Oanda’s CEO K Duker hosted a Reddit AMA yesterday. For those unfamiliar with Reddit, the site is a massive online community board where users can post links, questions, and comments on pretty much every conceivable topic. The site also has an ‘Ask Me Anything’ section (AMA) where typically experts in a field or celebrities offer themselves to the community for an open Q&A session. Previous notable AMAers include US President Barack Obama, singer PSY, and businessman Mark Cuban. Thanks to Forex Magnates reader Jack Larkin of FXGears for alerting us to K Duker’s very interesting appearance on Reddit. Regardless of public perception of Oanda as a forex broker, within the company they very much view themselves as a technology company, and that was seen in K Duker’s answers as he often stressed the importance of his firm’s engineers.
Some notable sections of the Q&A:
The first question revolved around Oanda’s spreads and how the broker which had been a leader in competitive pricing in the early years has been recently “being left behind by outfits with much more competitive spreads.. How does Oanda plan on competing in this new pricing environment?” Duker responded that “While spreads are seen as a proxy for cost, and indirectly the trust you have in a broker, it is important that we always associated the spreads with the transaction size. It is misleading to quote a spread without identifying the amount being traded at that spread. Over the last few months we’ve been working very hard on providing more accurate pricing for specific amounts. There are a number of key technologies we will be bringing on soon to ensure that not only is our pricing competitive, but to provide deeper liquidity, faster execution, and no rejected price requests.” Duker didn’t add another answer to a follow up question, but it appears that he could be hinting to tighter spreads at the top of book.
There were several general forex questions about how the industry worked and how hard it is to be a trader. On this topic, Duker provided some profitability figures (just not sure if the number is Oanda specific or industry-wide) as he stated “Breaking into the forex market is straightforward and there’s a huge amount of information available online. However, trading forex is hard…..To be successful at trading forex you need to train under real market conditions while experiencing real-time rates and real-world volatility. In terms of the percentage of people that make money, and based on the data that we have and that we see, anywhere from 20 per cent to 30 per cent accounts are profitable. Having said that, as with anything, there’s only going to be a few that make a lot of money.”
There was a question about bitcoin which Duker answered that “I wouldn’t expect to see (bitcoin) right away, but I definitely think alternative methods, like bitcoin, that focus on digitized exchange will become more prominent in the future.”
In regards to the US and regulations taking place there that have led to an exit of brokers Duker explained that “The trend in the market is that regulators are beginning to discriminate towards favouring larger and more transparent brokers. They have their reasons, after all, you want your broker to be highly capitalized so that it can withstand the turbulence of the market and maintain the safety of your funds.” On this note he added that he anticipates more consolidation. Will be interesting to see how that will ultimately effect Oanda as Duker also answered that the broker continues to be eyeing a ‘liquidity’ event which can be interpreted as an IPO or sale. VC firm NEA invested $100 million in the broker in 2008 as in a previous interview with Forex Magnates, Duker added that the NEA’s representative is an active presence at the broker.
Talking about MT4 and a possible Mini Terminal, similar to that which IBFX and GFT provide, Duker responded that they are working on new features for their MT4 platform as well as the addition of third party products. In regards to EA’s, Duker answered “The true advantage of any EA is the ultimate discipline it imposes on the trader by way of automation.”
Overall, the Reddit community seemed pleased with K Duker’s appearance on the site, with readers hoping he’ll make a return visit or be able to provide additional time for unanswered questions that went beyond the allotted AMA schedule.