Nadex Review – Binary Option Trading
What is Nadex and what do they offer?
In 2004, John Nafeh founded Nadex that was originally named HedgeStreet in San Mateo in California.
HedgeStreet was known as the very first internet-based marketplace for event futures and derivatives exchange in the United States being regulated by the CFTC (Commodity Futures Trading Commission).
It operated the HedgeStreet exchange meeting the growing need to provide private investors with a place to respond quickly to price movements and to economic events.
According to the growing number of private investments in stocks, from the beginning, the company's business model was focused on small investors.
At that time, John Nafeh created and used the term “hedgelet” to explain the main line of the company's business. This business was shut down in 2007.
The IG Group from the U.K. purchased HedgeStreet in 2007, restructured its technology, products and exchange and started also to offer binary options being similar to those on IG's own platform.
The main reason for the IG Group's decision was the fact that, according to the laws and rules of the United States, foreign brokers are not allowed to operate within the U.S.
In 2009, the company's name was changed to Nadex (Northern American Derivatives Exchange). So, today the IG Group owns Nadex and the headquarters of the company are situated in Chicago.
By now, U.S.-based Nadex is the first and biggest web-based and retail focused binary options exchange covering a wide range of markets with daily and weekly intraday expiration.
Beside its main service offering retail trading of binary options, Nadex offers forex rates to economic indicators, commodity futures, equity index futures, economic events and stock indices.
Most of all, Nadex gained a very good reputation for its fair and low, transparent trading costs without any hidden charges and for the funds being secure in the most trustworthy U.S. banks without any offshore banks being involved.
Nadex enables individual investors to trade multiple markets from their one single account on one single trading platform on their desktop or via all kinds of mobile devices. A good market place for individual trade ideas with primary focus on day trading
The trades are not limited to one single market and the investors have the free choice of all opportunities. For even more safety, here the traders operate with guaranteed limited risks and without any broker commissions as Nadex is not a buyer or a seller. It just assures transparent and fair executions.
However, the most important advantage of all is the fact that Nadex is completely legal and regulated for U.S. residents.
As a CFTC-regulated U.S. exchange, Nadex only operates in the U.S. and the funds of the members are safe in separated accounts in U.S. banks with a high reputation.
What are Binary Options?
Binary options may sound complicated to beginners in trading, but binary trading makes it amazingly easy to trade most of the stock indexes, commodities and forex with a guaranteed limited risk.
Here the investors are watching the market's price developments to answer a simple question with “yes” or “no”.
This means, they have to answer the question if the price of a market will be above a certain price at a certain time. If the trader answers with “yes”, he will buy the binary option. And if he will answer with “no”, he will sell.
The price range to buy or to sell moves between $0 and $100. The price that the investor pays is his maximum risk as there is nothing else to lose but this amount.
If the trader holds the chosen option to the expiration and if he answered the question right, he will get the full amount and he will only have to subtract the purchase price he paid. The remaining amount is his profit.
To minimize the risk even more, Nadex offers the investors the opportunity to exit before the expiration to keep the profits they already gained or to cut their losses. All this sounds quite simple, doesn't it?
Why is Nadex a good choice?
There are some important points making a significant difference when you compare Nadex with similar providers on the market and it is highly recommendable to consider those:
- Nadex is a U.S. CFTC regulated exchange. As a U.S. government agency, the CFTC watches all options, futures and swaps to protect the investors and the public from all kinds of abuse, manipulation or risks being caused by the system.
- Nadex is a Designated Contract Market and Derivatives Clearing Organization being determined by the CFTC. The investors should better be aware of the fact that some other binary option providers are based and operate outside the U.S So, they may keep their members' funds in offshore accounts and their clients have to face higher risk.
- Nadex is an exchange and not a broker only. The legal regulations mentioned above guarantee that Nadex offers its services to buyers and sellers without participating in any kinds of trades.
- It also means that all of the members' funds are held in separated accounts in the U.S. banks with the best reputation, like e.g. the BMX Harris Bank or the Fifth Third Bank. Nadex only gets fair and transparent exchange fees and it doesn't take any positions in the market.
- Nadex enables its customers to make safe and well informed choices. Nadex itself is not involved in any kinds of trades. The members of the team have a comprehensive knowledge and experience in all IT and legal aspects of exchange trades.
