- Commissions and Fees
- Investment Offerings
With so many trading platforms out there it’s hard to know which to choose. Nadex.com is a unique trading platform with many features for binary options traders. Read our in-depth review to decide if Nadex is the trading tool for you.
Nadex.com (North American Derivatives Exchange) is a regulated U.S. binary options trading exchange platform. It provides direct access trading to binary options, Touch Brackets™ and call spreads for currencies, commodities, and equity index futures. The U.S. Commodity Futures Trading Commission (CFTC) regulates the exchange which ensures the integrity of the marketplace and operations. They match buyers and sellers and do not take positions. This is important as there are a lot of questionable binary options brokers that operate like virtual online casinos with rigged decks (IE: trading against customer orders, delayed fills and withdrawal issues). Nadex provides both online and mobile platforms to make direct access trades without outside brokers. Nadex is owned and operated by IG Group (LON: IGG), a FTSE 250 financial firm.
The exchange is open 23 hours during the weekdays (Monday through Friday) from 6pm EST to 5pm EST the following day. On Friday, Nadex closes at 5pm EST and re-opens for trading at 6pm EST the following Sunday.
Nadex Commissions and Fees
Nadex charges a $1 fee per contract when opening a position and charges $1 per contract when closing a position.
There are no software fees and free demo account is available just for registering.
There is a $250 minimum deposit to open a live trading account. There are no account minimums or inactivity fees once a live trading account is open. Any additional funding has a minimum $100 amount which can be funded immediately with a U.S. debit card. ACH transfers may take three to five business days. Wire transfers are available for deposits and withdrawals.
Nadex Platform Features and Tools
The Nadex trading platform can be accessed through the web or through the mobile app available for Android and iOS. There is no stand-alone desktop download. One thing to keep in mind, you cannot have the live account platform running simultaneously on the web and on mobile together. If you open the platform on the mobile app, it will turn off the web access and vice-versa. This is common on most trading platforms for security reasons. If you need quotes or charts while away from desktop temporarily, you can access the demo-mode on the mobile without having the access cut to live account on your desktop.
While Nadex allows for short-selling, there is no margin accounts or leverage available for trading. This is probably a good thing considering the risky nature of binary options.
Nadex doesn’t provide fundamental research tools on the platform, however, the technical analysis tools are centered around the charts. Nadex also provides access to educational materials like free webinars and courses.
The HTML5 charting is exceptionally well designed. The incremental time selection is the deepest I’ve ever see, starting at 1-tick and 1-second charts up to monthly, including less popular four-hour charts. One thing to note is to make sure to select the Nadex Settlement Index for standalone charts. The Binary Ladder charts come with order entry levels on the chart. Some users may find it useful to place trades directly on the chart, but personally I find it takes up precious screen space, especially on the mobile version.
There are no news feeds on the platform. If traders want access to streaming market news, they will have to sign up for a standalone platform like Benzinga Pro.
There are many selections of pre-configured watch lists starting with All Master Spreads, Expiring Soon to Popular Binaries to Recently Trade. The Popular Binaries and Expiring Soon watch lists are my favorites since they tend to have the most activity which then helps to ensure more liquidity. Spreads can get exceptionally wide when liquidity thins out. Unfortunately, Nadex doesn’t provide a time and sales or volume statistics to give any clues on the liquidity. The only clues are when spreads get split by retail traders which can sometimes be spotted by odd-lot bid/asks.
Users can create and customize their own watch lists or use the pre-set watch lists like the most active stocks or benchmark index stocks like the S&P 500 or Nasdaq 100. Instruments can be linked to charts so simple click on any symbol in a watch list can quickly update the chart along with all your indicators and studies.
The order entry windows are designed like level 2 screens with bid size and price on the left and Offer price and size on the right, followed by additional layers of bids and offer below. Each order entry window displays the Max loss and Max win dollar amount, which is based on Order Limit price and Size (number of contracts). This helps traders to quantitatively define the risk and reward values on each trade. Market orders are available, but can be dangerous in volatile markets as spreads are wide to begin with.
