Nadex Review and Tutorial 2018
|Traders in United States welcome|
|Nadex Facts & Figures|
The leading US trading Exchange. Nadex offer genuine exchange trading to US clients on Binary Options. Fully regulated by the CFTC.
|Mobile Apps||iOS, Android and Windows|
|GBPUSD Spread||0.25 pips Var|
|EURUSD Spread||0.02 pips Var|
|GBPEUR Spread||0.25 pips Var|
|Payout Percent||Exchange (See Full Review)|
Nadex is a US-based exchange providing powerful trading tools and advanced features to traders of all experience levels. Nadex is not a brokerage, but a CFTC-regulated exchange.
Nadex focuses on trading in binary options and spreads on the most popular traded commodities, forex and stock index futures, as well as cryptocurrency and economic numbers. This review of Nadex will evaluate all elements of their offering, including pricing, accounts and trading platforms, before concluding with a final verdict.
A Brief History
Before looking at the potential for day trading returns, it can help to understand how Nadex has evolved into the leading exchange of its kind. The exchange was launched in 2004 and was originally known as ‘HedgeStreet’. The objective at that point was to create an electronic marketplace that facilitated trading in financial derivatives to retail investors. However, by 2007 HedgeStreet closed its doors.
UK-based IG Group Holdings Plc. purchased the company and in 2009 HedgeStreet was re-branded the North American Derivatives Exchange (Nadex). With sophisticated new technology and instruments.
It’s worth highlighting that while the parent company is based in London and listed on the FTSE 250, Nadex headquarters are in Chicago, Illinois.
Part of the improved product range saw a greater choice of binary options. In fact, their binaries and spread contracts cover an array of underlying markets, including commodity futures, equity index futures and spot forex rates, as well as economic numbers. They also offer trading on the price of cryptocurrency without the need to actually own the crypto. Furthermore, Nadex members can take positions on all of the following assets on:
- Stock Index Futures – US 500 (S&P 500), Wall Street 30 (DOW), US Tech 100 (Nasdaq), US SmallCap 2000 (Russell 2000), FTSE 100, Germany 30 (DAX), Japan 225 (Nikkei), China 50
- Forex pairs – EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, EUR/GBP, USD/CAD, AUD/JPY, GBP/JPY, EUR/JPY
- Economic Events – Weekly Jobless Claims, Fed Funds Rate, Nonfarm Payroll
- Commodities – Crude Oil, Gold, Silver, Copper, Natural Gas, Soybeans, Corn
- Cryptocurrency – Bitcoin
It’s also worth highlighting that Nadex clearly takes a forward approach. This is demonstrated by their move in recent years to embrace cryptocurrency coin traders. In fact, once you join the exchange, you can start trading in weekly Bitcoin without having to own physical bitcoins. There is no doubt this has helped Nadex attract new customers while increasing their net worth.
Traders are also able to benefit from a choice of expiration times, including intraday, daily and weekly expirations. But while using Nadex does mean you can start trading on just 5-minute forex or 20 minute stock index binary options, their product range does not include 60-second binaries or similar products, as some competitors do.
Minimum Initial Deposit
Nadex welcomes traders by requiring just a $250 minimum initial deposit. This is actually just half the industry average. In fact, Nadex has made strides to ensure once you have funded your account, you can start trading a variety of markets in binaries and spreads immediately.
This low initial deposit is particularly attractive for beginners who may not want to risk too much capital at the offset.
An even more powerful aspect of risk protection is the capped risk. The most you can lose on a binary options is the amount you paid to enter the trade, since the binary’s value cannot go below zero. Since you can never risk more than you have in your account, your losses cannot exceed deposits.
Spreads & Commissions
Most brokers do not offer genuine exchange trading. Because Nadex is an exchange and not a brokerage, traders can submit their orders direct to the exchange and not through a broker. Therefore, Nadex members also do not need to pay any broker commissions.
Instead, Nadex charges a fixed fee of $1 per side, per contract. If a binary options trade expires worthless, Nadex will waive the settlement fee. These trading and settlement fees are Nadex’s sole source of income. This means they do not trade against their traders.
Some suggest this may mean attractive earnings potential as your trading costs are lower. In terms of payouts, maximum losses and profits are calculated via entry/exit times, as well as the contract type.
Payouts can exceed 100% while losses are limited to the amount of capital initially invested. Because you cannot take trades if you do not already have the needed amount in your account, losses cannot exceed deposits.
