[MickMason]

Spreads can stay at 20 pips for anything up to 15 minutes and sometimes across the most trivial data releases, especially on Gbp/Usd.

For the purpose of this comparison we need to ignore what happens on the interbank market, it's not relevant, we're not trading the real market.

Let's take the average day trader. He's got say a couple of thousand dollars and makes on average 2 or 3 trades per day for a few pips per trade, in essence he's a scalper.

He wants to find a broker who isn't going to mess with his trades, where he is allowed to scalp, and where the spread is small. On the face of it Oanda is looking like a pretty good choice. They don't have a dealing desk and say they offer straight-through order processing. Most of the time they've got a 1.2 pip spread on Eur/Usd, they allow trades for any amount, and they pay interest on account balances. They also have a Traders Bill of Rights and say all the right things like how they offer a level playing field in this den of thieves we call retail forex trading. Sounds good.....but let's take a closer look at how all this works in practice compared to, for example, CMC.

Oanda usually has a 1.2 pip spread on Eur/Usd, so how comes my 8 pip 10k trade didn't make me $8? Pipettes is the answer, it looked like 8 pips but in reality it was only 7.2 because in actual fact you didn't buy at 1.3350 and sell at 1.3358, you bought at 1.3350(4) and closed at 1.3357(6), that means spread was really 2 pips. CMC have a fixed 2 pip spread on Eur/Usd and no pipettes hiding the true cost of your trade. If you buy 10k at 1.3350 and sell at 1.3358 you make $8. Bear in mind Oanda spreads vary, in the early European session it's usually 2 pips or 1.5 pips so in actual fact it's more expensive to trade with Oanda than CMC in a lot of cases.

Oanda don't have a dealing desk, that's a good thing isn't it, no-one to mess with my trades and hunt my stops? Stop hunting is a falacy, it simply doesn't happen with mainstream brokers like CMC. The benefit of trading with a broker who has a dealing desk is for times when the platform goes down or you lose your internet connection or you're away from your PC and want to open, close, or adjust a trade. Oanda's lack of dealing desk isn't for your benefit, it's to reduce their overhead.

Oanda have a Traders Bill of Rights, no-one else does, that must mean they're honest. Well read it, what does it really say once all the marketing hype is taken out? Basically it says nothing, it's all just soothing noises to make you feel better, it's a first class sales pitch but really amounts to nothing.

Oanda pay interest on my trades by the second, that's more profit for me, plus they pay interest on my account balance. Sure, they pay interest on yield positive trades by the second but they also charge you on yield negative trades, it's swings and roundabouts. The interest they pay on your account balance is negated by what comes next.....

Widening spreads across data. Oanda widen spreads on even the most insignificant data, usually by 15 or 20 pips and sometimes as much as 30 pips. But I don't trade data so it doesn't affect me does it? Yes, it can, especially if you're already in a trade. The wider spread can trigger your stop so you have to widen your stop accordingly, that increases the risk on your trade. You might want to exit a profitable trade on a data spike but Oanda's wide spread stops you doing that, or at least reduces your potential profit. You might want to enter a trade on a spike but wide spreads mean you'll get a worse price. There goes this month's interest they paid you on your account balance! That, together with the platform going down when data like NFP comes out will lose you far more than the few cents they pay in account balance interest.

Oanda don't freeze price feeds, they're fully automated so there's no dealer intervention. Check it out, run another platform or charting package alongside Oanda's and see, they regularly freeze prices, in fact there's a screenshot around here somewhere showing different prices for two separate Oanda accounts, one had an open trade, the other didn't! If they really are a fully automated level playing field why does that happen, and why did spread widen to 200 pips on Gbp/Usd a few weeks ago with the excuse it was human error? Something doesn't ring true so why would they lie?

On the face of it Oanda seems like the ideal marketmaker, in reality they're no better than CMC and in a lot of respects they're worse. Why would a company want to disguise the true costs of trading with them or stop traders trading data like NFP by disconnecting them from the platform? Why lie about being fully automated when it's obvious they're not? And why publish all that fluff in the Traders Bill of Rights?

Personally I would prefer to trade with a company who doesn't try to disguise their costs or use underhand tactics like disconnects to stop me trading but it all boils down to personal choice I guess.