OANDA, a well-known forex and contracts for differences (CFDs) brokerage, has ventured into the proprietary trading sector by introducing OANDA Labs Trader. The company announced today that it will offer traders up to 75% of the profits. This new prop trading service will be available to clients registered under OANDA’s Global Markets division, which operates under the British Virgin Islands regulatory framework.
OANDA Joins the Prop Trading Industry With OANDA Labs Trader
Kurt vom Scheidt, OANDA’s Chief Operating Officer, stated: “Our program aims to empower adept traders by providing them with seamless access to global financial markets and a diverse array of asset classes.”
He emphasised the company’s commitment to enabling traders to thrive in the financial markets.
Prospective traders at OANDA must complete an assessment test, similar to other prop trading platforms. The entry fee for this challenge ranges from $249 to $2,400, as listed on the company’s website. Depending on the level of the challenge undertaken, the funding can vary from $25,000 to $500,000.
Traders are required to achieve a 10% profit target in the first phase of the challenge and 5% in the second. Additionally, they must adhere to a daily loss limit of 5% and a maximum drawdown limit of 10%.
OANDA has clarified its business model, explaining that successful traders on the platform will function as signal providers. The company’s proprietary trading strategies will utilise these signals and other variables to inform OANDA’s market positioning.
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Though the capital in the OANDA Labs Trader account is virtual, actual market positions based on these signals will involve using OANDA’s proprietary capital, and profits will be shared with the traders.
Despite the allure of profit-sharing, it’s notable that a significant portion of revenue for most prop trading platforms comes from challenge fees, given the low success rate of such challenges. OANDA’s entry into this sector comes when prop trading is experiencing heightened demand, leading several brokers to introduce similar services.
Some have even rebranded their offerings to distance themselves from the traditional “prop trading” label due to the controversy surrounding the business model.