Because Nadex does not participate in trading, the bid/ask spreads in individual markets, as well as the pricing, are determined solely by the participant buyers and sellers. That said, as a CFTC-regulated exchange, Nadex partners with multiple market makers to ensure viable liquidity and bid/ask spreads.
Nadex also offers a unique product which they also call “spreads”. These are offered on a number of markets, including stock index futures, commodities, forex and Bitcoin. But fear not, understanding these spreads is also straightforward.
You can trade the price of a market like Bitcoin within a range. As the price of Bitcoin fluctuates, so does the spread, although it remains within a predetermined upper and lower limit.
It’s worth highlighting that if the value of Bitcoin exceeds one of the limits, the Bitcoin spread value will come to a standstill at whichever limit it is breaching.
At the upper limit, the spread stops at a maximum value. At the lower limit, the spread reaches a minimum and will not lose any more value, no matter how far the underlying market drops.
As a result, you get enhanced control over your risk-reward ratio. This is because you decide your risk parameters via the spread limits.
You have intraday, daily and weekly spreads. Each will require a careful spread strategy. This is hopefully where the Nadex trading platform comes into play. Details of which can be found further below.
You hopefully now know what a Nadex spread is. However, for a more detailed breakdown of forex and binary spreads, head over to the official website. You will also find contract specs.
The advantage of Nadex spreads in terms of leverage also needs to be explained. Normally, spot forex traders in the US, for example, can’t get better than 50:1. Nadex spreads are fully collateralised and dont involve margin. They are not a leveraged trading product, but more like a short-term option. However, in many cases the cost of a Nadex spread can be lower than trading the underlying market outright.
This low cost of can effectively give you a high reward vs risk. You also have a certain degree of risk control, since your maximum risk is capped. Plus you can exit early to further limit your losses. Alternatively, you can seize your profits before the spread expires.
Other Trading Fees
Reviews of Nadex have been quick to highlight their pricing structure is fairly transparent. As a result, traders do not have to worry about a range of hidden fees that will cut into their end of the day capital. Having said that, there is a $25 returned deposit fee. If you do need to pay any other fees, you will encounter clear notices.
So, is Nadex a good exchange in terms of fees? If used carefully, trading with Nadex could well mean generous leverage and low trading fees, and all while keeping risk levels low. However, as is the very nature of day trading, your capital is always at risk.
Unfortunately, user reviews are quick to point out that Nadex often falls short in terms of account promotions and special offers versus other binary providers. However, occasionally they will run free trading days and other similar offers. You will need to check on their official website for any current details of these.
Nadex Trading Platform
One of the most important components of the trader’s experience is the platform. This is where you will spend the majority of your time, conducting market research and executing trades.
Results from Nadex’s proprietary platform reviews are mixed. While you have everything you need, from technical indicators to free real-time market data feeds, the platform has somewhat of a foreign feel. Hence new traders may want to get a feel for the platform using the demo account first.
How to Trade
On the positive side, getting set up on the platform is relatively straight forward. Simply head to the ‘Finder’ window on the left of the platform to select an asset. This will bring up a clean selection of expiration time frames to choose from.
Note all times are listed in Eastern Time (ET).
Once both the asset and expiry have been chosen, your ‘Markets’ window will update. You will then be met with price levels available for trading. Normally you can expect around 10 levels to choose between.
Nadex binary options range from 0 to 100. The former is when the settled option did not finish in the money, while the latter reflects an outcome that did take place.
Your trading ticket will then confirm:
- Expiry time
- Price level
- Bid size
- Current bid and offer prices
You will then need to select buy or sell and specific a trade size. You also have the option to alter the indicative price above or below current levels to see if your position will be ‘matched’. As a regulated exchange, Nadex will never take the other side of your trade. Your order will only be matched by another trader.
Of course, you can close your trades at any time. This will allow you to realise profits or reduce losses. Finally, the figures your ticket displays highlight the outcomes if you allow the option to expire.
Then you just need to hit ‘Place Order’. If matched, you should be able to view your trade in the Open positions window. However, if it is only partially matched, it will be automatically moved to the Working Orders screen. You will then get an email confirmation with the details of your trade and another when an order is settled.
As forex and binary options customer reviews have explained, the platform is fairly user-friendly allowing even for beginners to understand how to trade with ease. Access to historical data is given, as are all the necessary symbols and tools to interpret price action.
Mobile app reviews are quick to point out Nadex’s offering is one of the most comprehensive on the market. You can currently download a free spreads app for iPhone and iPad, and a binary options app for Android devices from their respective app stores. Very soon there will be a web-based app solution available directly from the Nadex website.
