Very large oanda news spreads

Hey guys. I have been trading with oanda for years and have always encountered a 15-20 pip spread for G/U at major news release time (sometimes more, but very rarely). I have just come back from a long break and I am now copping around a 40 pip spread for G/U. Anyone know if this has become a regular thing for oanda.

Also would like to here from guys using ecn/stp systems if they have whitnessed increase spreads of this magnitude for G/U lately, or is oanda starting to take the piss a bit?

As far as I have noticed, E/U is still generally 10 pips at news time, same as it always was.

Cheers guys

OANDA's spreads are a reflection of the spreads in the Forex market.

Bust out some research on why spreads are what they are and you'll find your answer.

Thanks for the responses guys.

I am aware of the nature of the forex market (and any market for that matter) in regard to widening and narrowing spreads due to current interst ie, where the bids and offers lie. Oanda are a market maker however and there spreads do not reflect to the letter that of the major liquidity pools used by the interbank market such as reuters and EBS.

For example, in normal market conditions oandas eur/usd spread will be fixed at 0.9 pips. If you look at the major ecn systems used by the interbank (or any ecn for that matter), you will see that spreads are constantly going from 0 (or inverted even), to 1 or 2 pips. When a major news release happens and orders are pulled, spreads obviously widen. But in a natural ecn environment the amount by which will vary, as opposed to oanda who will almost always widen their spread to exactly 10 pips.

Obviously oanda adopt cirtain policies as to where to set spreads. As a variable spread market maker, they have the freedom to adjust these policies to suit conditions as best they can. Somtimes they will lose when they 'underprice' their spreads. Most of the time they will win when they slightly 'overprice' their spreads in relation to the spreads available to them. (As a side note, they also win as they can match many of their orders in house and never have to hedge through their liquidity pools.)

So my question is, how overpriced is the 40 pip spread they are currently offering on most important news releases involving G/U. Only someone with access to some of the major liquidity pools will be able to answer this for me. The other part of the question is how common have these big spreads of late been? Whether it is oanda grosly overpricing or the market being in an extremely volatile time I do not care, I just want to be prepared. I have been trading for many years and have only rarely seen this type of spread, even in big news weeks like this. But all this week and last week I have been whitnessing them frequently. I make my decisions based on the knowledge that Oanda is generally very consistent at where the spreads will be set for major releases and I may have to change my strategy slightly if this has become a common phenomenon. So people who have been trading with oanda over the past few months, are these spreads becoming more and more frequent, or is it just since I got back? Obviously I will be able to work this out as time goes on, but it would be greatly appriciated if someone could fill in the gaps that were created when i was on my holidays.

Cheers guys

Incorrect. Oanda's spreads are a reflection of spreads at Oanda only. They are not a true reflection of spreads in the forex market because Oanda is a market maker who sets its own spreads. They intentionally widen spreads at news time to defeat news traders. Some other brokers widen spreads too but a 40 pip spread on GU is outrageous. If I encountered such a spread with any broker I would take my account elsewhere.

I don't trade there but a trading buddy of mine does and he has said the same things. GU used to be 20 pips at news and now is 40. He told me last night AU was 30 pips at freaking Trade Balance. So seems it's just recently happened. Just my opinion, but I think this is as simple as Oanda wanting to further protect themselves and wanting to make more money. I don't think it has anything to do with interbank liquidity or anything like that. As you said, they are a market maker so they are essentially making up their own prices anyway.

I do have an FXDD account though, and first of the year they went to 5 decimal variable spreads from fixed 4 decimals, giving everybody the "this is better for you" BS. But all it's amounted to is a higher spread now and worse execution. Who knows, maybe the bucketshops all decided to tighten the screws first of the year?

For what it's worth...

Cheers for the responses guys

Pipstar - 40 pips does seem quite outrageous dosn't it. I have been trading a long time with oanda and am very happy. I have come to accept that their business model includes a highly inflated spread during news, but 40 pips??? If this becomes common practice it will def be a reason to start looking at other brokers.

Who do you trade with and what type of spreads have you been experiencing lately?

TC East - How long has your buddy been experiencing these spreads? You think AUD trade balance was bad? I got 40 pips on GBP Construction PMI the other night!!!

http://fxtrade.oanda.com/community/f...686;p=3#000031

He's been trading for years and also at Oanda for years; since 2006 I think, but the huge spreads just within last 2 weeks I think. Sounds similar to you; been generally happy with them, but definitely unhappy about the much higher spreads now...

Cheers TC

trash - Thanks for the link. Can see liquidity is low, but liquidity was higher when the liquidity index chart was posted last week than it was a few weeks ago and TC indicates that these high spreads have only been happening the last 2 weeks (although he is not sure). Also, liquidity is not hugely low, we have been lower than this and have experienced sharper drops in the past and as I say I can't remember these spreads happening on a consistant basis (although i may have just forgotten or not noticed). Guess oanda would lag a little in revising their spread policy. Also, this chart doesn't show us what liquidity is specifically at news time is. Maybe banks are really nervous during news releases at the moment for some reason.

Would love to watch the reuters or ebs feeds to see if this spread widening is to the same extent on these networks, even if I can't trade on them. Is this possible???

Cheers

Well, I meant that is a standard answer from Oanda!!!! I just copy & paste.

Liquidity and nervousness are two factors. I don't think that Barclay's graph does mean that if it's rising a bit then the spreads get lower all of a sudden. The general conditions of the market don't seem to be as good as last year.

Regarding EBS, look at CQG. They provide EBS, Reuters and other markets data.

Once last year I asked for spread during a news release. And someone kindly provided me with some data for EURUSD and USDJPY

This is a copy of the email

And she said the similar words that spread size depend on market activity.

Page does not exist...

Cheers trash, will check this out tomorrow. Now it is time for sleeeep.

Here is a screen cap of the mail. For historical data look here https://www.cqgdatafactory.com/?page=search

It does, try again.

I use forex.com and their spreads rarely widen. The highest spreads I have seen during news was 3-4 pips. I have just recently opened an account and that might have something to do with it but so far so good. I use oanda for their charts (demo account) and frequently see the spreads raised for news anouncements, but on my forex.com account, they usually stay the same.

Problem with forex.com is that they shut down during news and you get message 'Trade disabled' should you attempt to trade right on the news.

Maybe that will happen later but so far, I was able to trade successfully a couple of news reports. I guess we will see. I know when I used Oanda before, I would mysteriously lose my internet connection right before news reports came and/or when the market were moving fast. On one occasion, it even blue screened my laptop twice and my desktop once (right before the NFP report)

Oanda spreads during news releases are ridiculous. I've transfered my account to IKON Viking and the difference is huuuuge. The spread widens to 6 -7 pips for EURUSD and 8-9 pips for GBPUSD a few seconds before and after the release. Yesterday during the servives PMI release the spread for GBPUSD was 1.2-1.5 pips. Viking is Currenex based ECN platform.