Nadex review – Call spreads, Strategy, Demo and How To’s

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Nadex Review

In this Nadex review we will see why this platform is the #1 for US traders.

What Is Nadex?

Nadex is a US regulated platform, where you can trade binary options. You can visit their website here.

It is owned by the U.K based IG Group, a FTSE 250 global financial services firm.

They have been in operations since before binary options became a buzzword. In business since 2009, they have helped the US market familiarize themselves with binary option trading.

Nadex’s headquarters are located in Chicago,IL in the United States. Their business philosophy centers on the twin values of transparency and simplicity.

Nadex Is An Exchange

In the binary options industry, we are used to dealing with brokers. Nadex is not a broker. Nadex is an exchange. There is a significant difference between a broker and an exchange.

An exchange gives you direct access to the market, by matching buyers and sellers directly. Brokers are the go-between that connect you to their partners who then give you access to the market.

An exchange offers many advantages over a traditional broker. The most important is transparency.

Brokers use a number of routes to let you pitch in the market. The reputable brokers only pursue the ethical routes. Many others use unethical tactics. For example, a broker may take an opposite position to you (trade against you) in order to get you access.

There is no way to know for sure when brokers use unethical practices. Which is why an exchange is a better choice.

Nadex only makes money by taking a $1 fee per contract you enter into and $1 for each contract you close, offering you direct access to the market.

  • Nadex makes no money when you lose.
  • They do not take broker commissions.
  • The company explicitly states the contract specifications for each asset they support on their website.
  • You do not have to open an account to access this information.

You will not find this level of transparency with most brokers.

Nadex Regulation and Fund Protection

The binary options broker industry is awash with European-regulated brokers, many of whom have maintained excellent records for over a decade now.

However, it is refreshing to have a US-regulated broker on the premium list of reputable brokers. Nadex is one of the only US-based CFTC regulated exchanges. The US regulator is the Commodity Futures Trading Commission (CFTC).

The CFTC designates Nadex as a ” Derivatives Clearing Organization” and “Designated Contract Market”.

As a CFTC regulated exchange, Nadex holds all member funds in segregated accounts in top-tier US banks—BMO Harris Bank, Fifth Third Bank. This level of fund protection is not offered by most regular binary brokers.

Nadex Trading Platform

The Nadex trading platform is a proprietary platform. Everything about the platform centers on simplicity:

  • To access the platform, all you need is a username and password.
  • No download is needed (it is web-based).
  • The platform has no access fees either.
  • You get real-time indicative data.
  • The Nadex platform is easy to use and well arranged. Additionally, you can customize it. For example, you can make a watch list to track the assets you prefer.
  • It also offers robust charting and technical analysis tools.
  • Nadex also has mobile versions of its trading platform for convenient, on-the-go trading. It is called NadexGo. The apps are available for i0S (Apple iPhones and iPads) and Android operating system.

You can trade on Nadex on your Windows, Mac, or Linux PC, as long as you have a web browser and an internet connection.

An awesome feature is its cloud multi-device sync. For example, you can place an order using the Nadex trader on your PC. Then later on, for example in transit, you can use the Nadex mobile platform to manage or exit the trade.

Assets and Expiration Times

TRADEX supports several assets in multiple classes. Furthermore, TRADEX even offers new asset classes in addition to the traditional classes.

It offers assets in the usual Currency Pairs, Stock Indices, and Commodities classes. In addition, it offers assets in the Economic Events class and even allows you to trade Bitcoin.

When writing this Nadex review, we found out that the platform supports following assets:

Asset Class Number of Assets Example of Assets
Currency Pairs 10 EUR/USD, USD/CAD, EUR/JPY
Stock Indices 8 Dow, FTSE, DAX
Commodities 7 Gold, Crude Oil, Soybeans

The expiry time differs between assets. Assets like Currency Pairs may have an expiry time of as low as FIVE (5) minutes, while assets like Stock Indices may have an expiry time of as high as ONE (1) week.

Nadex Account Types

Nadex offers four standard types of trader accounts.

