The Best Binary Options Broker 2020!
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Nadex Review – is nadex.com scam or good binary options exchange?
|Minimum deposit||Min. bet size||Payout %||Bonuses||Trading platform||Regulation|
|$250||$1||Up to 100%||No||Nadex Trader||CFTC|
Nadex, one of the two major binary options exchanges operating in the US (together with Cantor) offers trading in wide range of stock indices, forex, commodities and economic events. Its trading conditions are really good, with limited risk and predefined maximum possible loss and besides, as opposed to the “traditional” binary options brokers, trading with NAdex 100% legal. Not to mention that an exchange makes its money by facilitating the trades, not when its clients lose, which is often the case with forex and binary options brokers.
Unlike most brokers offering OTC binary options, Nadex does not offer any bonus schemes. Instead, it really places a focus on education, taking it to a new level. There is a rich Learning Center on its website, where you can find free e-books, videos, trading examples, etc. Besides, Nadex regularly organizes free webinars on how to use its platform, and also, how to make consistent profit.
Nadex has two different account options, depending on whether its client is an individual or a business entity. Besides, it offers free permanent demo accounts either.
The Company. Security of Funds
North American Derivatives Exchange, Inc.
Nadex is the premier and largest CFTC-regulated derivatives exchange in the US, offering binary options and spreads to individual traders who seek low-cost, limited risk ways to trade the financial markets.
Launched in 2004 under the name “HedgeStreet”, Nadex was acquired by UK-based IG Group (LON: IGG) in 2007 and later renamed as the North American Derivatives Exchange. The group operates major forex and binary brokerage brand IG.
Despite the efforts of a number of financial regulators to ban or restrict over-the-counter binary options trading, it is available in many countries. This, however, is not the case with the US. Binary options trading in the USA is allowed only on regulated exchanges, so it is less risky and more transparent. Derivatives exchanges match buyers and sellers and do not take positions in any markets. They must be regulated by the US Commodity Futures Trading Commission (CFTC) and are required to keep clients’ funds in segregated accounts and to meet a number of other requirements.
For example, US-regulated derivatives exchanges are required to publish on their websites various transaction and position information, immediately after execution. All the required records must be available for inspection upon request by CFTC.
Minimum Initial Deposit
Nadex requires an initial deposit of $250 from its clients to start trading. Such initial investment is not high, as many OTC binary options brokers (some of which are unregulated) require similar or even higher amounts as a start. For example, CySEC-regulated StockPair requires $500 as a start.
The minimum bet size at Nadex is just $1, which allows for better risk management. Many brokers offering OTC binary options require more require more, for instance, with StockPair one can place a trade with no less than $20.
Instead of offering fixed payouts for the different instruments and expiry times, Nadex’s payout amount depends on the strike price that the trader was able to open the option at. As a the CFTC-regulated exchange, Nadex should offer its clients a choice of binaries with multiple strikes (not just current price) with various payouts depending on how close they are to price at expiration.
The Best Binary Options Broker 2020!
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If you hold the binary option until expiration, this value is either 100, if the contract expires in the money (100% payout), or zero if it does not. You may also close a position before expiration, either to take profits or cut losses. In that case, the settlement value is the price at which you exit.
Trading with Nadex also involves some exchange fees per lot which are capped to a set maximum and are fully disclosed and transparent. Clients of the exchange are charged $1 per contract to open/close, with a maximum of $50 per order. However, if a binary option expires at zero, Nadex waives the closing $1 settlement fee.
Nadex offers its clients a proprietary browser-based trading platform, called Nadex Trader (mobile apps are also available).
The assets available for trade are in the ‘Finder‘ window and after selecting a particular instrument, a market opens up the time frames on offer for expiry of the option. Clicking the asset in the market list (or the ‘Bid’ or ‘Offer’) will open the trading ticket screen. The maximum possible profit and loss are displayed on the order ticket and you have to enter that maximum risk amount in your account as collateral. So, you can never lose more than this amount on the trade, because you cannot initiate a trade without entering these values.
Nadex Trader gives you a real exchange trading experience, and real-time indicative market data is streaming directly from the exchange. The platform’s technical analysis and charting are among the best in the binary options sector.
Methods of Payment
Clients of Nadex have the following payment options: Debit Card ACH, (Bank Transfer), Wire Transfer (Telegraphic Transfer), and Paper Check.
Keep in mind that wire transfer withdrawals are charged with a $25 fee and that non-US customers are able to use only debit cards and international bank wire transfer.
Nadex, the US unit of IG Group, is the largest US-regulated binary options exchange. Meeting one of the strictest regulatory requirements worldwide, Nadex offers limited-risk trading in more than 10 000 instruments, forex and cryptocurrencies, commodities and stock indices on its professional web-based platform. To sum up the above:
|A CFTC-regulated derivatives exchange||No Signals service|
|Part of an international financial group (IG)||No bonuses|
|Trading costs – Not high and transparent|
|Trading with limited risk|
|Professional trading platform|
|Extensive product portfolio|
FXTM a regulated forex broker (regulated by CySEC, FCA and FSC), offering ECN trading on MT4 an MT5 platforms. Traders can start trading with as little as $10 and take advantage of tight fixed and variable spreads, flexible leverage and swap-free accounts.
