Nadex Trading Overview
Binary options trading in the US is a highly regulated and restricted activity. In fact, the US has one of the most stringent regulatory environments that put several restrictions on the how investors can approach the US financial markets. Although the US regulators may have created laws for safeguarding the integrity of the US economy and for protecting its investors from financial scams, some investors may feel severely restricted while investing in the markets. Nevertheless, it is important for traders from the US to follow all rules and regulations that are applicable in the country before choosing to invest in the financial markets.
Nadex has established itself as one of the premier binary options brokerages in the US that takes a different approach to binary options trading. Due to the considerable amount of interest among traders from the US, Nadex went on to become a popular choice of binary options brokerage among US investors and traders from all over the world. We analyse the unique concept of trading binary options with Nadex, and how the broker differs from the other scam brokers in the financial industry.
Nadex ( an acronym for North American Derivatives Exchange), while being a US-based financial company, can trace its roots back to the UK. IG Group, which is an FTSE-250 listed financial powerhouse in the UK, is the sole owner and parent company of Nadex. The IG Group operates multiple financial brokers and exchange houses across the world and is responsible for offering one of the largest liquidity pools in the Forex and commodities markets. Nadex was introduced as a binary options exchange house in the US back in 2004, which was created to meet the surging demand from both buyers and sellers in the market. Binary options trading, in its most modern form, only gained popularity during the late 2000s, but during the earlier days, there was a need among several market participants to exchange binary options as contracts to hedge against market fluctuations.
Nadex was developed to accommodate the need of traders to plug the growing disparity between binary options exchanges and Forex brokerages in the US market. Due to the recent laws and guidelines stipulated by the US agencies on binary options trading and the Forex markets as a whole, several companies had to exit the US markets and move to other nations where there were relatively lenient laws governing binary options products. On the contrary, Nadex thrived in the new regulatory environment by establishing its foothold in the US markets and raced to the number one spot in the US binary options market within a short span of time.
The IG Group is regulated by the Financial Conduct Authority (FCA) of the UK and is a reputed and reliable company that continues to serve millions of clients from all over the globe. Nadex, on the other hand, is regulated by the Commodities and Futures Trading Commission (CFTC), which is the primary US regulatory responsible for regulating and supervising binary options exchange houses and FX brokers operating in the US. Nadex guarantees of the best practices while handling with clients’ investments, and holds all such funds in segregated account with greater financial transparency. US regulation is indeed a reliable indicator of the positive attributes of Nadex, and we have yet to see any major issues with the company.
Nadex Binary Options Assets
There are both positive and a few negative features for Nadex when it comes to the selection of underlying financial instruments. Of course, the binary options market has pampered investors with access to some of the largest collection of assets from the Forex, commodities, stocks, indices, ETFs, Futures, Energies, and the CFD markets. As a result, a majority of binary options traders now expect their brokers to offer a comprehensive array of binary options products, which may number up to 10,000 assets and even beyond. Therefore, it may come as a surprise that Nadex has restricted the number of available assets to just a few Forex pairs, commodities, indices, and news events.
However, unlike traditional binary options products, Nadex allows its traders to trade some of the major news events in the market, which does offer a striking opportunity to profit from volatile news events. News trading is considered to be a risky proposition due to the unlimited downside risk, but binary options trading allows traders to control their risks in the market. Therefore, Nadex users can indeed take advantage of the remarkable platform without the associated risks. Here is a collection of all the Nadex assets offered to traders:
Forex – EUR/USD, AUD/USD, EUR/GBP, GBP/USD, USD/CAD, AUD/JPY, USD/JPY, GBP/JPY, EUR/JPY, USD/CHF
Commodities – Gold, Silver, Copper, Crude Oil, Natural Gas, Corn, Soybeans.
Index Futures – Wall Street 30 (DOW), US 500 (S&P 500), US Tech 100 (Nasdaq), US SmallCap 2000 (Russell 2000), China 50, FTSE 100, Germany 30 (DAX), Japan 225 (Nikkei)
Economic Events – Fed Funds Rate, Weekly Jobless Claims, Nonfarm Payroll
Nadex does not offer a direct contract to its traders, as the binary options trading platform with Nadex does not involve a contract between the trader and the broker. Instead, all binary options contracts are facilitated between traders, where Nadex only acts as a middleman or an exchange house. Consequently, Nadex has no conflict of interest with its clients, but to enhance the liquidity of the markets, the company creates over 5000 different contracts per day that allow its traders to enter the markets without any issues related to volumes or liquidity. While traders are guaranteed of 99.9% uptime for all contracts, it may be common for users to experience reduced liquidity during low-volatile sessions.