The account types include:

  • Individual Account for US Residents
  • Individual Account of Non-US Residents
  • Trust, Partnerships, LLC’S, Corporation Accounts for US-based entities
  • Permanent Demo Account

Opening an individual real trading account takes minutes.

Nadex offers everyone a free permanent demo account that you can open in less than one minute. Literally! You only need to input your name, country, phone number, and email address to create a demo account.

This is what you get with the Nadex Demo Account:

  1. You get to practice with a simulated $25,000 unlimited demo
  2. You can continue demo trading for as long as you like. It is your permanent practice account
  3. You do not have to open a live account nor make a deposit before you get access to demo trading
  4. Demo accounts have access to the same full-featured trading platform as live accounts

The Nadex demo account is a great way to try out this platform.

Deposit and Withdrawal

Nadex offers multiple deposit and withdrawal options. Its minimum deposit is $250.

Payment Method US traders Non-US traders
Deposit Withdrawal Deposit Withdrawal
Debit Card Yes Yes Yes Yes
Wire Transfer Yes Yes Yes Yes
ACH Bank Transfer Yes Yes No No
Paper check Yes No No No

Nadex Review: Fees

Nadex charges a contractual fee of $1 to open a contract and another $1 to close a contract. However some exceptions exist.

  • The standard contractual opening fee is $1.
  • They do not charge the contractual closing fee of $1 if you let your position expire out of the money.

Aside from contractual opening and closing fees of $1 each, the only other extra fees are the standard $25 fee for wire withdrawal and $25 fee for a returned check.

Therefore, deposits and withdrawals are free except for the wire withdrawal. The $25 fee for wire withdrawal is the standard fee in the financial industry.

Nadex Learning Center and Support

Nadex boasts of an expansive learning center. Thus, it is very clear that Nadex is committed to ensuring clients succeed in the market. This is because it sticks to their bottom line.

They make money when you open and close contracts. Accordingly, you wouldn’t keep opening contracts if you are largely unsuccessful. Therefore, it is in both in your interest and Nadex’s that you have long term trading success.

The Nadex learning center contains:

  • Extensive educational courses
  • Resources, such as Videos, Webinars, e-books, and even trade examples
  • News and Market Commentary
  • Glossary
  • FAQ

You can contact Nadex via Phone and Email. Response is terrific in terms of both speed and how it addresses the underlying situation which prompted you to initiate contact.

Is Nadex A Good Broker?

As you can see in our Nadex review, the platform is awesome. The biggest appeal of Nadex is that it is an exchange and not another run-of-the-mill broker. That makes all the difference in the world of binary options.

With Nadex you are certain that they are not trying to play a fast one on you. That certainty, complemented by simplicity and utmost transparency, makes Nadex a fantastic binary options company to choose for your trading activity.

Nadex continues to innovate in the binary options trading industry (for example they recently introduced Touch Brackets)

Its appeal is compounded by being regulated by the CFTC, offering services to US and non-US residents alike, record low fees, a robust trading platform, versatile asset classes giving you the ability to trade US and global indices, forex, commodities, economic events and Bitcoin; and a lifetime demo account.

How to Trade Binary Options with Nadex Step by Step Guide

Nadex binary options are fast becoming the only choice for US binary options traders. This is a “How to” guide for trading binary on this unique platform.

How to Trade Nadex Binary Options in 6 Steps

  1. 1. Log on to Nadex platform. Sign up is simple and free, the minimum deposit is low at $250. Some US and most non-US applicants will need to verify their identity or residential address by sending in the required documents. This is meant to protect user’s account and to comply with AML/KYC rules.

2.Choose an asset. Use the Asset Finder tool in the left sidebar window. Assets are listed by asset class, asset and expiry.

3. Choose expiry. After clicking on your chosen asset class and asset expiry information will appear, click on your target expiry to call up available strike prices.

4. Choose strike. Strike prices are listed in the main window. The most heavily traded strikes are the ones closest to the assets current price. Clicking on a strike price will call up the order ticket.

