Category Archives: NADEX

nadex logo

Advantages To Using NADEX Binary Options

There Are Many Advantages To Trading NADEX Binary Options

Nadex order screens allow traders to watch multiple assets at once.

Nadex order screens allow traders to watch multiple assets at once.

I have been researching binary options for some time now. One of the biggest areas of concern in the industry that I have uncovered is regulation. Not many binary options brokers are regulated and not of all those who are regulated are the same. The biggest advantage to U.S. traders using NADEX is CFTC regulation. NADEX is the only the binary options exchange licensed by the CFTC and legally operating in the U.S. Without that regulation a binary options broker can not operate in the U.S. or with U.S. citizens.

Some still claim they are accepting U.S. clients but it is only a matter of time before they get shut down, or at least cut off from the U.S. market. If you don’t believe me just check into Banc De Binary or 24Option. BDB has already closed it’s door to U.S. traders and 24Option has informed they are on the way to doing the same. In this will only leave us NADEX so there really is no choice. However, after reviewing and using NADEX I have come to the conclusion that it is the best binary options broker or exchange. There are many more advantages to NADEX than just CFTC regulation.

  • OCC. NADEX options are closed through the OCC, the Options Clearing Corporation. This is the same body that clears all other types of options in the U.S.
  • NADEX is an Exchange. NADEX is an exchange. They are in business to provide an arena for traders to meet. When you trade NADEX binary options you are trading with other market participants and not the house like with Euro style binary options.

    Nadex options can be sold for a credit.

    Nadex options can be sold for a credit.

  • Multiple Strikes. This gives some real flexibility. Option values at the different strikes are vastily different and offer different risk/reward profiles. If you have been looking at or using the Option Builder tool offered by SpotOption powered off-shore brokers then you will probably love the multiple strikes at NADEX.
  • No Spreads. NADEX options are based on an underlying asset and are priced, purchased and closed according to the current spot rate. There are no spreads, cushions or buffers for your trades to overcome.This is one reason to be thankful for CFTC regulation.
  • Fees. NADEX charges just $0.90 per contract with a maximum fee of $9 per trade. This is a far cry less than the percentage rates charged by off-shore binary options brokers.
  • GTC Orders. To my knowledge there is no off-shore European style broker with limit or gtc order capability. In order to trade with them you have to be present, there is no set-it and forget-it with them. NADEX binary options can be set with a target price and set as good-until-cancelled. This allows traders to pick appropriate entry points and target prices, set orders and then execute them without having to sit in front of the computer all day.
  • Use More Strategies. Because NADEX binary options have more than one strike price, are tradable and have credit positions there are dozens of more techniques and strategies available. European style binary options are incredibly limited.Click here for more on NADEX strategies for binary options.
  • Hedging. You can hedge more effictively with NADEX binary options. There are some good hedging strategies employable in the off-shore binary options world but in the end the best they can do is reduce risk, not eliminate it. It is possible to open offsetting NADEX positions for a net credit. Because of the pay out structure of off-shore binary options, and because they only offer debit positions, hedging them against each other can reduce your risk but will still leave you with a net loss.
  • Tradable. NADEX binary options are tradable. They are only binary at expiration, during thier life they can be opened or closed at any time. The price depends on the price of the underlying, profits and losses are the difference between the cost of ownership and $100.
  • No Pattern Day Trader Rule. There is no pattern day trader rule. You can trade as much or as little as you want without fear of margin requirements or sanctions.
  • No Margin Requirements. There are no margin requirements with NADEX. All trades are cashed secured. It only takes $250 to open an account. You can buy or sell as soon as your funds clear. Sellers only need to maintain the risk requirement for their open positions. After the initial deposit there are no account minimums, you can make any trade your account will cover.
  • Forex Opens Sunday At 3PM. Currency traders can access world markets when they open on Sunday. There is no need to wait for Monday morning opening.
  • Selling! You receive a credit for selling a position. This creates positive cash flow!

Nadex is CFTC regulated

Why NADEX Is The Best For U.S. Binary Options Traders

Trading NADEX Is The Right Choice For U.S. Traders

Nadex is CFTC regulated

Nadex is CFTC regulated

After more than a year researching and blogging about binary options, binary options brokers, platforms and regulation I have learned many things. One of them is that NADEX is the right choice for U.S. traders. There are just too many risks to trading with offshore brokers to make any other choice. Unless you are a gambler and just want the thrill of 60 second options (which are not available through NADEX) there really is no reason for you to trade anything else but NADEX. I’m not saying that European, CySEC regulated, binary options are bad mind you. I am saying that U.S. citizens should turn to NADEX.

