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.
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.