5. Build your ticket. Order tickets list expiry time, strike price, bid/offer prices and the depth of the market. You choose to buy/sell, the number of lots to trade and the price you are willing to pay.

  • 6. Monitor your trade. After your order is filled, monitor your trade. You can either hold it until expiration and get a full payout or you can get out of the position (by buying or selling) at any time you wish, in order to cut losses or capture profits.
  • Important Reading Before Implementing the 6 Steps

    This is a How-To guide for binary options trading on the Nadex platform. If you don’t know anything about Nadex, please read this Nadex Review first. This is not a strategy article, system article or any kind of scam. We here at ThatSucks.com recognize the growing need of education for this platform as it is fast becoming the only choice US traders. On the surface it is a little more complicated than spot binary in the European style but once you get the hang of how it works it gets a lot easier. The most important thing to remember is this; with European style binary options the price you pay is what you choose, it stays the same, the strike prices is what changes with the change in the price of the underlying asset. In Nadex the strike prices are static and the price you pay is what changes as the price of the asset moves up and down. The difference with Nadex makes for two different approaches; you can simply try to buy low and sell high, or you can try to buy when the asset price is below the strike and hold the option until expiry for your binary payout.

    A quick reminder. Nadex binary options work in the 0-100 method. This means that when you buy an option its price will be between $0 and $100 depending on the price of the underlying asset. If you buy an option for $55 and hold it to expiration, and it closes in the money, you get $100 in total, minus fees. Keep in mind that at this point you’ve already paid $55, thus your profit will be $100-$55, so $45 profit, minus fees. If you hold it and closes out of the money you get $0. If you choose to sell it before expiration you will get whatever the market price is at that time.

    Another reminder. With Nadex you can buy and sell to open, unlike EU style where you buy a call or buy a put depending on your analysis. At Nadex a buy to open means you are bullish, it’s like a call. Your account is charged, if you lose you lose the price you paid, if you win you receive $100 per lot (which is not all profit, as explained in the previous paragraph).

    There’s a seller for every buyer and you can be that seller if you so choose. If you are selling a binary option priced at 30, your worst-case scenario is a settlement of 100. If you click Sell, your order ticket will show your maximum risk as 70 points (100 – 30) times $1.00 per point or $70.00. As a seller, you put up $70.00 in collateral to execute the trade, in other words, you are risking $70 and your potential reward is $30. The best case scenario (when selling) is a settlement of 0 (the option expires worthless), in which case the seller gets $100 minus the initial sell price. In this case, you paid $70 to be a seller, so your maximum reward would be 100 – 70 = $30. For the purpose of this example, trading fees were left out.

    A 6-Step Guide For Trading Nadex Binary Options

    Step 1:

    Step one is to log on to the platform. The first thing you will see will most likely be some messages, all you have to do is click on them to make them disappear after you read them of course. At that point, you will be left with the home screen of the trading platform. On the left-hand side, you will see the asset/strike finder. Use this to scroll through available assets along with their listed expirations. This screen is set up to automatically show the most active binary with daily expiry but you can change this later if you want. Notice how the bid and offers for some options are highlighted, these are live trades as they happen. Blue is for buy, red is for sell. Open trades you make are listed at the bottom of the screen.

    Step 2:

    Step 2 is choosing an asset. Look to the left sidebar. It lists binary options and call spreads for forex, indices, commodities and a few other choices. I choose forex binary for this example. When clicked, forex binary provides another drop down with all the available pairs.

    Step 3:

    Step three is picking your expiry. What you need to do here is choose the expiry time for the asset you want to trade in the finder window and then click on it. When you click on it all the available strikes for that asset with that expiry are shown in the main window.

    Step 4:

    Step 4 is choosing a strike price. Once you’ve pulled up all the strikes for the expiry you want you can choose which one is the best. This screen shows the actively traded strikes, time to expiration, strike prices, which ones are ITM and OTM and what the bid/offers are for each strike. It is recommended to choose a more actively traded strike rather than a less actively traded one in order to ensure a fill, if no one wants to trade the option of your choice then you may not get it. Once you’ve decided the strike you want to trade click on it for the next step.

