Oanda Vs Interactive Brokers

Category: Broker Guides | Author: Trading Brokers | Date: June 29, 2023

In the world of online trading, where financial markets are accessible to anyone with an internet connection, choosing the right broker can make all the difference. It’s a decision that can impact your trading experience, costs, and overall success. In this article, we’ll dive into a comparison between two well-known platforms: Oanda and Interactive Brokers. Whether you’re a seasoned trader or just starting out, we’ll explore their features, platforms, pricing, customer support, and more, helping you make an informed choice that aligns with your trading goals. So, let’s get started and find out which of these brokers could be the perfect fit for you.

Overview of Oanda

Oanda

Oanda

Oanda is a prominent online forex and CFD broker that has been operating since 1996. Founded by Dr. Michael Stumm and Dr. Richard Olsen, Oanda has established itself as a reputable platform in the financial industry. The company specializes in providing currency trading services, catering to both individual retail traders and institutional clients. With a user-friendly trading platform, competitive spreads, and advanced trading tools, Oanda offers access to major currency pairs, commodities, indices, and precious metals. Committed to transparency, Oanda provides real-time exchange rates, historical data, and educational resources to empower traders. Regulated by authorities such as the CFTC and FCA, Oanda ensures compliance and prioritizes the security of client funds, making it a trusted choice for traders seeking reliability and a seamless trading experience.

Pros of Oanda

  • Established and reputable online broker with a long history in the industry.
  • User-friendly trading platform with advanced tools and features.
  • Competitive spreads and flexible leverage options.
  • Wide range of tradable instruments, including major currency pairs, commodities, and indices.
  • Commitment to transparency, providing real-time exchange rates and historical data.
  • Regulatory compliance and strong emphasis on the security of client funds.

Cons of Oanda

  • Limited product offerings compared to some other brokers.
  • Availability of certain advanced trading features may vary depending on the account type.
  • Customer support response time can be slow during peak periods.
  • Limited social trading and community features compared to some competitors.
Oanda Logo

Oanda is a multi-regulated and established online broker offering an excellent range of financial instruments via powerful and user-friendly trading platforms with industry leading trading conditions and a superb selection of premium trading tools for comprehensive market analysis.

Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and may not be suitable for everyone.

Overview of Interactive Brokers

Interactive Brokers

Interactive Brokers

Interactive Brokers is a well-established online brokerage firm that offers a wide range of financial services to individual and institutional investors. With a history dating back to 1978, Interactive Brokers has become one of the largest electronic trading platforms globally. The company provides access to various financial markets, including stocks, options, futures, currencies, bonds, and mutual funds. Its advanced trading platform, Trader Workstation (TWS), is renowned for its customization options, real-time market data, and powerful trading tools. Interactive Brokers stands out for its competitive pricing structure, low commissions, and tight spreads, catering to active and professional traders. Additionally, the broker emphasizes regulatory compliance and the security of client funds, making it a trusted choice for those seeking a comprehensive and reliable brokerage service.

Pros of Interactive Brokers

  • Extensive range of financial instruments and global market access.
  • Advanced trading platform with customizable features and powerful tools.
  • Competitive pricing structure with low commissions and tight spreads.
  • Strong emphasis on regulatory compliance and the security of client funds.
  • Comprehensive research and analysis tools available.
  • Suitable for active and professional traders due to competitive margin rates and direct market access.

Cons of Interactive Brokers

  • Steep learning curve for beginners due to the complexity of the trading platform.
  • Minimum deposit requirement might be higher compared to other brokers.
  • Customer support response time can be slow during peak periods.
  • Inactivity fees may apply if trading volume is low.
  • Additional fees for certain data feeds and services.
  • Limited availability of educational resources specifically tailored for beginners.
Interactive Brokers Logo

Interactive Brokers provide leading online trading solutions for traders, investors and advisors, with direct global access to stocks, options, futures, currencies, bonds and funds.

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.

Comparing Oanda and Interactive Brokers: Choosing the Right Online Broker

To determine which platform is more suitable for you, let’s compare Oanda and Interactive Brokers across various factors:

Regulation

Both Oanda and Interactive Brokers are regulated by the Financial Conduct Authority (FCA) in the UK, which is known for its stringent regulatory standards. However, Interactive Brokers goes a step further with additional licenses from other tier-1 regulators, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in the United States, the Australian Securities and Investments Commission (ASIC) in Australia, the Monetary Authority of Singapore (MAS), and the Securities and Futures Commission (SFC) in Hong Kong. This broader regulatory coverage gives Interactive Brokers global reach compared to Oanda.

Trading Platforms

Oanda provides a range of trading platforms, including its proprietary web and desktop platforms, which are intuitive, user-friendly, and packed with advanced charting and analysis tools. In addition, Oanda supports the popular MetaTrader 4 (MT4) platform, which is widely recognized for its robust features and extensive third-party ecosystem. On the other hand, Interactive Brokers offers three distinct trading platforms: Client Portal, Trader Workstation (TWS), and IBKR Mobile. Client Portal is a web-based platform designed for simplicity, while TWS is a desktop platform known for its advanced features, customization options, and direct market access capabilities. IBKR Mobile is a well-designed and functional mobile app. Interactive Brokers’ platforms cater to a wide range of traders, from beginners to advanced professionals, offering diverse options for different trading needs.

