I’m new to forex and looking to open a couple demo accounts to get started. Targeting NDD, CFTC and NFA regulated, MT4 platform, micro lots, longer term positions and good free charts. What, if any, would be the big drawbacks or concerns with Oanda? With FXCM? Thanks for any insight offered.
I use both. FXCM has a rad platform that does some great things but how much you value you that will depend on your approach to the markets. They are a solid dealer.
Oanda is also a great dealer but their platform is not as full-on-nerd-status-tricked-out as FXCM’s. But the BIG DIFFERENCE is the trade size options with Oanda. FXCM’s minimum lot size is a standard 1,000 unit minilot. Oanda lets you trade single units. You can literally trade 1 euro. Another innovative feature Oanda offers is continuous rollover calculation (day traders would be more concerned about this than longer term traders like me).
Suppose you want to buy EUR/USD at 1.1000 with a stop at 1.0900. Suppose you want to size your position so that the stop loss would lose you $18.25. At FXCM (and almost every other dealer out there) you have to put on lots of 1,000 units. So 2,000 units of EUR/USD with a 100 pip stop distance would put on $20 (more than what you want) and 1,000 would put on $10 (a lot less than what you want). Do you put on more? Do you put on a lot less?
At Oanda you could put on 1825 units and your risk from entry to stop would be precisely $18.25. Now that is account granularity. This is a big plus for many implementations so consider that.
My advice is not to choose but to use both.
-Adrian
P.S. you can’t get the odd lots feature with Oanda using MT4. It is only available using their fxTrade platform.
Adrian,
I appreciate the comments. Can I ask how long you’ve been using both? Do you use any other NDD?
I started using FXCM in Aug 2013 and Oanda in April 2015. I also use forex.com. Thus far I have not encountered any situation wherein I thought a dealer had failed to deliver services as advertised. I believe most of the traders out there claiming to have been ripped off by their dealer are simply failing to take responsibility for their own actions.
One of the great things about fx is the available leverage. I think many have a tendency to think they can maximize the benefits of that aspect by tossing all the cash they can or want to put toward fx trading into their dealer account and trading position sizes that get close to their maximum available leverage. With that, they need to feel they can trust their dealer.
I became convinced that this approach is a recipe for an eventual disaster that amounts to a lack of personal responsibility. Putting one’s whole portfolio at risk is irresponsible.
So how does one take responsibility and use that high leverage available to reduce rather than increase risk? I learned the answer from someone else on this site: put only a minimal deposit in your account with a dealer and keep the bulk of your portfolio in a local FDIC insured bank account.
Example: You have $1000 to trade fx. Put it in a segregated bank account (not your main checking account). Transfer just $100 to an fx dealer account. If you size your positions such that you put on a maximum sum value to all of them of $3000 you will leverage your dealer account 30 to 1 (3000 to your 100 deposit) but your portfolio including your cash in the bank will be leveraged 3 to 1 (3000 to your 1000 total portfolio value).
Of course in fx you can even leverage the dealer account 50 to 1 and your portfolio will be leveraged 5 to 1. With that, even if your dealer is a no-good scumbag you have taken responsibility for your own money and have given him only the capacity to relieve you of ten percent of your portfolio while 90 percent remains in your main capital account at home.
EUR/USD moved over 20% in just the last year. If a trader leveraged 3 to 1 caught half that move (10%) he grew his account 30%. And 30% is a good return.
So while high leverage can certainly increase risk, it can also be used by responsible traders to reduce risk.
-Adrian
Welcome to the forum, Mtaughenbaugh 
Since you’re targeting NDD, it’s worth noting that the reason FXCM’s minimum trade size is one micro lot is because that’s the smallest order size that can be offset one-for-one with liquidity providers on our No Dealing Desk (NDD) forex execution. A smaller order size would require dealing desk (DD) execution.
I’m FXCM’s representative here on BabyPips. You mentioned testing out several demo accounts. If you ever have questions about your FXCM demo(s) or our services in general, please feel free to reach out to me in the Broker Aid Station.
Hello Jason,
Thanks for your valuable comment.
Both your company and Oanda appear to have solid reputations. Given my initial requirements to get my feet wet, what can you offer as advantages of FXCM that I won’t find at Oanda?
Michael
Hi Michael,
You mentioned that you’re targeting NDD. That’s something we offer that they don’t and a key reason for our popularity. Below are the latest financial data from the CFTC which show that more funds are on deposit with FXCM than any other regulated forex broker in the US.
On the NDD model, FXCM offsets each of your orders one-for-one with the best prices from competing liquidity providers including micro lots. That means we don’t profit for your losses or lose from your profits. Instead, we make money from your trading volume. Therefore, we want you to be profitable so you can trade more.
Another of your requirements is good free charts. While this is subjective, you will find many traders on this forum and elsewhere speak highly of our flagship Trading Station Desktop platform and Marketscope charts. Just recently, I announced the release of the latest version which includes real volume indicators and stop limit orders which aren’t available with other platforms: http://forums.babypips.com/fxcm/76594-update-trading-station-desktop.html
You also mentioned interest in the MT4 platform, so it’s worth noting that you can have access to both MT4 and Trading Station with a single account login. In case you don’t have a universal demo login already, here’s a free practice account that will work on both platforms.