- They make sure that their members are executing their trades fairly and according to the U.S. laws. Besides, the members can always withdraw their funds by transferring them right away using their computer or a mobile app.
Nadex - Trading Platform
The innovative, fast and powerful web-based trading platform of Nadex is all easy to handle. The access is free and helpful free real-time data information, drawing tools, full-featured charts and technical indicators are part of it.
Here, the investors have the opportunity to place their orders themselves without any broker being involved while they benefit from the MOP (Market Order with Protection) that Nadex offers.
The members can use the platform with their laptop or computer with a fast internet connection and by using Windows, Linux or Mac or with mobile apps for their iPhones, iPads or Android.
By simply signing in to the personal account, it is all easy to open a trade on one of the devices and to finish it on another one.
Before making well informed decisions, the users have the opportunity to analyze the market of their choice with the help of highly advanced real-time price data and the so-called price ladder that investors won't find anywhere else.
Analyzing the market, executing the orders and checking the trades is possible from one single screen. In addition to this, the traders can use all kinds of technical indicators, make notes to all features and charts and open and fund their accounts.
And there is one more special and important advantage. All interested traders have the chance first to open a free demo account with $25,000 in virtual money to get used to the platform and to find out if it really meets their needs.
Nadex even encourages them to test the binary options and spread trading for free before opening a live account with real money. And the members may keep their demo account also after opening a real account.
Nadex – One single account for all different kinds of markets
Using Nadex means for U.S. citizens and for international members that they legally trade a large range of markets with the safety of the first exchange being regulated by the CFTC and that they benefit from a defined, limited risk, the low opening balance and fair, competitive trading fees – and all this from one single account.
They simply have to fund their account with a debit card - and immediately they can start trading stock index futures, economic events, forex and commodities.
From this one single account the traders operate:
- U.S. and international stock market indices without any need to use ETFs or index futures while they always know the maximum of their possible profit or loss
- Economic events with the help of the latest economic reports to try to forecast the market's reaction, e.g. to changes in interest rates or unemployment numbers
- 10 of the most popular spot forex pairs in the currency exchange being the world's largest market with a daily turnover of four trillion dollars – for 23 hours on six days a week
- Commodity futures prices, like e.g. for oil, metals and grains, using binary options and spreads with remarkably lower costs and with a limited risk
Nadex – Trading fees
Every interested investor has the opportunity to open an account all easily – online and for free.
Using the highly advanced trading software, the up-to-date market data and the powerful tools for charting and for analysis is also free for everybody with a live account at Nadex.
The trade may start all immediately after funding the low minimum opening balance of only $250.
The users only pay $1 per contract to enter and $1 to exit for the first 50 contracts while there is no exit fee when an option expires.
From the 51st contract on there are no additional fees.
Beside this, there is a special bonus offer for those who deposit $500 or more before their first trade. After their first trade they receive a so-called introductory fee holiday.
That means, they won't have to pay any fees for the first days of their trading. The more they deposit, the longer they trade for free.
Nadex – Educational resources
Nadex believes that only well educated traders will be successful. So, as the business depends on successful traders, Nadex offers free trading courses for everyone.
For example, every member can download free trading handbooks containing all kinds of helpful advice – from basic knowledge for beginners to advanced guidebooks for professional investors.
The free education for all members that Nadex offers includes:
- Weekly live webinars being lead by experts who trade in real time, who guide the members through useful examples and who answer their students' questions (Most of these free webinars are open for everyone.
- There are only a few webinars with a limited class size for advanced members. Interested investors simply have to become a member, but not to fund any money or to trade yet to join these classes.)
- Trade examples in the growing library of real trades that several Nadex' experts have done and explained to share their experiences with their students by showing them the real action (These include screenshots and detailed explanations regarding the trader's strategies and decisions, dealing with risks, success and losses.)
- Trading videos covering all that a professional trader needs to know (Some of these deal with the basics of binary options, the platform and spreads, others are in-depth lessons for specific trading strategies and markets.)
In addition to all this, there is a free glossary on the website that explains all of the traders' terminology in alphabetical order and there are new free videos on Nadex' YouTube channel in every week.
Regarding all these free education options, the main intention of Nadex is to help every trader to find his own way.
Nadex – How is the platform registered and regulated?
