Oanda being shady????? | Forex Factory

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Oanda being shady?????

  • #1
  • First Post: Sep 4, 2007 1:47pm Sep 4, 2007 1:47pm
Months ago I had long AUDUSD positions which I noticed was being charged interest. Recently I had long USDCAD which was charged interest.

I called them up and asked about it, and they said that they charge interest due to 'speculation' of interest rate change by Oanda

So I asked them how soon do you actually do this before the news come out? And, if the interest rate decision doesn't go as plan, do we get refunded for all the days that interest was charged?

The two callers that answered me dodge the questions pretty much. I was told to email and they said they will 'look into it' I am seriously considering changing broker because of this hiding behind the bush method. If I ever decided to open a 100k account, then that few cents interest can easily be hundreds of dollars in the long run. And why would you charge clients interest BEFORE the news ???? I mean Oanda could easily rip off customers and earning fat profits from that. And God knows how soon they would do this prior to the interest rate report. Ridiculous

Can somebody comment and hopefully bring this to light?
  • #2
  • Sep 8, 2007 1:34pm Sep 8, 2007 1:34pm
Thanks Hilmy83 for bringing this to my attention. I will now watch closely those interest charges.

Bluefish
  • #3
  • Sep 8, 2007 4:04pm Sep 8, 2007 4:04pm
What u say maybe true........BUT a BIG plus for Oanda is that they DO pay interest on money that is sitting in your account doing nothing.....how many brokers do that ????

regards fxloot
  • #4
  • Sep 8, 2007 5:43pm Sep 8, 2007 5:43pm
Also have never noticed this myself, and I have to agree with fxloot. In my mind, Oanda's benefits exceed its costs. However, I say this being EXTREMELY biased, since I have a Mac, Oanda is the only broker who offers charting java software who is somewhat reputable. Thus, Oanda is the only broker I use, and possibly will ever use. I've been satisfied for 2.5 years(just barely, nothing special...)

Verdict:

There are better brokers
  • #5
  • Edited 7:32pm Sep 8, 2007 6:01pm | Edited 7:32pm
Quoting fxloot
What u say maybe true........BUT a BIG plus for Oanda is that they DO pay interest on money that is sitting in your account doing nothing.....how many brokers do that ????

regards fxloot

fxloot....

himy83 has brought up a HUGH business negative practice. BTW, as an Oanda client, thanks for this post himy83.

While true, Oanda pays interest on balance.....do not over look that your OPEN trades are being debitted interest by the second when they should not be at time of trade. HOW many brokers do that???

I can go long , for instance, the eur/usd at 5:01PM edt and close my position at 4:59PM at a few brokers and incur no negative debit or roll. ( some have different rules, just an example here ) Yet I'd have paid interest for 23 hours and 58 minutes at Oanda.

I've often wondered why rates are not easily posted....as for instance FXCM has them posted right on the tradestation.

Now this begs the Question.....how accurate are the rates Oanda pays interest vs. how much they charge????? No matter the pair. Follow me?????

Lastly, where does it state in the "fine print" that this will occur....speculation on an interest rate decision???????

Fxj

EDIT: SEE MY UPDATE ON POST 15
Proper Prior Planning Prevents Piss Poor Performance
  • #6
  • Sep 8, 2007 6:20pm Sep 8, 2007 6:20pm
I wish this issue could be big enough to bring an Oanda representative on here to answer these questons that we have. Maybe the moderators could do that??
  • #7
  • Sep 8, 2007 6:23pm Sep 8, 2007 6:23pm
I too am an Oanda customer and had not noticed this, and yes it would be very interesting to se if the same practice is done with intrest positive trades...I think this would be pretty hard to track.......maybe worth a try though.
On the plus side howmany brokers pay intrest on your idle funds, those just sitting in your account between trades or the balance during a trade?
Same Whore .... Different Dress
  • #8
  • Edited 7:34pm Sep 8, 2007 6:41pm | Edited 7:34pm
johndoe....true not many do pay interest on balance.....BUT....is Oanda making up for that "bennie" by unfairly charging interest to OPEN positions that SHOULD be PAID....than in the end, it is sort of a wash.....at least for Oanda.....

Hilmy83......a rep would be nice.....have you by chance posted this on Oanda's Board.....

I'm going to check over there if others have notice this.

Fxj

EDIT: SEE MY UPDATE ON POST 15
Proper Prior Planning Prevents Piss Poor Performance
  • #9
  • Sep 8, 2007 7:06pm Sep 8, 2007 7:06pm
There's nothing shady about it. You were charged interest because you opened negative carry trades. If you open positive carry trades you earn interest. You should really learn this basic stuff about how your broker works before trading with them.
  • #10
  • Sep 8, 2007 7:07pm Sep 8, 2007 7:07pm
Quoting FxJarhead
johndoe....true not many do pay interest on balance.....BUT....is Oanda making up for that "bennie" by unfairly charging interest to OPEN positions that SHOULD be PAID....than in the end, it is sort of a wash.....at least for Oanda.....

Hilmy83......a rep would be nice.....have you by chance posted this on Oanda's Board.....

I'm going to check over there if others have notice this.