As soon as you have completed your download you will start to appreciate the sleek user interface and concise design. In fact, the dealing ticket trading area looks extremely similar to the desktop platform.
Conducting research is straightforward while setting up alerts is quick and hassle-free. You also get access to the same free signals while viewing your order history is simple. On top of that, you can utilise binary options app tutorials to help you make the most of your Apple or Android app.
Overall then, the mobile apps provide a smooth transition from the desktop-based platform. Furthermore, the mobile apps are actually supported by a browser-based interface which you can open up from within your mobile device. This should all help alleviate concerns among traders who worry they won’t be able to implement a 20 minute or hourly options strategy effectively.
Methods of Payment
Once you have signed up, you will need to go about funding your account. Fortunately, Nadex offers a number of ways you can go about deposits and withdrawals, including:
- Debit card
- Wire transfer
- ACH transfer (US residents only)
- Paper check (US residents only)
Note bank verification will be required for some transactions and credit cards are not accepted. Users may need to pay withdrawal fees if they use wire transfers, which will cost $25 but will normally be processed the same business day. Whereas ACH transfers are free but usually take between three to five days.
You can head to your account section to choose a specific payment amount. Also, see their FAQ page for details on minimum withdrawal limits, proof and any other issues, as these will depend on the payment method and can change over time.
While these payment methods are fairly industry standard, some user reviews did complain about the lack of an option to fund an account or take profits via PayPal.
Opening a Nadex account is relatively straightforward. There are just two account types to choose from, a US individual account and an international individual account available for residents of over 40 other countries. For a full list of countries, visit the Account types pages at the Nadex website.
All you need to do is head online and follow the on-screen instructions. You will need to provide:
- Date of birth
- Permanent residential address
- Social Security Number or National Identification Number
Note you may have to upload supporting documents before you can start trading. You will also need to fund your account. When you sign up you will also be given information on how to close your account.
Nadex offers a free practice account. Once you have your demo login details you can use the same platform and real-time data as those with live trading accounts. Signing up for a demo account is the ideal way to practice generating profits without having to risk real capital. You can practice scalping strategies, intraday strategies, or any others.
It’s also worth noting there are certain differences between demo vs live trading. For example, a practice account cannot replicate the psychological pressures that come with putting real capital on the line.
If your demo account is not working, you can contact customer support. You can also see the Learning Center for guidance on how to get the most out of the trading platform.
Reviews of Nadex praise the extensive resources available. All of which may help you understand how it all works on Nadex. Some tools might also help you earn an income and work towards personal success, including:
- Advanced charting – Sophisticated charts and technical tools can be used for developing a range of techniques, including an out the money (OTM) strategy. For example, you could also use candlestick charts, Fibonacci retracements and the MACD indicator to help you build a binary options strategy, with a favourable risk to reward ratio.
- Nadex spreads – They are similar to binary options as they have a maximum possible profit and loss. However, they have a variable payout at expiration instead of the all-or-nothing outcome of binaries.
- APIs – There is plenty of information online on how to utilise rest and fix APIs, including the unofficial Nadex python API and documentation.
- Market data – Nadex offers real-time indicative price data which cosely matches the price of the underlying market. There is no delay. Nadex does not charge an additional fee for data feeds.
- News trading – Some utilise complex patterns and trading journals to craft and enhance a binary strangle, for example. However, some traders focus on market news and fortunately, Nadex provides daily, actionable commentary and video on important market events. This content is created exclusively for Nadex by a group of experienced and trusted analysts from a variety of trading backgrounds.
- Education – From weekly webinars to e-books and trading courses – there is a wealth of information to aid your trading growth in Nadex’s Learning Center. On top of that, you could also head online to find forex binary options videos and strategies to trade stock indices with capped risk in a volatile market environment.
Regulation & License
As a result of hacks and promises from brokers to make traders millionaires, choosing a place to trade binary options that is regulated is increasingly important. So, is Nadex a scam? Users can relax in the knowledge that Nadex is legitimate and regulated by the US Commodity Futures Trading Commission (CFTC). You can see their official website for verification.
This regulation should also put traders outside the USA at ease too. Whether you are in the US or one of the over 40 other eligible countries – whether it be Mexico, Japan or the United Kingdom, Nadex aims to treat all consumers fairly.
There are a number of clear advantages to choosing Nadex, including:
- Management – Managing market orders and quotes are quick and easy on the Nadex system.
- Customer service – User reviews report high levels of satisfaction with the extensive customer service on offer.