    Step 5:

    The last step is placing your order. On the order ticket choose the order type, either buy or sell. Then choose the size of the trade, this is done in lots. If the options cost $65 and you want to trade $500 then you will want to choose 7 lots ($455) since there are no partial lots. By choosing the price you are able to control to some extent the price you pay, the caveat is that if your price is too low you may not get your option. When the ticket is filled out click “Place Order”, confirm and you are set.

    Step 6:

    Monitoring your trade. The beauty of Nadex is that any option can be closed at any time, regardless of expiry. There are no windows in which a close-now feature will work. If the asset moves into the money and your option shows a profit you can close it so long as you can get a fill on your ticket. Likewise, if the asset moves in the wrong direction. You can sell at any time in order to cut your losses, the only catch being you have to get a fill. The same is true if you sell to open. You can buy that position back at any time so long as you are willing to pay the bid prices.

    Below is a video by Nadex: how to place a trade

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    Play with Nadex on the Demo Account

    To practice everything I’ve described thus far, Nadex offers one of the best binary options demo accounts on the market. It is hands down the #1 when compared what anyone else has to offer, I mean, who else has a demo that is fully funded, never expires and functions exactly the same way as the real-money platform without a deposit? The average run of binary options demo account has at least some kind of string attached and at worst is nothing more than a marketing gimmick with no true value for traders. All too often your demo account will turn out to be bonus money to tie up your real deposit, or will only last a few hours or days in order to whet your appetite, or is obviously not the same as the live platform.

    Not so at Nadex. The demo is exactly the same as the real thing. The only difference is that since it is demo trading and no one is really buying and selling it takes an actual purchase on the live platform to trigger a trade on the demo. This is what I mean; if you enter a market order on the demo it won’t fill immediately as it would in live trading, it will take an indicated buy transaction from the live platform to trigger the fill.

    Getting a Nadex demo account is easy and pain-free. All you have to do is sign up to Nadex. There is no need to give any financial information, you don’t have to make a deposit and you don’t have to talk to anyone. All you have to do is sign up, it’s easy, you could do it right now. Once you are logged in, you have full access to the account which duplicates the entire Nadex platform. The balance starts off at $25,000 and can be added to, there is no time limit it will last forever, or as long as Nadex is around.

    Trading with Nadex – Take It From Here!

    Once you get familiar with the platform and its inner workings trading becomes much easier. The key is expiry and strike price, and mostly expiry so I suggest becoming very familiar with how that works. My tip; if you know which strike and expiry you are targeting you can call up an order ticket and get it ready, that way you will experience the least amount of lag time between when you spot your signal and when you place your order. After that all you have to do is watch your charts, identify your signals and take your entries.

    Strategy: You can use any approved binary options strategy at Nadex, the technical signals are the same, the only difference is in how the platform operates. Before using any trading strategy, make sure you understand how it works by using it on a Demo account.

    Nadex review

    Ideal for short-term trading

    By Jitendra Soni 10 March 2020

    Our Verdict

    Nadex is a great choice for binary options trading for both US and non-US residents.

    • Demo account
    • No hidden charges
    • Low initial funding

    Against

    • No mobile apps
    • Web UI has a learning curve
    • No live support

    Nadex, or North American Derivatives Exchange, is a Chicago based exchange. Founded in 2004 as HedgeStreet Plc, it was bought over by London’s IG Group and was renamed as Nadex in 2009. It is regulated by CFTC (Commodity Futures Trading Commission).

    Nadex allows you three different options to trade in – binary options, touch brackets, and call spreads. It is the first regulated US trade exchange that allows you to trade on all the three options mentioned above, based on forex, commodities, and stock indices.

    Unlike unregulated offshore trading entities, Nadex offers a transparent and legal way to trade in binaries. It prides itself for offering a transparent, stable and a reliable platform which at present offers more than 5,000 contracts on a daily basis.