Fxj
I did try to look over Oanda's forums but I couldn't any thread about this interest stuff. I'll try again later and maybe post a thread on it.
  • #11
  • Sep 8, 2007 7:08pm Sep 8, 2007 7:08pm
Quoting notouch
There's nothing shady about it. You were charged interest because you opened negative carry trades. If you open positive carry trades you earn interest. You should really learn this basic stuff about how your broker works before trading with them.
dude it was long AUDUSD and USDCAD....tell me which way the carry trades should be..

I'm not a total newbie you know
  • #12
  • Sep 8, 2007 7:13pm Sep 8, 2007 7:13pm
My apologies, I see what you mean. You should have been earning interest. I've never had this issue trading GBP/USD so please keep us informed what Oanda say.

What happens when you short those pairs?

One thought that springs to mind is that the interest rates used are the LIBOR rates not the fed funds rate and there have been times in recent weeks where the LIBOR rates for the USD are well above the fed funds rate due to the credit crunch.
  • #13
  • Sep 8, 2007 7:23pm Sep 8, 2007 7:23pm
Quoting notouch
My apologies, I see what you mean. You should have been earning interest. I've never had this issue trading GBP/USD so please keep us informed what Oanda say.

What happens when you short those pairs?

One thought that springs to mind is that the interest rates used are the LIBOR rates not the fed funds rate and there have been times in recent weeks where the LIBOR rates for the USD are well above the fed funds rate due to the credit crunch.
when i short these positions, i get charged as normal

Actually I did find a thread about Oanda using fluctuating interest rates, not the ones that we are familiar with. If that's the case, I guess that's something you just gotta live with. These interest charges didn't happen till recently, so I guess it does have to do with the credit problems.

Hmm..any comments from anybody?
  • #14
  • Sep 8, 2007 7:28pm Sep 8, 2007 7:28pm
I'm pretty sure it's the fact that interest rate differentials are based on LIBOR rates, not the central bank base rate. There were time in recent weeks were the USD Libor rates were well above the base rate which would have reversed the carry trade. Keep your eye on the LIBOR rates or whatever interest rates Oanda uses.
  • #15
  • Edited 7:34pm Sep 8, 2007 7:31pm | Edited 7:34pm
Hi all...

Ok...really tough to find your way around on the forum.....I'm a client, yet have only looked at the forum there 2 times, 1 being today.

From checking on the interest page.....maybe this can help, and make a bit of sense of what himy83 was told by a Oanda phone rep.

BEWARE: This is not my strong suit here....just my layman's understanding....I don't nor have ever traded interest rates!

From my understanding, from info provided, it seems to me that Oanda pays interest based on an open market B/A interest rate....and they can change daily.

So if "specualtors" in the market are short/long ( whichever ) on a particular currency on any given day/week/.month.....and it happens to fall below it's counter pair....daily interest would than be changed...debited or added.

I know back in the day....300pm NY time used to be the cut for swap rates., still is...seems I've forgotten those days, and maybe many brokers are so static with thier rates....One can forget. Like myself.

Re-reading this, I realize it sounds a bit lame....just trying to help out, how ever limited it may be.....Maybe food for thought from some one more knowledgable and better able to explain......

Too me, as of this writing, it would appear that Oanda is not the one speculating, they are using the rates at which speculators set. So I would cast my vote for Oanda after doing this search. Though a bit better clarification and possibly more information from phone reps would be of help.


Hope some followed that thought......LOL, cuz I probably couldn't!!!!
Fxj
Proper Prior Planning Prevents Piss Poor Performance
  • #16
  • Sep 8, 2007 7:33pm Sep 8, 2007 7:33pm
You can go to http://fxtrade.oanda.com/fxtrade/int...culation.shtml# and click the link FXTrade's Interest Rate Form. You can see what interest rate Oanda was using on the days in questions. I don't think you can check the intraday volatility that was going on in the past few weeks.
  • #17
  • Sep 8, 2007 7:40pm Sep 8, 2007 7:40pm
Quoting FxJarhead
Hi all...


From my understanding, from info provided, it seems to me that Oanda pays interest based on an open market B/A interest rate....and they can change daily.
That makes sense. Interest rate are themselves determined by traders on the open market and the market interest rate is never the same as the central bank base rate so in times of volatility in market interest rates like we've seen recently the carry trade could reverse where the differential between the interest rates of the two currencies is not very large. Obviously it wouldn't happen with NZD/JPY but could easily happen with AUD/USD.
  • #18
  • Sep 8, 2007 7:42pm Sep 8, 2007 7:42pm
well i feel a little better bout oanda now that's cleared up little bit
  • #19
  • Sep 8, 2007 7:49pm Sep 8, 2007 7:49pm
Quoting hilmy83
well i feel a little better bout oanda now that's cleared up little bit

Yeah - me too.....hoped that helped out a bit....it took a lot of concentration on my part to get an "ah huh! " moment....

Ok, off to find better things to do on a Saturday night, or Sunday morn for many... Let's get a life!!!.... I need a beer now, my head is clouded from all the study!!!!!!!!!!!!!!! Still Saturday night for Me!!

Great Post/thread though! Gave stop for thought!!

fxj
Proper Prior Planning Prevents Piss Poor Performance
  • #20
  • Last Post: Sep 8, 2007 7:53pm Sep 8, 2007 7:53pm
Another issue could have been the widening spreads in the credit market in recent weeks, so you would have been charged more for borrowing and earned less for lending. Things are back to normal now for the time being.
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