As mentioned above, Nadex is completely legal and fully regulated for U.S. residents. This CFTC-regulated exchange operates according to the U.S. laws and the rules of the CFTC.
This Designated Contract Market and Derivatives Clearing Organization following the rules of the CFTC only operates in the United States and it only cooperates with the top banks within the U.S. to deposit the users' funds in segregated accounts.
On the website, interested traders may read the complete rules and all legal terms and conditions of the platform. And the Leadership Team is introduced in person.
They can also see where Nadex has been featured lately, e.g. in CNBC, Yahoo Finance, in Futures, in the Bloomberg Businessweek etc.
For further questions, it is always possible to contact the customer service by e-mail or on the phone. The support service is available from Sunday to Friday.
Top 9 advantages of Nadex
Nadex being a CFTC-regulated U.S. exchange that only operates within the U.S. and guarantees the members that their funds are safe in separated accounts in U.S. banks with a high reputation
Free trading accounts including the free use of the software, up-to-date market data and powerful tools for charting and for analysis
A low minimum opening balance of only $250
Fair, low and transparent trading costs without any hidden charges and a defined, reduced risk
One single user account for many different kinds of markets
Nadex being an exchange and not a broker participating in trades and taking commissions
Many helpful kinds of free education for beginners and for professionals – most of this even for traders who didn't sign in yet
A free demo Nadex account for beginners to test the platform with virtual money before making the final decision about a membership
Full access to the accounts via computer, laptop, smartphone or tablet - where ever the users are and at every time
Nadex - My personal summary
Nadex looks back at professional experience since 2004. Especially, since the restructuring that started in 2007, this platform gained a well deserved high reputation.
As a CFTC-regulated U.S. exchange that only operates within the United States, Nadex ensures the members that their funds are safe in accounts in some of the top U.S. banks. In addition to this, Nadex is trustworthy as it is not taking part in any trades.
The free binary options demo account with virtual money is a perfect starting point helping beginners and professionals to find out if this platform meets their needs.
The platform is easy to handle, allows access via computer and all kinds of mobile devices and offers a lot of powerful tools for a well informed analysis of the market before starting to trade.
Compared with other binary options brokers in the United States and with other binary options brokers reviews, the many helpful free education options for beginners as well as for professional investors are another significant advantage.
I like it that Nadex doesn't try to make additional money with education, but that the company's philosophy says that only well educated traders will be successful and that the company's success depends on the success of the members.
It is also a big plus that the users have the opportunity to trade so many different kinds of markets by only using one single account.
Of course there is never any full guarantee in trading and everybody who is honest and reliable will never be able to promise the users to get rich overnight.
But if private investors are searching for a tested and proven starting point for a career with realistic aims and with a defined and reduced risk, in my opinion, Nadex is a promising choice offering a free account with free powerful trading tools and low, competitive and transparent trading fees without any hidden charges.
When interested investors ask the question what is the best binary option broker for U.S. traders, Nadex is definitely in the game and there are many good reasons why Nadex belongs to the leaders in the binary option market.
Have a look at their website and check them out!
High risk ahead!
Investors should be aware of the fact that binary options belong to the most risky ways of trading of all. Unlike stocks, binary options themselves have no real “inner” value and usually, they can not be held over a long period of time. However, when you have a look at all the many binary options brokers in the market, in any case, Nadex belongs to the best regulated brokers of all.
Especially within the United States, the opportunities for trading binary options are strongly restricted. Because of its safe regulation within the U.S., Nadex is one of the most appropriate brokers for investors from the U.S. Nevertheless, for all investors it is highly recommended first to use the free demo account to get the right feeling for trading binary options.
This will make it much easier for investors to find out if this type of highly speculative trading really corresponds with their personal risk profile.
NADEX ► Main advantages
- Nadex being a CFTC-regulated U.S. exchange that only operates within the U.S. and guarantees the members that their funds are safe in separated accounts in U.S. banks with a high reputation
- Free trading accounts including the free use of the software, up-to-date market data and powerful tools for charting and for analysis
- A low minimum opening balance of only $250
NADEX ► Main disadvantages
- Binary option trading is connected with an especially high risk
- Binary options are only recommendable for investors who know exactly what they are doing and who are completely aware of the risks
- Binary options serve exclusively for speculation and not for financial investments