NADEX binary options, the North American Derivatives Exchange, is the only CFTC regulated broker for retail traders. Notice how I said retail traders, not US traders. I did this because you don’t have to be a US citizen or in the US to become a member. The exchange is the only viable exchange based, P2P, platform for trading binary options and comes with a number of features that make it the best choice for US traders, and all traders.
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The Geek’s Review Of NADEX Binary Options
NADEX is a wholly owned subsidiary of IG Markets, a well known forex, binary and CFD trading group headquartered in London. NADEX itself is located at 311 South Wacker Drive, Suite 2675, Chicago, Illinois and can be reached through email or phone. US phone number is 1-877-776-2339, international number is 1-312-884-0100. I want to point out one more time before I move on that this platform is available to both US and non-US clients. Clients join the exchange as members and gain access to all available features, of which there are many.
To be honest, NADEX is not likey any other binary options broker or exchange on the market today. One difference is that it only supports high and low trading but that doesn’t matter, I’ll explain that a little later. Another difference is that options are sold in lots and priced in the 0-100, all or nothing, method similar to what other brokers may call Ladder Options, only better.
This is how it works; assets are listed just like you would expect, indices, commodities, forex (but no stocks, as if that matters). Each asset has a set number of expiries, you choose which expiry you would like and they range from short term 5 and 20 minute to intraday, end of day and end of week. Each expiry is matched with a number of strike prices, some out of the money, some near the money and some in the money. To trade you choose your asset, pick the expiry and then pick the strike price.
Options are all priced between $0 and $100 dollars. In the money options have higher prices, out of the money have lower prices, at the money options typically cost about $50. If the option you buy closes in the money then you get $100, you profit will be $100 minus the price you pay so it makes sense to think that you want to pay the lowest price possible. If the option closes out of the money you lose the price you pay. If the option was $30 to buy, you stand to lose $30 or make $70 ($100 – $30) which would be a gain of 230%, way better than what you could get trading off-shore CySEC style spot binary.
The part I think that confuses new traders the most is trading a “low” position. To do this you have to sell an option or “write it” as it is known. If you think that the asset price is going lower you sell the chosen strike and receive that money as a credit in your account, yes, a credit. If the option closes out of the money you keep the premium received for selling, if the option closes in the money you pay the difference between the price you receive and $100. For example, you sell an at the money strike for $50 and the asset price is in the money at expiration. This means you are responsible to pay the holder of the option $100, the $50 you received for selling plus the $50 difference, make sense? If not, don’t worry, there are videos and webinars to help.
The final thing to understand is that NADEX binary options are 100% tradable. That means you can buy or sell, open or close, a position whenever you want. If the asset moves in the direction you chose and shows a profit you can sell to lock in that profit, if it moves against you you can sell it whenever you want to avoid unnecessary loss. If you hold it until expiry you will either lose the value of the option, or gain the profit, both figures determined at purchases with no chance of losing more and having a margin call.
Banking With NADEX Binary Options Exchange
The very best feature of NADEX is that is CFTC regulated and 100% safe. Being an exchange means that you are trading with and against other traders, not the house, so there is no conflict of interest. NADEX makes its money on fees which are very low compared to what an off-shore broker makes off of your losses. All monies are held in segregated accounts in either the BMO Harris Bank or FifthThird Bank, all transactions go through a designated clearing house to prevent fraud. The fee for trading is only $1.00 per contract with a $50 max, not much considering most trades being executed on the platform are in excess of 100 lots.
Depositing is easy but be warned, you will need to register and verify your account BEFORE making a deposit. Funds can be transferred by wire, paper check, ACH or debit card. ACH and debit card are the quickest, cards will post almost immediately, ACH within 3 days, wires up to 10 business days and paper check depends on how fast the mail is. Withdrawal is also easy, and totally backed by US regulations. Requests are processed immediately and will show in your account in about 3 days if using ACH. Other methods may take longer, there are no fees unless you chose to withdraw by wire transfer. Minimum deposit is now $250.
There is a bonus offered to new traders but it is also unlike anything you will find with any other broker. For one, there is no turnover requirement so there is no impact on your trading, balance or withdrawals. The bonus is this, first time depositors receive a “trading fee holiday” that means you don’t have to pay the $0.90 per contract fee for a set number of days. Minimum deposit is $250, to get the bonus free trading days you will need to deposit at least $500, 2 free days, and up to $10,000 to receive 10 days of fee free trading.
Asset List, Expiry and Strike Prices
The asset list is not quite as full as what you might find with a SpotOption or other top level offshore platform but it is more than adequate. There are 7 commodities, 10 forex pairs and 6 indices as well as a few non-asset trading opportunities. The commodities are gold, silver, copper, WTI, natural gas, corn and soybeans. The forex pairs are the major USD, EUR, GBP, CAD, AUD and JPY pairs. The indices include the major US and EU markets including the S&P 500 (US 500), Dow Jones (Wall Street 30), NASDAQ 100 (US Tech 100), Russel 2000 (Small Cap 200), DAX (Germany 30) and FTSE 100. There are no stocks but that doesn’t matter, I don’t know very many traders who focus on those anyway.
Expiry are listed for several intraday times such as 10AM, 11AM, 1PM, 3PM and end of day. End of day for indices is 4:15PM, expiry is based on futures prices. End of day for forex is 3PM, end of day for commodities is based on when the futures markets settle for the asst in question. Keep in mind that since many of the assets are based on futures there are distinctly different trading session daily, for example gold trades daily from 3AM to 1:30PM and from 6PM to 1:30AM while forex pairs trade nearly round the clock from 4AM to 3AM, with the market opening Sunday afternoon. There are also 5 minute and 20 minute epxiry available for most assets within their regular trading hours.
There are also plenty of strike prices to choose from. As I write this the EUR/GBP with a 3PM daily expiry is listing with 20 strike prices with a 20 pip difference between each. For example, the at the money strike is 0.7700 with strikes going up to 0.7720, 0.7740 and on up to 0.8020 and down to 0.7620. Similar listing are available for each expiry, and each asset.
Extra Features At NADEX
It’s hard to differentiate the extra features from the regular features but there are there. One is the charts. Charts are available for each asset and can be pulled up by expiry time with buy/sell tickets listed for quick trading. The charts can be viewed as lines, bars or candles and in time frames like tick, one second, 1 minute, 2 minutes, 5 minutes, 10 minutes, 15 minutes, 30 minutes, 1 hour, 2 hour, 4 hour and daily data. Tools on the charts include drawing tools for support/resistance and Fibonacci, studies like RSI, MACD and stochastic.
There is a demo account as well, full featured and loaded with $25,000. This allows for a complete test of the platform and plenty of time to get up to speed before making real money trades. Click here to read the Geek’s Tips For Trading NADEX Binary Options.
Market orders come with “protection” which means no order will filled outside the spread available at time the order is sent. This protects you from getting a fill at some wild price without your consent. Any orders not filled will be cancelled when the option price moves outside the spread.
You can also use limit orders to ensure you get the price you want. Simply enter the price on the order ticket and wait for your fill, it will not be cancelled until you cancel it or the option in question expires.
Education resources include a full series of webinars, live and recorded. A video library, eBooks, market commentary and up to date news resources.
With all this going for it there is no reason for US traders not to use NADEX. Sign up now and get started!