XM is broker with great bonuses and promotions. Currently we are loving its $30 no deposit bonus and deposit bonus up to $5000. Add to this the fact that it’s EU-regulated and there’s nothing more you can ask for.
FXCM is one of the biggest forex brokers in the world, licensed and regulated on four continents. FXCM wins our admirations with its over 200,000 active live accounts and daily trading volumes of over $10 billion.
FxPro is a broker we are particularly keen on: it’s regulated in the UK, offers Metatrader 4 (MT4) and cTrader – where the spreads start at 0 pips, Level II Pricing and Full Market Depth. And the best part? With FxPro you get negative balance protection.
FBS is a broker with cool marketing and promotions. It runs an loyalty program, offers a $100 no-deposit bonus for all new clients outside EU willing to try out its services, and an FBS MasterCard is also available for faster deposits and withdrawals.
FxChoice is a IFSC regulated forex broker, serving clients from all over the world. It offers premium trading conditions, including high leverage, low spreads and no hedging, scalping and FIFO restrictions.
HotForex is a EU Regulated broker, offering wide variety of trading accounts, including Auto, Social and Zero spread accounts. The minimum intial deposit for a Micro account is only $50 and is combined with 1000:1 leverage – one of the highest in the industry.
Nadex – обзор и отзывы об официальной Американской торговой платформе
✅ Данная Торговая платформа доступна в стране Россия
Обзор торговых платформ: Nadex
Детальное изучение торговых площадок, предлагающих трейдерам различные финансовые инструменты для проведения торговых сделок в онлайн режиме, показывает, что большинство брокеров предоставляют свои услуги без оформления всех необходимых документов, подтверждающих законность их деятельности. Известная во всем мире торговая площадка Nadex – первая компания сумевшая легализовать операции с бинарными опционами на территории США. Регулирование деятельности брокера CFTC (Комиссией по торговле товарными фьючерсами) является 100% гарантией законности предоставляемых трейдерам услуг.
Общая информация о Nadex
Более десяти лет жители американских штатов пользуются финансовыми инструментами представленной компании для получения прибыли и приумножения своих сбережений. По документам фирма принадлежит IG Group (Лондон, Великобритания), но ее главный офис находится в штатах (Чикаго, Иллинойс). На данный момент услугами трейдинговой площадки могут пользоваться не только американцы, граждане других государств также имеют доступ к финансовым инструментам брокера. Созданное для nadex приложение существенно расширяет возможности трейдера и позволяет контролировать ситуацию на торговой платформе, независимо от местонахождения пользователя веб-ресурса.
Рассматриваемая торговая площадка позволяет проводить операции с одного аккаунта, независимо от выбранного финансового инструмента. Клиенты брокера могут заключать сделки, используя:
На рассматриваемой площадке предусмотрены специальные графики, демонстрирующие динамику изменений финансовых показателей по каждому активу.
На торговой площадке nadex логин, пароль и минимальная информация о пользователе не открывают доступ к финансовым инструментам брокера. Каждый трейдер должен заполнить подробную анкету и подготовить запрашиваемые документы (паспорт, счета за коммунальные услуги, социальную карту и т. п.), только после выполнения данных требований пользователь получит право осуществлять торговые сделки. Для обеспечения безопасности ресурса администрация площадки тщательно проверяет анкеты новых пользователей и применяет многоэтапную регистрацию аккаунтов.
Предусмотренный на платформе nadex демо счет позволяет начинающим трейдерам детально изучить, как проводятся сделки, что нужно делать для получения максимальной прибыли и т. д. Но прежде чем приступить к работе, опытные пользователи рекомендуют ознакомиться с учебным материалом, размещенным на данном веб-ресурсе (глоссарий, комментарии, видео и т. д.).
Работа на nadex: обзор и анализ факторов, о которых должен знать каждый трейдер
Главная особенность представленной торговой площадки заключается в том, что брокер не принимает участия в торгах. Его главная задача – выполнение посреднических функций, платформа является местом, где «встречаются» участники будущей финансовой операции.
Еще один важный момент, связан с тем, что финансовые средства клиентов хранятся на отдельных банковских счетах (деньги пользователей защищены от различных форс-мажорных ситуаций). Составляя для nadex обзор, опытные трейдеры обязательно указывают, что данная торговая платформа достигла высокого уровня развития, благодаря отзывам, советам/предложениям своих клиентов (достаточно редкое явления для любого коммерческого интернет-проекта).
Пополнение счета и вывод заработанных денежных средств
Кроме обучающего демо счета, о котором упоминалось выше, у пользователей торговой платформы есть возможность открыть индивидуальный (отдельно для граждан США и трейдеров из других стран) или трастовый счет (для компаний, зарегистрированных в американских штатах).
Ввод/вывод денежных средств для граждан и фирм из США осуществляются при помощи телеграфного/банковского перевода или дебетовой карты. Граждане других стран, чтобы решить данный вопрос, могут воспользоваться системой международных переводов и банковской (дебетовой) картой.
