Category Archives: Binary Options Brokers

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.

Is Banc De Binary Legit

This is a very good question. I will be the first to admit that the binary options community has earned a reputation for scams. There are quite a few binary options scams out there and that is what regulators are seeking to prevent. Banc De Binary is not one of them. The Banc is based in Cyrpus and has been a leader in the binary options industry since it opened in 2009. The bank and binary options broker has always maintained a professional approach to its operations and has been a leader in the binary options industry. It was the first broker to get CySEC regulated and it was the first broker to get regulated by the FSA.

Banc De Binary is based on corporate responsibility,ethical practices and the highest professional standards. At least that is what it says on the website. Digging a little deeper I found evidence to back up the boast. The first thing that come up is that it is the first binary options brokers to receive CySEC approval License number 188/13. This means that the European branch of the operation is regulated by the Cyprus SEC and the Eurozone Investment Services And Activities And Regulated Market Law of 2007-2009. This falls under the broader spectrum of the MiFIB and the European Economic Arena Passport. This assures that the broker is monitored by a third party regulator and is subject to scrutiny and sanction. It also means that all client funds are held in trust accounts and not commingled with corporate funds. This insures the safety of your deposits and guarantees access to European markets. These accounts are also protected by the EEA’s ICF, Investors Compensation Fund and audited by K.Treppiddes & Co Inc.

Banc De Binary Not Open For U.S. Traders

Another sign of the brokers legitimacy is its desire for SEC and CFTF Regulation. In order to back up its claims of transparency and compliance with local/federal banking laws Banc De Binary is currently in negotiations for approval and regulation as U.S. binary options broker. According to an update to a press release put out by BDB in January the CFTC and the bank are still in negotiation and there is no sign of progress yet. The Banc maintains its position and is hopeful it will get approval soon. This approval would mean that in addition to the NADEX, CBOE and AMEX binary markets there would also be an actual binary options exchange in the U.S. As soon as they close the deal it will open back up and I will open an account for a better revue.

More About Banc De Binary

Banc De Binary has one of the best binary options platforms available. The site is powered by SpotOtion, a binary trading platform used by about 80% of the binary options industry. SpotOption is also licensed under CySEC regulations. The platform is easy to use and comes with some of binary tradings best features. Screens are easy to read and payouts are good. Expirations range from 60 seconds to weekly and even monthly expirations through the end of the year. This gives some of the most flexibility of trading I have seen in binary options. Other types of binary trades available are one touch, 60 second and Options Builder. The first two are risky binary tools, I am still on the fence about the Option Builder. I have used it of OptionXP and didn’t really see the point but more on that later. Overall I like Banc De Binary and would use it if they received U.S. approval.