Nadex Fees, Binary Options Products, & Payouts
Nadex trading products are fundamentally different from the traditional binary options products offered by competing brokerages, where traders can simply choose to buy or sell binary options at any time of the day or night. Under normal scenarios, binary options trading offers an opportunity to trade 24 hours a day, and some brokers even offer the chance to trade over the weekends. Regardless, Nadex offers its services for 23 hours a day and is open six days a week. Nadex products are also contracts between traders, which mean that Nadex does not get involved in any transactions, irrespective of the market conditions.
Nadex is a binary options exchange house and is purely designed to offer a platform for buyers and sellers to transact different types of binary options contract and to contribute to the overall demand/supply dynamics of the market. Nadex is similar in its operations to the liquidity providers in the FX and commodities market that facilitate the buy/sell between traders. Despite the contract-based transactions of binary options contracts, the Nadex contracts still have a value of $0 and $100, which is determined according to the trade outcome at the expiry of the contract. For instance, $0 is the value of the contract for out-of-the-money trades at the time of expiry, while $100 is the full value return for in-the-money trades.
The minimum investment for binary options contracts are determined by the number of contracts and the contract specifications, but the payouts can be as high as 150% for some binary options products. The average payout is in the region of 80%, while traders can also exit their trades prematurely to lock in profits or minimise losses. Nadex binary options contracts may also offer up to 30% refunds for losing trades. One of the best features of trading with Nadex is that traders have the ability to manage their trades according to the way the trade develops, and quickly close contracts at early profits or if the losses sustained are increasing by the minute.
Nadex does not profit or lose money from clients’ trading activities, as the contracts are directly transmitted between traders. Nadex only acts as a facilitator and not as a counterparty to traders’ positions in the market. Therefore, Nadex makes its revenue from fees of trading, which specifies a minimum of $1 per contract. Nadex has an upper ceiling on the fees, which is limited to $50 per trade, regardless of the contract size. The Nadex fees of trading are quite nominal, which is a small price to pay for complete peace of mind. Larger traders will be particularly happy that Nadex only charges $50 per trade without any exponential increase in the trading costs or risks.
Nadex Binary Options Trading Platform
The Nadex trading platform is designed with the trader in mind and has not aimed to change the way traders approach the markets drastically. Of course, Nadex products are slightly different to what traders are used to, but the Nadex platform enables traders to trade the markets with confidence and ease. The fully online web-based platform does not require any downloads and can be modified according to a trader’s preferences. Most binary options trading platforms are developed on a browser-based interface, which is why traders will right at home with the Nadex trading software.
The Nadex web-based platform does not make any compromises on the safety aspect of trading, as it follows all the latest encryption tools for ensuring the safety of investors. The ability to access Nadex accounts through a browser does help traders to invest in the markets through remote access, without needing to invest in a dedicated trading device. Nadex platforms are also an excellent option for traders who are unable to trade the markets at their place of work or other avenues. Nadex web platforms are compatible with Chrome, Firefox, IE, and Safari, for both Windows and Mac OS X operating systems.
Nadex Mobile Trading
For a dedicated mobile trading experience, Nadex mobile apps do create a robust and reliable platform that allows traders to access Nadex products through both iOS and Android operating systems. The Nadex trading apps are indeed one of the best mobile trading applications in the market and provide an excellent user interface for both smartphones and tablets. The Nadex mobile apps offer all the convenience and trading features that one gets to enjoy from the web-based platform and offers a no-compromise trading environment, regardless of the reduced screen real estate. We are mightily impressed with the mobile platforms offered by Nadex, and really feel that they are more than adequate for most traders’ requirements.
Our only concern was that the broker mentions about the incompatibility of their web-trader version with a mobile web browser. With most of our reviews, we did find that browser-based versions of the trading platform do work well on a mobile device, but Nadex has claimed the contrary. Nevertheless, the availability of dedicated mobile apps does seem to do the job well for a majority of Nadex traders.