Pricing and Fees

When it comes to pricing, Oanda and Interactive Brokers employ different models. Oanda charges a spread-only fee structure, where traders pay the difference between the bid and ask prices. On the other hand, Interactive Brokers charges a combination of spreads and commissions. Oanda’s average spread for the popular EUR/USD currency pair is around 1.4 pips, while Interactive Brokers’ average spread plus commission for the same pair is approximately 0.8 pips. This indicates that Interactive Brokers generally offers lower forex trading fees. However, it’s important to note that Interactive Brokers also imposes an inactivity fee of $10 per month if there is no trading activity or commissions generated, whereas Oanda does not charge any inactivity fees. Both brokers have transparent pricing structures with competitive rates for deposits and withdrawals.

Broker Type

Both Oanda and Interactive Brokers act as market makers, meaning they serve as the counterparty to their clients’ trades. However, Interactive Brokers also provides direct market access (DMA) to its clients, enabling them to trade directly with liquidity providers such as banks and hedge funds. DMA offers enhanced control over execution and potentially tighter spreads. In contrast, Oanda does not offer DMA, which may be a consideration for traders who value this feature.

Leverage

Leverage allows traders to amplify their positions in the market. Oanda and Interactive Brokers offer different leverage ratios depending on the account type, instrument, and regulatory jurisdiction. For example, Oanda offers leverage of up to 50:1 for forex trading in the US, 30:1 in the UK and EU, and 400:1 in Australia. In comparison, Interactive Brokers provides leverage of up to 50:1 in the US, 30:1 in the UK and EU, and 200:1 in Australia. Therefore, Oanda generally offers higher leverage for forex trading in Australia compared to Interactive Brokers.

Asset Selection

Interactive Brokers boasts a more extensive selection of tradable asset classes compared to Oanda. Interactive Brokers offers over 100 tradeable symbols across stocks, ETFs, forex, funds, bonds, options, futures, crypto (via futures or ETFs), and contracts for difference (CFDs). In contrast, Oanda primarily focuses on forex trading and offers a limited selection of CFDs on indices, commodities, metals, bonds, and crypto (via CFDs). Traders seeking a more diverse range of investment options may find Interactive Brokers to be a better fit.

Social Trading

Neither Oanda nor Interactive Brokers directly offer social trading features such as copy trading or social networks within their platforms. However, both brokers allow integration with third-party social trading platforms like ZuluTrade, enabling traders to access social trading functionalities through these external services. Therefore, the availability of social trading features is relatively equal between Oanda and Interactive Brokers, as it depends on the preferred third-party platform chosen by the trader.

Minimum Deposit

Oanda does not impose a minimum deposit requirement for opening an account, making it more accessible for traders who want to start with smaller amounts. On the other hand, Interactive Brokers has varying minimum deposit requirements based on the client’s location and account type. For US clients, there is no minimum deposit requirement. Non-US clients are required to deposit a minimum of $2,000, and corporate accounts have a minimum deposit requirement of $10,000. Therefore, Oanda has a lower barrier to entry in terms of minimum deposit compared to Interactive Brokers.

Withdrawal and Deposit Methods

Both Oanda and Interactive Brokers offer a range of withdrawal and deposit methods to facilitate transactions. They support popular options such as bank transfers, credit/debit cards, online payment services (e.g., PayPal), and checks. It’s worth noting that Oanda does not charge any withdrawal fees, making it more cost-effective for traders. On the other hand, Interactive Brokers charges a flat rate of $10 per withdrawal. Therefore, Oanda has a slight advantage in terms of lower withdrawal costs compared to Interactive Brokers.

Choosing the Right Broker: Oanda or Interactive Brokers?

When deciding between Oanda and Interactive Brokers, it’s essential to consider your individual trading preferences and requirements. If you’re someone who values user-friendly platforms, simplicity, and a focus on forex trading, Oanda may be the best choice for you. With its intuitive interfaces and support for MetaTrader 4, Oanda provides a user-friendly experience suitable for beginners. On the other hand, if you’re an experienced trader who seeks advanced features, customization options, a wider range of asset classes, and direct market access capabilities, Interactive Brokers is likely the better option. With its comprehensive Trader Workstation (TWS) and diverse selection of investment options, including stocks, ETFs, bonds, options, and futures, Interactive Brokers caters to the needs of more seasoned traders. Consider factors such as user experience, asset selection, pricing and fees, regulatory coverage, and other specific features to determine which broker aligns best with your trading style and goals.

Conclusion

In conclusion, choosing between Oanda and Interactive Brokers depends on your trading needs and preferences. Oanda is suitable for beginners, offers a user-friendly platform, and focuses on forex trading. On the other hand, Interactive Brokers caters to experienced traders with advanced features, a wider range of asset classes, and direct market access capabilities. Consider factors such as user experience, asset selection, pricing and fees, regulatory coverage, and other features important to you in order to make an informed decision. Conduct thorough research and evaluate which broker aligns best with your trading goals and requirements.


Relevant Articles