Spot 'v' Futures

[rwilliams]

Thanks rwilliams .

are trade executions instant with oanda all of the time, or can they be delayed/requoted?

What is the minimum transaction size - if there is one?

Just had a look on "an" Oanda website and it mentions spreads of 2-3 pips on currency pairs. Please can you provide the web address of the oanda forex service that you are referring to?

Just to confirm - is Oanda a retail spot forex broker and not a direct market access, interbank, ECN type, spot forex broker?

http://www.oanda.com/

Many thanks

jtrader.

I find execution to be instant (internet willing) most of the time. During news announcements you will find that it's delayed by a few seconds (at least that's my experience) as their server has to process godnose how many orders in a very short space of time. There are no requotes - Oanda's system is completely automated. Your quote is untouched by human hands (no, they don't have chimpanzees manning the quote screens... that's another market-maker entirely ! )

The minimum transaction size is $1.00 with a granularity of $1, so you could trade 31234 units if you want - you're not restricted to set 'lot sizes'. That has confused some people when they first trade at Oanda - they think 1 unit is $100,000! Nope it's $1.

As regards the 2-3 pip thing, that's a documentation bug. You probably have the right Oanda.

Oanda is a spot forex market-maker.


http://www.oanda.com/

I believe that if you're going to trade spot forex at all, Oanda is your best choice. Some have commented on 'slippage', and it's true that during the extreme volatility of news releases, the next available price may well be quite a way from your attempted entry, but if the price you wanted was never actually quoted in the interbank market, you can hardly complain if your market-maker doesn't offer it to you either.

Search the Oanda message-boards for posts from the principals, Dr Richard Olsen, and more importantly, Dr. Michael Stumm - Michael Stumm's posts elucidate how Oanda operates in some detail if you look at them collectively.

Hope this helps - I'm extremely happy with Oanda, as are most of the long-timers there.

 

[TRADERguy]

Thanks JT -

therefore its a case of -

A) - with a 10million position in EUR/USD = I am buying $10,000,000 worth of Euros with USD.

and not a case of -

B) - with a 10million position in EUR/USD = I am buying 10,000,000 EUROS with USD. (So 10,000,000 EUROS will cost 12,200,000 USD, @ EUR/USD = 1.2200 for example).

:?: :?:

Cheers

jtrader.

No. When you buy a currency pair you are buying the first of two. If you buy 10,000,000 EUR/USD you have bought 10 mil Euro. Also buying a CME 6E currency future is a promise to buy 125,000 Euro at expiration.

Cheers,

TRADERguy

 

[JTrader]

Thanks all


TRADERguy - so are you also saying that when trading EUR/USD - "If you buy 10,000,000 EUR/USD you have bought 10 mil Euro" but that also - PnL is calculated in euros per pip?

So some say that EUR/USD profits are calculated in $ per pip, and others say that EUR/USD profits are calculated in euros per pip. This has left me confused.

Thanks again

jtrader.

 

[TRADERguy]

Thanks all


TRADERguy - so are you also saying that when trading EUR/USD - "If you buy 10,000,000 EUR/USD you have bought 10 mil Euro" but that also - PnL is calculated in euros per pip?

So some say that EUR/USD profits are calculated in $ per pip, and others say that EUR/USD profits are calculated in euros per pip. This has left me confused.

Thanks again

jtrader.

For CME futures and for all USD denominated forex accounts profits are shown in USDs. A CME currency futures contract is worth $12.50 per tic and a 100,000 Euro position is worth $10 a pip.

Cheers,

TRADERguy

 

[JTrader]

For CME futures and for all USD denominated forex accounts profits are shown in USDs. A CME currency futures contract is worth $12.50 per tic and a 100,000 Euro position is worth $10 a pip.

Cheers,

TRADERguy

Thanks TRADERguy -

just to check - so the same rules and conventions apply for all USD denominated spot forex accounts also. With EUR/USD you are effectively buying/promising to buy say 125,000 euros with USD$. Therefore the Pnl value per pip is also in USD?

You are buying/promising to buy X amount of the first currency within the pair with the second currency, and Pnl per pip is calculated in the second currency?

Many thanks

jtrader.

ps. Have just found an email reply that FXCM sent to me a while back explaining this very issue.
"The value of a pip is determined by the pair of currencies being traded, the rate at which the currency pair is trading and the size of the position being traded. In the case of the GBP/USD the value per pip is £.54."

 

[JTrader]

Originally Posted by JonnyT
You cannot trade on Oanda at certain times and they whip the spread upto 10 pips.The futures is a fair market and can be traded with a spread of 1 throughout UK and US hours.No comparision for the EUR in my book.

That's wrong (about Oanda, I cmean) - I trade at Oanda and you can trade 24/7. On the weekend the spread on EUR/USD is 10 pips, though. During the week it's mostly 1.8, but can be 2 outside EUR and USD sessions.

When the spread's 10 you wouldn't be trading anyhow - it's just a way of allowing you to exit a trade over the weekend if you _really_ have to. I've _never_ had positions open over the weekent, nor opened or closed trades then.

