Oanda Core Pricing + Commission vs. Spread Only

Trading Discussion Risk Management Practices
1

Hi Everyone,

I expect to be going live soon on Oanda’s MT4 platform. I’ll need to choose between the Core Pricing + Commission model or Spread Only model to pay the broker. I think I’ve got my math comparisons correct so I could make the wisest choice; but if you understand these pricing models well, especially Core Pricing + Commission, I’d truly appreciate if you’d check my math on these comparisons. I sent this exact same example and query to Oanda customer support, but got a very cordial non-answer. (“We don’t give trade advice.” - But did I ask for advice?)

Either affirm me or correct my math. I must know that I’ll be making the right choice. Thank you very much.

HERE’S THE MATH:

OANDA CORE PRICING + COMMISSION IS ($5 PER SIDE PER LOT = $10 ROUND TURN PER LOT) + ABOUT A 1 PIP LOWER SPREAD THAN SPREAD ONLY.

HYPOTHETICAL TRADE:
RISK: $80.00
TRADE VOLUME: 2 MINILOTS
STOP LOSS: 10 PIPS

MY MATH:
EACH PIP MOVEMENT = $80/10 = $8.00, SO . . .

WITH CORE PRICING I PAY A $2 COMMISSION (2 MINILOTS AT $1 PER MINILOT ROUND TURN), BUT SAVE $8.00 ON THE 1-PIP LOWER SPREAD.
TOTAL PAID: $2.00.

WITH SPREAD ONLY THERE IS NO COMMISSION, BUT I PAY $8 FOR THE EXTRA SPREAD PIP.
TOTAL PAID:$8.00.

If my math is correct, there is no doubt I should choose Core Pricing + Commission. I’ve tried similar hypothetical examples, and CP + C kicked the poop out of Spread Only each time - if my math is correct.

Thanks again,
Norm

3

It’s actually the exact same pricing. As an example let’s look at EUR/USD.

If the spread is at 1.4 (which is pretty typical for this pair using spread only pricing) and you trade a standard lot (100,000 units) then your cost would be $14 (round turn in and out of the trade). The calculation would be .00014 x 100,000 = $14.

Now for the core pricing, to calculate the cost it would be spread + commission. The spread for core pricing is 1 pip lower so your new spread would be .4 pips. So the total spread cost would be $4 (.00004 x 100,000 = $4).The commission is $5 per trade so it would be a total of $10 ($5 buy + $5 sell). So if the spread is $4 and the commission is $10, then total is $14.

So there is no difference in pricing.