Best tool for the job?

WorAl

Newbie
6 0
I put this in the Forex trading section but after 52 views, not a single reply, so figured I may have gone "too advanced" for my second post. So I'll downgrade to here to see if I get a bite.

Hi everyone, I've not began trading properly for my own profit however I have been using practice accounts on and off on OandA.

Before sinking tens of pounds of my own hard earned premium quality bank notes, I'd like to ask a few questions.

Firstly, is OandA a good platform to begin with? It seems easy to use, but are there better options out there that give a smaller spread and easier to cash in on?

Secondly, how much do OandA actually charge for using their site? They have to make money some how, how do they do it? On the practice accounts it seems straight forward, you set a target to buy low and a target to sell high, when they're reached you get your money, I've been making around 20-25% a day on 100k practice account so far.

But surely it can't be as simple as that? All I've found so far is that you get charged £25 per withdrawal transaction and that's all? Don't they take a percentage of the profits?

Any help would be appreciated as I'd like to sink my teeth into this and get rolling in the dough. :cheesy:
 

pboyles

Legendary member
8,072 1,302
Practice accounts are not the same as live accounts. With a practice account it in their interest that you make money as this convicted you that you're going to be rich in about a week. That way you'll dump a load of real money into the account. As soon as you start trading real money you'll start losing and you'll continue losing for the foreseeable future.
 

pboyles

Legendary member
8,072 1,302
Actually you asked how the SB company makes money. Like any other bookie they take the other side of your trade. Whatever you lose they keep, on top of that they'll make a bit more by adding in some slippage. If you do make a load of money they will cancel your trades and say there was a 'manifest error'. Either way you not going to make money.
 

WorAl

Newbie
6 0
I kind of expected that the practice account wouldn't be the same as the real account (but they cant change the format as whats the point in the practice, then) but I'm a little confused at how money is lost as you don't actually have to buy anything on OandA (as far as I can see). You can set a limit to buy eg USD at 1.52 and to sell at 1.53, you then set your time limit for these points to expire, if they're never reached, you don't pay anything out, if one is reached you take that number of USD at that price then wait for the price to rise/fall to reach the other target. If it doesn't, you just set another. I'm really struggling to see where you can lose money as the USD or UK100 or what're isn't going to go away/go bankrupt so it's just a waiting game until targets are reached.

Or am I missing something?
 

pboyles

Legendary member
8,072 1,302
I kind of expected that the practice account wouldn't be the same as the real account (but they cant change the format as whats the point in the practice, then) but I'm a little confused at how money is lost as you don't actually have to buy anything on OandA (as far as I can see). You can set a limit to buy eg USD at 1.52 and to sell at 1.53, you then set your time limit for these points to expire, if they're never reached, you don't pay anything out, if one is reached you take that number of USD at that price then wait for the price to rise/fall to reach the other target. If it doesn't, you just set another. I'm really struggling to see where you can lose money as the USD or UK100 or what're isn't going to go away/go bankrupt so it's just a waiting game until targets are reached.

Or am I missing something?

You are missing something, well quite a few things. What happens if you buy at 1.52 ad it immediately drops to 1.49, what will you do, hang on? Next day it drops to 1.47, what do you do? Because it 'always comes back' you hang on for weeks, it drops to 1.35 what do you do?

All you need to do is look back several years in forex chart to see that it doesn't always come back. In fact some indices only got back to their 2008 levels a few months ago. That's 5 years of waiting for it to come back. At least the indices did recover.
 

Sir Pond Life Dreg

Active member
135 125
I kind of expected that the practice account wouldn't be the same as the real account (but they cant change the format as whats the point in the practice, then) but I'm a little confused at how money is lost as you don't actually have to buy anything on OandA (as far as I can see). You can set a limit to buy eg USD at 1.52 and to sell at 1.53, you then set your time limit for these points to expire, if they're never reached, you don't pay anything out, if one is reached you take that number of USD at that price then wait for the price to rise/fall to reach the other target. If it doesn't, you just set another. I'm really struggling to see where you can lose money as the USD or UK100 or what're isn't going to go away/go bankrupt so it's just a waiting game until targets are reached.