It's true that the spread widens around news events, though, at Oanda. They narrow again after a number of minutes depending on persistence of volatility. I don't trade through or around news, so I routinely get anything from 1 pip (on odd occasions) to 2 pips. As I said mostly 1.8.

Ron W

Hi rwilliams

I think the point that jonnyt may have originally been trying to make was that Oanda whip the spread upto 10 pips away from the underlying interbank market price (offering a price that is far removed from what is going on in the underlying market = marklet manipulation?), and not that Oanda open the spread up to 10 pips wide in itself.

Does this happen with Oanda in your experience?

Many thanks

jtrader.

 

[TRADERguy]

Thanks TRADERguy -

just to check - so the same rules and conventions apply for all USD denominated spot forex accounts also. With EUR/USD you are effectively buying/promising to buy say 125,000 euros with USD$. Therefore the Pnl value per pip is also in USD?

You are buying/promising to buy X amount of the first currency within the pair with the second currency, and Pnl per pip is calculated in the second currency?

Many thanks

jtrader.


ps. Have just found an email reply that FXCM sent to me a while back explaining this very issue.
"The value of a pip is determined by the pair of currencies being traded, the rate at which the currency pair is trading and the size of the position being traded. In the case of the GBP/USD the value per pip is £.54."

If the current exchange rate for EUR/USD is 1.2800 that means that 1 euro costs $1.28. If you pay $1.28 for a euro and then the euro increases in value by one pip to $1.2801 then you have made 1/100th of a penny. If you bought 125,000 euros and it goes up 1 pip, then you have made $12.50 (125,000 X $.0001).

Cheers,

TRADERguy

 

[JTrader]

But what's confusing everyone is that retail brokerages may allow you to have an account in one of several currencies.

Hi GJ

I agree, I think this is where the main confusion has arisen.
For me an account that sticks to USD denominations is best.

Cheers

jtrader.

 

[rwilliams]

Hi rwilliams

I think the point that jonnyt may have originally been trying to make was that Oanda whip the spread upto 10 pips away from the underlying interbank market price (offering a price that is far removed from what is going on in the underlying market = marklet manipulation?), and not that Oanda open the spread up to 10 pips wide in itself.

Does this happen with Oanda in your experience?

Many thanks

jtrader.

Well, maybe - I haven't noticed any such thing, though. I monitored Oanda pricing vs others such as MetaTrader and CMS-Forex's VTSpot, and unless there's collusion between widely different competitors their pricing followed pretty closely most of the time. Oanda do 'clean up' the price to what their idea of a 'fair representation' of their sources is - i.e. their price isn't as jumpy with false moves as some because they filter bad ticks. If you like to scalp that kind of movement you won't find it at Oanda, generally.

In any case, I can't deal with the interbank market - I _can_ deal with oanda, whether or not their pricing tracks the 'interbank market' (which, mind you, is kind of amorphous - it's _not_ like an exchange where there's a real definite definitive price - only a best bid/offer amongst the participants).

Ultimately they have to follow the market consensus, or be arbitraged.

No dealer or market-maker is perfect, but if you're making money in a reasonably fair environment, that's all you can hope for, IMO.

 

[JTrader]

Well your flag states that you're in the UK somewhere so presumably you funded your account initialy in sterling?

Even with a USD account, if you trade 100,000 USD/JPY you're still going to have a JPY P+L which your broker si going to have to convert for you.

Hi GJ

I'm not used to converting into a third currency. My forex trading experience to date has been through spreadbetting and so has been simply in £ per point.

What I mean is that as seen as I will only trade EUR/USD and maybe GBPUSD, keeping my conversions in USD is easiest for me and not converting the PnL to a third currency. However, if my broker (when I get one) then automatically converts these USD profits into GBP then that is fine and understandable.

Cheers

jtrader.

 

[JTrader]

Hi GJ

yes the plan would be to trade from a retail forex account, or trade forex futures.

Cheers

jtrader.

 

[rwilliams]

Hi GJ

I agree, I think this is where the main confusion has arisen.
For me an account that sticks to USD denominations is best.

Cheers

jtrader.

Yes, that's what I have, but I have to hedge the amount of my account by buying an equivalent number of units in AUD/USD

I have three choices:

1) Hedge
2) Open an account in AUD
3) Neither - just accept exchange fluctuations.

1) is more certain, but if your broker doesn't allow opening a position both ways you have to fund a subaccount (or a second account), thus either tying up more of the trading account than you want to, or risking a margin call if the value falls.

2) incurs extra costs for conversions when trading (as I believe - I don't do it this way, as above)

3) is bad if AUD/USD goes up - or good if AUD/USD goes down

 

[rwilliams]

Even with a USD account, if you trade 100,000 USD/JPY you're still going to have a JPY P+L which your broker si going to have to convert for you.

Not actually sure about USD/JPY - there's an USD in there, but that's certainly right for, say, EUR/JPY or the other crosses. It shows up in the higher spreads charged or in the interest, I guess. It certainly isn't a line-item in the account statement.