Types of Contracts
There are three different types of options on Nadex:
Binary options contracts have a set expiration and strike price that it must close above by at least a fraction. The payout total is $100 minus whatever was paid for the option. For example, if a trader bought a 20-minute binary option for US 500 (equivalent to the S&P 500 e-mini) Sept > 2781.00 for $13.00, then the underlying US 500 indicator needs to close above 2781.00 to be considered in-the-money (ITM) at the time of expiration. If the US 500 closes at 2781.5, then the payout is $100, but the trader should subtract the cost of the option ($13.00) to derive the actual profit of $87. Out-of-the-money (OTM) options are priced cheaper than in-the-money options (ITM).
Call Spread contracts enable traders to take a position with a defined Max Loss and Max Win based on the range of the spread. It’s important to pay attention to the Nadex Indicative Index (NII) value price. The different between the NII value and the bid/ask is the premium attached to the spread. For example, an NII at 2778 with a bid/ask of 2779.6 and 2780.1, means there is a 2.1 difference or 21 pips of premium if you take an entry at the 2780.1 offer or 16 pips of premium if you sell/short the bid at 2779.6. If the contract is OTM, then the premium will be more than if it was ITM. There it’s important to be aware of the spread premium versus the underlying NII before taking a trade. This is very important if your contracts are OTM when the spread expires since they will expire worthless.
Touch Brackets™ are one of the newest offerings from Nadex. Touch Brackets are contracts that can be used to trade forex markets and stock indices with fixed risk/reward. Brackets can be bought or sold so traders can play both sides of the market. These contracts can be confusing at first, so make sure to review Nadex’s explanation. Basically, each bracket has a ceiling (top of range) and a floor (bottom of range). There are 4 weekly bracket options with different floors/ceilings relative to the market price. Brackets expire a) at the end of every week or b) if the ceiling or floor price is hit.
For example, you may buy into a US500 bracket at 2780 with a floor at 2770 and a ceiling at 2820. If the US500 hits 2770, you will automatically be stopped out for a loss (thus, the fixed risk). If the US500 hits 2820, you will automatically take profits (fixed reward). If the contract expires before the floor or ceiling is touched, your profit/loss will be equal to the difference between the market price and the floor or ceiling. For example, if the US500 closed at 2800 at the time the contract expired, you would make a profit of 20 points (2800 closing price – 2780 entry).
Note: Traders should be aware of the risks involved with trading binary options. While Nadex is a reputable company in the space, the options themselves are highly risky due to their “all-or-nothing” structure.
Nadex Customer Service
Nadex offers customer service via e-mail and phone support. Phone support is available from 3:00pm EST Sunday through 5:00pm EST Friday. Once an account is set-up, it’s a good idea to use an alternative e-mail address to receive trade e-mails. Nadex sends an e-mail for every single order transaction, even orders that don’t fill as well as adjusted orders, expired orders and cancelled orders. This applies to orders on both demo and live platforms. The order confirmation e-mails can easily overload your inbox quickly.
Can You Trust Nadex?
The binary options industry doesn’t have the most stellar reputation. FINRA has already brought cases against a few binary options brokers and continues to warn investors of the risk involved with trading these financial instruments.
Due to the nature of binary options contracts, these financial instruments can be attractive to gamblers, and many scams have been brought down for using “get rich quick” marketing messages.
To remain fair in our review, we need to treat all of the players in the industry as individual companies. A shady industry isn’t necessarily indicative of a shady company, and Nadex is by far the most reputable company in the space. Nadex is owned and operated by the IG Group, a multi-billion dollar company based out of London. The company is transparent and avoids overly aggressive marketing.
Binary options are inherently risky, but Nadex appears to be a trustworthy exchange if you choose to trade these contracts.
What Type of Trader Is Nadex Best Suited For?
Nadex is ideal for intra-day traders with small accounts that have a seasoned understanding of the underlying trading instruments and a methodology to trade them. While there are weekly binaries available, most of the contracts expire intra-day. The platform has a shallow learning curve and registering with the site enables the free demo account, which is almost identical to the live platform. New users should spend time on the demo before even considering making a live trade to get acclimated to the rhythm of the quote movements.
- Low-costs to start trading FX, indices, commodities and benchmark futures with a small account.
- Exceptional and flexible free real-time charts
- Improving liquidity as Nadex marketing efforts grow
- Mobile app is in-depth and quick
- Quick deposits through debit cards are instantaneous
- Simple fee schedule of $1 per-contract
- E-mail confirmation overload for active traders
- Bid and Offer spreads can be prohibitively wide during slow markets