    What does Nadex offer?

    Nadex welcomes users from over 41 countries worldwide and offers a demo account with $25,000 virtual funds to test the platform before signing up. It offers only one type of account for all the traders regardless of the fact that you’re US citizen or an international trader, individual or a corporate firm.

    The account can be opened with a deposit of $250, which is actually way less than the industry average. Low initial funding makes Nadex a preferred platform for beginners who are not willing to commit a huge amount right at the start. Interestingly, Nadex allows users to keep their demo account even after they’ve signed up with the live account.

    (Image credit: Nadex)

    US citizens can open an account using a debit card, ACH, wire transfer, or a paper check while non-US users can use a debit card or an international bank transfer to fund their account. Once your account is funded, you can start trading immediately.

    Since the platform does not allow you to invest more than the funds in your account, the losses are automatically limited to the amount lying in the account.

    To start, you need to provide:

    • Date of birth
    • Permanent residential address
    • Social Security Number or National Identification Number

    Types of trade

    Traders can trade binaries and spread on stock indices, forex, commodities and crypto. It also allows you to trade on macroeconomic indicators and events.

    The platform offers you three different type of accounts:

    Binary Options: This is more or less like a bet where users speculate where an asset or market will be, at a specific time or date. These are simple yes or no bets which just have two possible outcomes, you win or you lose.

    Touch Brackets: More like a stop-limit trade in the stock market, Touch brackets lets you enter into a trade at your pre-decided price point and automatically execute the trade.

    Call spreads: These are a variant of Touch Brackets however; the trades have a time-based expiration rather than price-based.

    All three variety trades are available in four different types of trading options. The list is as below:

    • Indices: US 500, Wall Street 30, US Tech 100, US SmallCap 2000, FTSE 100, Germany 30, Japan 225, China 50
    • Forex: EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, EUR/GBP, USD/CAD, AUD/JPY, GBP/JPY, EUR/JPY
    • Commodities: Crude Oil, Gold, Silver, Copper, Natural Gas, Soybeans, Corn

    Since Nadex is an exchange rather than a brokerage, orders placed here are submitted directly to the exchange rather than through an intermediary. Hence no brokerage or commissions need to be paid.

    It charges a fixed fee of $1 per transaction, per side with a cap of $50 for a single purchase. This fee is Nadex’s only source of revenue as it does not trade against their traders. In binary options, Nadex waives the settlement fee in case the trade expires.

    The fee structure here is very transparent and apart from the transaction fee it only charges a $25 fee for returned deposit. The platform keeps running promotional offers running free trading days where you will not be charged any fee for trading. These offers are regularly updated on the website.

    (Image credit: Future)

    Nadex allows you to trade via their website on the computer or mobile phone. The mobile app is called NadexGo and is available directly from the website rather than either the iOs or Android app stores. It offers a sleek user interface and a neat design. The design is kept quite similar to the web platform. Since this is a web app and opens on any web browser on your mobile regardless of the OS, it is highly responsive and loads very quickly.

    While other platforms offer many more options to trade in, one of the biggest limitations of Nadex is the number of assets available to trade on the platform. Though the presence of a unique product like binary options is good enough to offset the disadvantage.

    (Image credit: Nadex)

    Support and reputation

    Support on Nadex is available between 3:00 PM EST Sunday through 5:00 PM EST Friday. The support team can be contacted via a US toll-free number, an international number, or email. Unfortunately, there is no live chat option for new users who need hand-holding or users who have some urgent queries.

    As a platform, Nadex is one of the most trusted and recognized brands. It has even received multiple awards from industry watchers for its transparent and reliable binary options platform. Nadex was also awarded as best US broker for the year 2020 by Fair Binary Options.

    Final verdict

    Nadex offers a level playing field for all the traders and is the best option in case you want to start trading in binary options. While the web platform is fairly simple and doesn’t have the most modern design and features, it still does what it is supposed to do. Missing native mobile apps is a disappointment. If you’re in for a high-risk high-reward sort of trading, then Nadex is the best platform for you.

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