NADEX Is The Only U.S. Regulated Binary Options Exchange

NADEX is the only binary options exchange in North America that is solely for trading binary options.  NADEX is also the only binary options broker licensed, regulated and allowed to operate in the U.S. The AMEX and the CBOE have exchange listed binary options that are traded in a similar fashion to NADEX but they are not available to retail traders. Plus, NADEX has more assets and exposure to more markets than either the CBOE or the AMEX. At this time no other binary options exchange or broker is allowed to sell investment products to U.S. citizens except Cantor Exchange and they are not fully functional yet.

Commonly traded Nadex binary options.

Commonly traded Nadex binary options.

There are some off-shore brokers still offering binary options to U.S. citizens but don’t be fooled. They are well meaning but probably won’t tell you there is a good chance they will get banned from the U.S. One kind of broker still taking U.S. citizens is the unregulated broker. These are primarily gambling sites or scams and should be avoided at all costs. They are usually fairly easy to detect. Many off shore brokers fall into the next category; CySEC regulated. These are brokers regulated by the government of Cypress and falling under the broader regulations of the EU and the MiFID. These are at least trustworthy in the sense they must comply with oversight, regulation and sanction but they should still be approached with care. Some brokers are better than the rest.

Brokers like AnyOption and 24Options are all CySEC regulated and good choices for European based traders. This I think is a sign of their commitment to legitimate binary options trading. I would look for more brokers to follow that lead and for BDB to search for regulation in other countries as well. Another broker of innovating and leading the binary options industry is Anyoption. This broker has begun to offer 0-100 options that are traded in the same way NADEX options are traded. This could lead, in a best case scenario kind of way, to integration with NADEX at some time in the future.

The problem with CySEC for U.S. traders is that these binary options and brokers are classified as investment instruments and providers of investment instruments. The CFTC and the SEC have a lot to say about how these two things are handled in the U.S. Basically, to sell or market investment instruments especially options, futures and derivatives contracts you must be regulated by the CFTC and the SEC. So far no off-shore broker has gained that certification. One by one the best European style binary options brokers are going to be shut off from access to the U.S. markets due to CySEC regulation, yours could be next. To date I know that Banc De Binary is no longer taking U.S. customers due to regulation and that 24Option is soon to follow. My contact informed that minimum deposits for American traders was going up to $500 and after that there would be no more access.

How To Trade NADEX Binary Options

NADEX trades are easy to make.

NADEX trades are easy to make.

NADEX binary options are a little different than European style binaries. European style binary options trade for whatever amount you want to risk and pay a set rate. This rate is usually in the range of 70-80% depending on the type of option you buy. Pay out can go up to 500% or more for exotic instruments like one-touch options. This type of binary options only have one strike price, the price that you paid. They also only have two participants, you and the broker. Click here for information about the advantages of NADEX.

NADEX options are all worth $0 or $100 depending on if they are in the money or out of the money. The price of the option fluctuates during its lifespan in tandem with the price of the underlying. Traders pay the spot price for the options and can close prior to expiration if they want to. The price will range between $0.01 and $1.00 and are based on lots of 100 shares. This means that an option with a price of $0.50 will cost $50 to own and will return 100% profit if it closes in the money. Profit or losses from closing the options before expiration are equal to the difference in prices time 100. You can find information on NADEX strategies here.

Even though NADEX is an exchange like the CBOE, NYMEX, and CBOT it is easy to join. Retail traders can sign up for free and gain instant access. It only takes $250 to fund an account and start trading. The platform is easy to use and only requires a little time to master. The real advantage to NADEX that European style options don’t have is true flexibility. The options are trad-able, have so much many more expirys and offer the chance of much larger returns. Imagine, you are able to buy an option for $.035 and it closes in the money. The return is $1.00 for a profit of 185.7%.

Nadex is CFTC regulated

Best Binary Option Exchange For U.S. Traders

NADEX Binary Option Platform Top Notch

I have been interested in binary options for over a year now and have spent quite a bit of time investigating the industry. In that time I have learned quite a bit. Not only are there different kinds of binary options there are different kinds of binary options brokers. For the most part they can be broken into two different categories; domestic and off-shore. Domestic based U.S. binary options exchanges are headquartered and regulated in the U.S. Off-shore binary options brokers and exchanges are based outside the U.S. and may or may not be regulated. For that matter they may or may not be real businesses because the industry has been plagued by scams and con artists.

