip. leverage is just what the broker gives you. mine is 40 to 1, yours may be 50 to one, offshore you can get 500 to 1. unless you are insane, leverage doesn't mean much, it's just how much rope they give you to hang yourself. 40 to 1 is the going rate both for forex and futures. you are correct, in spot you pay interest, in futures it is figured in to the price some of us like spot because of the trading hours, and the ability to fine tune size, rather than always working in 125k units
I would be curious to know how many of you that trade spot also trade forex futures. I wonder if forex futures are a bit easier to trade than spot Forex?
In futures, you get a value per tick, per contract. That value isn't just made up, it has to relate to the quoted price multiplied by the exposure of the contract itself. Example: if you buy 1 contract of 6E, you are exposing yourself to 125k worth of Euros' value as it trades against the USD. That's where the ~$12.50 per tick value comes from. In spot, you're accounting for positions in notional value / exposure to the currency pair. So in sport, to get ~$12.50 per pip (unit equal to tick in 6E) you'd open 125k worth of a position (or 1.25 standard lots.) Most brokers allow standard lots (100k worth), mini lots (10k worth) or micro lots (1k worth) of size. Oanda allows any exposure size you want, and their minimum position size is 1 unit of currency. This would allow you to gain a very fine control over exactly how much 1 pip of movement will impact your P/L (down to the penny.)
to open account with oanda you need to to be acredited investor it means net worth in exsess of 1 mil$
??? Oanda actually lets you open a account with $1. Are you trying to open some sort of institutional account?
well, as I understand it, after the 2008 crash they raised the minimum to 1.8 million, but it doesn't need to be liquid, it could have been your house (before the housing market crashed) but thanks for that informative knowledgable information. I don't put people on ignore, but I do kind of make a mental note of who the crackpots are. Don't you have something better to do?