Nadex Logo

  • Unique “Event” options permit trading on the Fed Funds Rate, Non-Farm Payroll data, or Weekly Jobless Claims releases;
  • Regulated & Authorized by CFTC
  • Options are bought and sold on an exchange, without brokers fixing the prices to their advantage;
Exchange Info
Company Name: Nadex
Website: nadex.com
Country: USA
Year established: 2004
Exchange Services: Binary Options
Assets offered: 28
Min deposit: $250
Payout: up to 100%
Funding methods:
Debit cards, wire transfers, paper checks, and direct deposit ACH transfers;
Platform Info
Trading platform: Proprietary
Mobile trading: Yes
Web based: Yes

Nadex Review

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History and Background

The global binary options market has been growing and innovating like wild fire for the past several years, but U.S. citizens have not been able to join in on the fun. CFTC regulations do not recognize binary options of CFDs as tradable securities, unless they are traded on a regulated exchange. Americans may be shut out from most binary option brokers by the phrase “U.S. clients not accepted at this time”, but they now have an alternative -- the North American Derivatives Exchange (Nadex.com). Nadex has actually been in operation since 2004, offering over 5,000 contracts a day on a variety of binary options for currency pairs, commodities, indices, and a few other items you will not find elsewhere. The Nadex exchange has its headquarters in Chicago and is wholly owned and operated by the IG Group, a leading international provider for Forex, Binary Options, and CFD trading.

For the uninitiated, trading binary options with Nadex is a good bit different than with a foreign-based broker in this arena. The reason is that you are dealing with an exchange where buyers and sellers meet at market-based prices, not with a broker that is setting the odds in his backroom to benefit the House. From that perspective, you are getting a much fairer deal that is fully transparent and free from the large cut imposed by a traditional broker. There are transaction fees, but these are minimal. The biggest challenge will be to orient your style of trading to this rather confusing approach. The system is proprietary, as you might expect. It lists the available contracts for assets with expiry times and buy/sell strike prices. Specific payoff ratios are not listed, but you can choose an “Out-of-the-Money (OTM)” option and by so doing, you can adjust your risk/reward ratio. You may buy in specific lots priced below $100. The winning payoff is always $100. Your individual ratio becomes a calculation between the differences from what you paid at the outset. Your potential loss is limited to your fixed investment.

The Nadex also offers Spreads, which are a bit like range options, but the futures market is used to set all initial prices. You may offer something else, and a buyer or seller may negotiate, but as with traditional binary options, your risk parameters are fixed after your order is executed. There will be no margin call, as long as your account balance can pay for your order at the outset. You may also sell early, if there is a buyer willing to take you out of your position. There is a single account, and it comes with a free demo account and access to a multitude of videos and archived webinars. Every effort is made to prepare you adequately for this different approach to trading, a style that is somewhere between trading real options and executing binary option deals with a non-U.S. binary options broker. CFTC regulations do not allow for promotional bonuses, but there are “fee holidays”. Yes, the Nadex is not exactly the same as other binary options, but you are in control, not the exchange.

Features

The distinguishing features listed by Nadex on its website are as follows:

  • Founded in 2004 in the United States;
  • Headquarters in Chicago and wholly owned by the IG Group, a UK-based derivatives trading company, part of the FTSE 250 (Market Capitalization of £2.9 billion as of 31 May 2016), and listed on the London Stock Exchange;
  • Regulated and authorized by the CFTC;
  • Legal for U.S. citizens;
  • Deposits and withdrawals can utilize one-day settlement with ACH direct deposit or wire transfer;
  • Options are bought and sold on an exchange, without brokers fixing the prices to their advantage;
  • Payoffs can vary by adjusting the strike price for OTM options, which can permit payoffs as high as 100% or more;
  • Asset choices include Currency Pairs (10), Commodities (7), Indices (8) and Events (3);
  • Unique “Event” options permit trading on the Fed Funds Rate, Non-Farm Payroll data, or Weekly Jobless Claims releases;
  • Trading platform is unique and proprietary that matches willing buyers with willing sellers;
  • Live technical charts are displayed along side the order ticket;
  • Comprehensive Education and Support Center;
  • Customer support available “24x7” via email and direct phone line.

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Accounts

  • Minimum deposit is $250;
  • All customer deposits segregated from operating capital in Top-Tier bank accounts;
  • One account classification for domestic and international clients, including a mobile app and free Demo account with $25,000 in virtual cash;

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Transactions

  • Transaction fees are $0.90 per contract – capped at $9.00 per side;
  • Deposits can be made via debit cards, wire transfers, paper checks, and direct deposit ACH transfers;
  • AML/KYC ID information is required, as with other international brokers;
  • Withdrawal amounts can be delivered quickly via the U.S. Automated Clearing House system in a matter of 1 to 2 days.

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Platform

The Proprietary Nadex trading platform is not anything like SpotOption, the prevailing leader in the binary option industry. The reason once again is that the Nadex is an exchange. The trading software must be specifically designed to present available contracts for each asset with varying expiry times and strike prices. You will definitely have to practice on the free demo system to get a feel for this rather “foreign”, if you will, approach. The proprietary design will still present an option contract with all of the risks disclosed and fixed before execution takes place. Detail screens will show you your profit or loss in real time, an aid to managing your position until the option contract expires. Mobile applications are also supported.

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Information

The Nadex staff goes out of its way to provide excellent educational and support materials. The Education center is comprised of videos, continually scheduled webinars (you may access the archives, as well), tutorial courses, handbooks, news and market commentary, and trade examples that walk you through both options and spreads.

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Support

Regular trading hours are from 6pm ET Sunday through 4:15pm ET Friday, and customer service assistants can be reached during those times via email or direct phone. Due to daily exchange accounting and reconcilement requirements, the exchange must also shut down between 5pm and 6pm ET on Monday through Thursday for end-of-day processing.

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Safety

All client deposits are maintained in segregated accounts at Top-Tier banks. All trading activity data and personal identity information are encrypted using the latest technologies for security purposes.

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Conclusion

Americans may be restricted by local law from trading in the burgeoning global  binary option scene, but they do have another option, so to speak, and that is Nadex. This exchange is a wholly owned subsidiary of one of the largest derivatives trading companies on the planet, valued at over £2.9 billion at this writing, and regulated actively by the CFTC. You could not have a safer, more transparent, or fairer way to trade binary options. You are in control. You set the risk/reward parameters between yourself and another willing buyer or seller. Minimal transaction fees apply. The trading platform and how you assess trades in this space will take time to become familiar, but the free demo account and extensive educational and support materials will provide practice experience and guidance. The potential for above average and quick returns are there. All you have to do is open an account, practice, and join in on the action.

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