Not all off shore brokers are bad. CySEC has been leading the way in Europe, regulating off-shore binary options brokers and helping the industry to grow. The industry is legitimate and CySEC is helping to usher it in to the trading community. In the end though none of this matters for U.S. based traders. Even though some sites are still catering to U.S. based traders from what I have found it is completely illegal for them to be selling options and derivative instruments to Americans. The bottom line is that NADEX is the best binary platform for American traders because it is the only one regulated in the U.S. and the only one Americans can safely use.

I think CySEC regulation is good but until those brokers, exchanges and platforms get registered, approved and regulated by the CFTC and the SEC they are not supposed to operate in the U.S. Using these sites is a potentially hazardous for U.S. traders. What happens to your money if a web site is closed down or shuts down access to American traders? What happens when you have a problem with your broker? There is already a string of websites closing access to U.S. traders that started with Banc De Binary. This is part of their CySEC approval process and unfortunately unavoidable. I have also recently learned that 24Option will soon be doing the same thing. They just raised their minimum deposit for U.S. traders to $500 along with a statement that trading would soon be unavailable in the U.S.

Don’t Worry, NADEX Really Is Top Notch Binary Trading

My first experience with U.S. regulated binary options was CBOE options on the VIX and SPX. While binary in nature they did not have the same appeal as European style binary trading. For one there are only two assets offered by the CBOE. Second, they only have one expiration which is the third Friday of each month. CBOE binary options aren’t very liquid and trade-able but that does not interest me enough to make me want to trade them. NADEX has a much larger list of assets and also has the types of expiration periods that make European style binary options so attractive for short term speculation.

NADEX also has a really great platform. The platform is head-and-shoulders above anything available with any off-shore broker I have yet seen. Some of the features included are Java charts with technical analysis, direct market access with bid/ask spreads and volume, a customizable desk top with watch lists, and a free demo account. The charting package alone far surpasses anything I have seen with any other broker, platform or exchange and all this is available for free. All you have to do is sign up for membership.

Differences Between NADEX and European Binary Options

There are some major differences in NADEX binary options compared to European style binary options. Once I fully understood the nature of the trading and was able to log into an account I was pleasantly surprised. NADEX binary options is a near perfect blend of binary trading, forex and futures trading. It is also CFTC licensed and completely legal in the U.S.

The first big difference is strike price. ES (European Style) options have only one strike price, the current price of the underlying asset. NADEX options have several strike prices whose values are affected by the current price of the underlying. In ES binary options you are trading on whether or not the underlying asset closes higher or lower than the strike price at a certain time. With NADEX options you are trading on whether or not the underlying asset will move above the strike price in a certain time. The difference may seem small but because of it NADEX can offer differing levels of strike prices. The distance each option is in or out of the money is directly related to the price of the option. The further out of the money an option is the less likely it is to close in the money. This makes it worth less than other options closer to the money.


Pay Outs

NADEX options also pay out in a different way. ES options pay a fixed return on your trade amount, usually in the range of 70-80%. ES options cost however much you want to trade and orders are entered in dollar amounts up to the broker maximum. Whatever amount you trade is the cost of the option and your reward is going to be X% of that amount. NADEX options are bought in lots, each option costs between $0.01 and $1.00 (effectively $1.00-$100 per lot). If you hold a NADEX binary option until expiration it is either worth $100 (All) or $0.00 (nothing). For example, lets assume you are bullish on a trade and Buy an option at $45 per lot. If you decide to hold it until expiration there are only two possible outcomes. First it closes out of the money and you lose $45 per lot. Second, it closes in the money and you receive $100 per lot for a total profit of $55 per lot.

The nature of NADEX binary options value and pay out lead to another major difference between the two styles. NADEX options are trade-able throughout their life and are bought/sold at market price. ES options are not, they are only binary and are always held until expiration. NADEX options are cash settled can be closed with an off-setting position. If you chose to close a position, you can either profit of lose according to the difference in opening and closing prices.

Yet another of the many differences in the two is the types of positions that can be open. With ES binary options you can only open long, debit, positions. You buy calls when you are bullish and you buy puts when you are bearish. With NADEX binary options you have the choice to buy or sell a position. This is similar to forex and futures trading. Unlike futures and forex bought positions are bullish and require a debit equal to the current option price to open. Sold positions are bearish and pay a credit equal to the current price. The only account requirements are equal to the maximum loss of the trade. Unlike futures or forex trading where margin accounts allow for huge losses binary trading is fixed return, all or nothing. There are no margin or account maintenance requirement when you trade with NADEX.