- Market makers – Nadex has attracted market makers, who may lead to increased liquidity for more and larger traders.
- Fee structure – When you take Nadex vs IQ Option and Cboe, you realize that Nadex offers a competitive, transparent pricing structure.
- Demo account – Opening a free demo account is straightforward and can be an effective way to go about understanding Nadex while gaining valuable trading experience.
- Accessibility – Nadex welcomes traders from over 40 countries. This means Nadex is a viable option for UK residents, as well as those from the US, Canada, Europe , Asia, Australia and beyond.
- Regulation – Nadex is regulated by the US CFTC to ensure trader’s capital is protected in a number of scenarios. Furthermore, Nadex will have to adhere to rules and regulations specifically designed to protect consumers.
- Training – Nadex provides tutorials, user guides, PDFs, ebooks, webinars and a number of other useful resources through their Learning Center. This is a fantastic place to go for aspiring traders who need help developing winning strategies. In fact, their webinars, in particular, can impart detailed guidance on short term trading, scalping with 5-minute binaries, as well as details on crafting an effective ATM or hedging strategy. Not to mention that there is a wealth of trading tips and strategies information available too.
Despite benefits, user reviews also expose some downsides to the Nadex offering, including:
- Instrument list – Vs binary options brokers, such as Oanda and Stockpair, Nadex does not offer as extensive a range of products. For example, they do not provide one-touch monthly binaries.
- Promotions & bonuses – Nadex is faulted in options reviews and ratings for not offering special offers and new-customers bonuses.
- Difficulty – Although Nadex is beginner-friendly in a number of ways, some users may find their binary options trading to be more complex than other binary options providers.
- Order types – Some competitors offer more order types and therefore increased choice for intraday traders.
Nadex Trading Hours
Nadex trading hours will be the same as the asset you are trading. This includes both the regular and electronic trading hours. From Sunday evening until the close of markets on Friday, US Eastern Time, Nadex offers trading 23 hours a day, with an hour off from 5pm to 6pm for exchange maintenance.
If a particular market is closed due to a holiday observance, Nadex will stop trading of that market during the holiday period.
Contact & Customer Support
Nadex exchange reviews are quick to praise the customer service component of their offering. If you have any problems, you can make contact via email or phone. Customer service representatives are reliable and knowledgeable.
They can help you if the website is down and point you towards any legal rules and necessary extensions. They may also be able to explain why an order was cancelled. In addition, reviews show agents had a strong technical grasp of the platform and tools.
Simply head to the home page and then ‘Contact Us’ for the contact telephone number in your location. Note customer support assistants are available via email or phone between 18:00 ET on Sunday through to 16:15 ET on Friday. Also, as a result of exchange accounting and other requirements, agents will be unavailable between 18:00 ET on Monday through to Thursday.
On the downside, Nadex does not currently offer live chat support, although it is planning to at some point in the future. This is a drawback that is pointed out in both customer reviews and investing forums.
This means novice traders who want instant access to customer support may want to look elsewhere. This is a shame because competitors are continuing to increase their customer service offering, with some even facilitating live video chat.
Note customer service agents cannot advise you on revenue and taxes, including any form of capital gains calculators and reporting.
Safety & Security
With account hacks no longer being uncommon, some traders understandably have security concerns. Fortunately, Nadex has made keeping your capital safe relatively easy. Segregated accounts at top-tier banks keep all client deposits secure. Furthermore, the Nadex group expressly state they utilise intelligent encryption technologies to keep all trading activity and personal information safe.
Nadex is a sensible choice for traders looking to trade binary options across numerous time frames with powerful trade tools. Their offering also comes complete with a demo account, competitive prices and an extensive Learning Center.
However, Nadex does come with certain downsides. Firstly, some competitors offer a more extensive product list. Secondly, Nadex could provide more in terms of welcome bonuses and promotions.
Overall then, is Nadex a good choice for binary options traders and does it compare favorably to binary options brokers? Yes, the US based, regulated exchange (not broker) is capable of meeting and exceeding the needs of both novice and veteran traders. But rule 101, you must develop effective options strategies. Failure to do so could result in you effectively gambling and puts you at risk of losing your account balance. However, because of Nadex’s capped risk guarantee, you cannot lose more than your deposit.
Nadex only accepts traders from United States, United Kingdom, Australia, Hong Kong, Brazil, Japan, Italy, Spain, Sweden, Singapore, New Zealand, South Africa.
|The leading US trading Exchange. Nadex offer genuine exchange trading to US clients on Binary Options. Fully regulated by the CFTC.|