Or am I missing something?

Don't ever fund a live account.

Oh Yeah, Fishing rod.
 
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pboyles

Legendary member
8,072 1,302
25% a day? So fund it with £1000 and 30 days later you'll have a million. Another 10 days you'll have 9 million. Another 20 or so days later you'll have a billion. In about 6 months you'll have all the money there is in the world.

And people actually think this is possible.
 

pboyles

Legendary member
8,072 1,302
pboyles, your typical knee-jerk reaction, diatribe against and personal hatred of SB firms is getting pretty f*ckin' boring.

What do you suggest we tell him? Fund a live account and he'll make 25 % a day?
 

timsk

Legendary member
7,344 2,136
Hi WorAl,
Welcome to T2W.

Firstly, is OandA a good platform to begin with? It seems easy to use, but are there better options out there that give a smaller spread and easier to cash in on?
I can't comment on Oanda as I've never used them. However, they are one of the larger and better known FX brokers and covered by the FCA. Read some reviews about them here

Secondly, how much do OandA actually charge for using their site? They have to make money some how, how do they do it? On the practice accounts it seems straight forward, you set a target to buy low and a target to sell high, when they're reached you get your money, I've been making around 20-25% a day on 100k practice account so far.
They make their money from the bid/offer spread. You buy at the higher price and sell at the lower price and they pocket the difference. Additionally, as pboyles has said, they are the counterparty to your trade and may accept the risk and profit if you incur a loss. However, most spread bet companies claim not to do this and offset the risk by hedging their exposure in the underlying market. One thing is for certain, you will definitely not make the kind of returns you've been enjoying trading a demo account when you switch to a live account. To make returns that good, you are almost certainly taking massive risks which, if you attempt to replicate with real money, will result in you having a 'blow up'. This is traders jargon for losing most - or all - of your capital. I won't go into detail here as to why this is the case but, if you're interested, read this Sticky: Essentials Of 'Risk & Money Management'

But surely it can't be as simple as that?
It's not! Again, as pboyles has said, knowing that you picked the absolute low and that price isn't going to fall any further appears to be deceptively simple to start with. It is almost inevitable that you'll get it wrong sooner or later and blow up.

All I've found so far is that you get charged £25 per withdrawal transaction and that's all? Don't they take a percentage of the profits?
See my second paragraph, above.

I recommend you soak up the information provided in the forum Stickies and the Trading FAQs and continue demo trading for now.
Tim.
 

Hakuna Matata

Well-known member
357 209
What do you suggest we tell him? Fund a live account and he'll make 25 % a day?

Well, you could start by:

Practice accounts are not the same as live accounts. With a practice account it in their interest that you make money as this convicted you that you're going to be rich in about a week. That way you'll dump a load of real money into the account. As soon as you start trading real money you'll start losing and you'll continue losing for the foreseeable future.

Not insinuating that Oanda are intentionally trying to lure you in to a false sense of security via underhand behaviour.

Actually you asked how the SB company makes money. Like any other bookie they take the other side of your trade. Whatever you lose they keep, on top of that they'll make a bit more by adding in some slippage. If you do make a load of money they will cancel your trades and say there was a 'manifest error'. Either way you not going to make money.

Or labelling Oanda a bookie when they're a market maker. They make money from the spread.

What's your problem pal? Got some axe to grind?
 

nunrgguy

Established member
656 118
Well, you could start by:



Not insinuating that Oanda are intentionally trying to lure you in to a false sense of security via underhand behaviour.



Or labelling Oanda a bookie when they're a market maker. They make money from the spread.

What's your problem pal? Got some axe to grind?

AFAIK OANDA are a bucket shop, so no different at all to an SB company apart from they're not using the SB wrapper.

Don't use them for charts - their charting is not exactly great.
As far as fills, no better or worse than anyone else in that regard.
 

Hakuna Matata

Well-known member
357 209
AFAIK OANDA are a bucket shop, so no different at all to an SB company apart from they're not using the SB wrapper.

Don't use them for charts - their charting is not exactly great.
As far as fills, no better or worse than anyone else in that regard.

I am 99% certain that Oanda are a Market Maker.
 
 
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