Best tool for the job?

[WorAl]

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]

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]

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]

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]

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]

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.

 

[pboyles]

Don't ever fund a live account.

Agreed, you are going to lose your money. You have not grasped even the most basic concepts. It will be money down the drain.

 

[pboyles]

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.

 

[Hakuna Matata]

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

 

[pboyles]

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]

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]

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]

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]

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.

 

[cablemonster]

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

lets just say they operate a dealer based operation there. that is to say they deal you a price and it's up to you if you want to take it.

 

[WorAl]

Hi WorAl,
Welcome to T2W.


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


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'


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.


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.

Thank you very much Tim for your helpful answer and the others that have come back with help, rather than just trying to insult my intelligence.

Yes you're right, they have been high risks which have been taken as its just a practice account. I realise that those sort of returns are unrealistic in reality or no one would be working for a living. And if it were my own money, I'd obviously be a lot more cautious with it.

I do understand that the bottom could drop out of a market, but USD/UK100/German 30 etc aren't going to go away/become bankrupt, but I do know it could be a long time before prices rise if they crash and you'd be better off just putting it in a bank, but there is a possibility to make money too, or they wouldn't exist. Even at just 2% a year it's better than if it were sat in a bank account, plus there's a bit of excitement there

Anyway, off to practice more, thanks everyone. Seems like a great forum, I'll be sticking around and learning the ropes.

 

[counter_violent]

Thank you very much Tim for your helpful answer and the others that have come back with help, rather than just trying to insult my intelligence.

Yes you're right, they have been high risks which have been taken as its just a practice account. I realise that those sort of returns are unrealistic in reality or no one would be working for a living. And if it were my own money, I'd obviously be a lot more cautious with it.

I do understand that the bottom could drop out of a market, but USD/UK100/German 30 etc aren't going to go away/become bankrupt, but I do know it could be a long time before prices rise if they crash and you'd be better off just putting it in a bank, but there is a possibility to make money too, or they wouldn't exist. Even at just 2% a year it's better than if it were sat in a bank account, plus there's a bit of excitement there

Anyway, off to practice more, thanks everyone. Seems like a great forum, I'll be sticking around and learning the ropes.

It's not that the members are insulting your intelligence. But you need to understand the difference between your intelligence and your trading intelligence, of which you have close to none. Now don't take that as a criticism, it is just a fact and is plain for anyone to see who's been around the block a few times.

Good luck on your trading education journey.

 

[WorAl]

It's not that the members are insulting your intelligence. But you need to understand the difference between your intelligence and your trading intelligence, of which you have close to none. Now don't take that as a criticism, it is just a fact and is plain for anyone to see who's been around the block a few times.

Good luck on your trading education journey.

Hi CV I know my trading knowledge is low, same as everything when you begin, hence why I came on here asking for opinions and advice about platforms and methods, but replying with something simple like "don't do it" doesn't help, as the next part is, why? And neither does being sarcastic "well go and make 25% a day and you'll own all the worlds wealth in 2years time" when I'm asking genuine questions.

If you're not willing to help, don't reply, it's not compulsory.

Anyway, thank you for your well wishes, I'm off to bed, I'm up in 4.5 hours and setting off on a 7 hour road trip.

 

[counter_violent]

Hi CV I know my trading knowledge is low, same as everything when you begin, hence why I came on here asking for opinions and advice about platforms and methods, but replying with something simple like "don't do it" doesn't help, as the next part is, why? And neither does being sarcastic "well go and make 25% a day and you'll own all the worlds wealth in 2years time" when I'm asking genuine questions.

If you're not willing to help, don't reply, it's not compulsory.

Anyway, thank you for your well wishes, I'm off to bed, I'm up in 4.5 hours and setting off on a 7 hour road trip.

Yes I understand. They can be a very tough crowd in here and the feint of heart could easily give up.

 

[wackypete2]

While I agree with many of the sentiments here regarding the hazards of trading I wouldn't tell someone to never bother trying it. As long as you are sensible about it, use small amounts of money that, if lost, wouldn't affect your mortgage payment, lifestyle, or marriage, then why not give it a try? If all the inventors over the years had that same "don't bother trying it" attitude then we'd still be in the dark ages.

Never go through life constantly wondering "what if".

Peter