Nadex Account Types & Minimum Deposit
Nadex offers only a single type of trading account, but there are different account features for various types of traders. For example, the broker has created two different versions of their trading accounts for both US traders and international traders, which have slightly different account conditions to suit the existing CFTC regulations. The company also offers a Business account for companies, trusts, partnerships, LLCs, and corporations, in a bid to diversify its portfolio to a global audience. In spite of the different account options, all individual account holders are subjected to a Nadex minimum deposit of $250. A minimum deposit of $250 is indeed representative of the minimum investment requirement as stipulated by most of the leading binary options brokers, but Nadex offers the added advantage of US regulation.
If you are a bit concerned about the minimum deposit requirements, you may open an account at other leading binary options brokers that offer trading accounts for a significantly lower amount. However, we really feel that Nadex does not charge any high costs of trading, as is common among brokers based in the US. One of the major concerns about Nadex is their payment options, as the company only accepts payments through debit cards, checks, or bank wire transfers. Traders cannot make a payment through credit cards or online payment processors, which does seem to be a major drawback for Nadex clients. Nadex intends to reduce financial discrepancies with its payment policies, but online payment processors such as Skrill and PayPal are undeniably one of the more advanced and secure payment options in the financial markets.
Aside from debit card transfers, both check and wire transfer payments involve a longer processing time, but all payments will be processed according to the guidelines issued by the CFTC, the global anti-money laundering laws, and the US authorities. The company does not have any complaint or failed transaction to date, as all clients’ investments receive the top-most priority.
Nadex is a part of a select few binary options brokers that do not provide a bonus to its clients for any deposits. The concept of free money is quite rampant in the binary options market, but regulated brokers from the US and the EU are now turning away from providing free money to its clients. There are also several restrictions concerning bonuses and promotional offers, which make it difficult for clients to enjoy free money credited to their account.
However, in order to entice traders into opening an account at Nadex, the broker has created the concept of free trading days. Free trading days are nothing but days where the broker waivers off its fees of trading, and are provided according to the size of the initial deposit. Free trading days are only applicable from the date of the first deposit and are available for a maximum of 10 days. The broker has also specified a minimum deposit of $500 for free trading days, and traders are eligible to enjoy concessions for two days maximum. The broker starts charging its regular fees of trading after the free trading days are completed.
Demo accounts are a premium offering in the binary options markets, and unlike Forex trading demo accounts, it is quite difficult to sign up for a free binary options demo. Since Nadex offers a unique binary options product, the company has provided an unlimited and permanent demo account that offers a glimpse into all the different aspects of trading with Nadex. The demo account is a good trading resource that should be considered as a valuable tool for trading, especially for new and amateur binary options traders.
Nadex Customer Support
Trading with a US regulated binary options company has several advantages, the chief among which is the professional and friendly attitude demonstrated by the company’s customer service department. With access to an email address, phone, and web contact form, Nadex maintains a 24 hours-a-day live support channel that is available for six days a week. Traders can also contact the customer service department through a toll-free number, but we did miss a live chat or VOIP feature. Nonetheless, Nadex has an excellent customer support team that can address all of your queries without any hesitation.
Nadex Trader Resources
Both new and advanced traders can utilise the company’s advanced materials to learn all the different features of the binary options markets for a profitable trading career. The company’s educational materials are designed to educate and inform but do not provide any guarantees or promises about succeeding in the markets. Nadex does not have any conflict of interest with its clients, and the broker does not create a situation where traders are misled into making wrong choices with their investments. Regardless, it is up to the trader to choose what works best and to make investment decisions only after careful contemplation of their risks and trading strategies.
- Nadex is a US-based binary options company that accepts traders from the US, and is regulated by the CFTC.
- Nadex offers excellent payouts and trade management features.
- The Nadex trading platform is excellent for binary options trading.
- Availability of mobile apps for iOS and Android.
- Top of the line customer support for quick and responsive service.
- Offers a permanent, unlimited, and free demo account.
- No conflict of interest.
- No bonus offered to traders.
- A limited number of tradable assets.
What Is The Minimum Deposit For A Nadex Account?
Nadex requires a minimum deposit of $250 for opening an account.
Is Nadex A Scam?
No, Nadex is a CFTC regulated binary options exchange that is located in Chicago, USA.
Does Nadex Offer Trading Education?
Yes, Nadex provides a comprehensive trader education program and training resources that are suitable for all traders.