Минимальный размер депозита составляет 250 долларов. Для вывода денег администрация веб-ресурса попросит предоставить документы, подтверждающие личность клиента. После снятия финансовых средств со счета на Nadex и до момента получения денег, проходит 1-7 дней (зависит от индивидуальных особенностей каждой операции).
Еще одной особенностью представленной трейдинговой площадки является тот факт, что для проведения торговых операций пользователю не надо платить комиссионные. За предоставления возможности пользоваться финансовыми инструментами, трейдер платит всего один доллар за каждый контракт (удобно и недорого).
Преимущества и недостатки Nadex
Анализируя размещенную в сети информацию о платформе Nadex: отзывы, замечания, рекомендации и т. п., можно выделить самые важные достоинства данного веб-ресурса:
● невысокая стоимость предоставляемых услуг;
● забота о сохранении финансовых средств своих клиентов (деньги хранятся на счетах в надежных банках);
● одна из немногих торговых площадок, которая легально предоставляет свои услуги;
● деятельность компании контролируют американские регулирующие органы;
● веб-ресурс предлагает своим клиентам широкий выбор финансовых инструментов для проведения самых разнообразных торговых операций;
● предусмотрена защита денежных ресурсов клиентов от резких изменений стоимости активов;
● на сайте компании размещены учебные материалы, позволяющие новичку с нулевым уровнем подготовки, освоить принцип работы торговых площадок;
● предусмотрена возможность получения прибыли на краткосрочных контрактах.
Если в процессе работы у пользователя торговой платформы возникнут какие-то проблемы или вопросы, он может обратиться в службу поддержки. Для этих целей предусмотрена телефонная связь и электронная почта.
Основными «минусами» данной платформы являются:
● ограниченное количество способов ввода/вывода денежных средств;
● необходимость предоставления большого объема личной информации во время регистрации;
● некоторые пользователи считают, что 250 долл. – большая сумма для первого депозита.
Nadex Binary Option Basics in the U.S.
The most common definition found for an option is that it is an investment instrument (generally a contract) in which a trader purchases the option to buy or sell the underlying asset. In layman’s terms, the owner of a stock writes a buy (call) or sell (put) option on shares of that stock; an options trader purchases the ability, but not the obligation, to buy or sell the writer’s offered shares. The writer is obligated to conduct the transaction if the trader exercises the right they purchased.
These options are then traded between investors, varying in price with the asset they are based on. Nadex binary options, however, have fixed payouts—this means the investor will receive either all or none of the profit—and are popular because they are relatively easy to understand.
Binary options have complications when purchased outside of the U.S. There is not as much regulation, opening the doors for fraudulent activities. Authorities advise staying away from foreign binary options presented via websites. This means that if you want to trade binary options in the U.S., you’ll likely be trading “Nadex options.” Nadex is the primary binary options exchange in the U.S. Here’s a basic rundown of how these binary options work.
Binary Options in the U.S. (Nadex)
A Nadex binary option is a wager that the price of an asset will be above or below a specific price (called the strike price) at the time the option expires. For example, a trader would consider if the price of gold would be above a $1,550 strike price at 1:30 PM (the option expiration time). If the trader thought it would be, they would buy the option. If they thought it wouldn’t be above the strike price, they would try to sell any options they had.
Binary options are written for stock indexes, forex (currencies), commodities, news events, and bitcoin, with various strike prices and expiry dates or times. This makes them suitable for day traders and swing traders as they are geared towards the short-term.
The binary options are priced between $0 and $100. When the option expires, it’s worth either $0 or $100, depending on whether the underlying asset is above or below the strike price when the option expires. The price of the option is set by the buyers and sellers of the option contract and represents the approximate odds of the price reaching $0 or $100.
Binary options trading is much like visiting a casino, you are playing the odds.
For example, if the option is trading at $50, then traders view the odds of the option expiring at $0 or $100 as equal. If the option is trading at $20, traders view the odds of the option expiring at $0 as greater than expiring at $100.
You can buy, sell, close or hold an option at any time, at any price available, up until expiry. Should you choose to hold, the option will either be worth $0 (good if you sold options) or $100 (good if you bought options).
Maximum Profit and Loss
Profits and losses are created based on the difference between the expiry price, and the price at which you buy or sell the option.
If you buy an option—expecting the price of the underlying asset to be above the strike price at expiry—your maximum risk is your purchase price minus $0. For example, if you buy an option at $45, your maximum risk is $45 (you have risked the money you used to purchase the option). Your maximum profit is $100 minus your purchase price. In this case, your maximum profit is $55 (if the option maxes out).
If you sell a Nadex binary option—expecting the price of the underlying asset to be below the strike price at expiry—your maximum risk is $100 minus your sale price. For example, if you sell an option at $35 your maximum risk is $65. Your maximum reward is your sale price minus $0; in this case $35.
Every dollar the option contract moves is worth $1 in profit or loss. You can buy or sell multiple options to increase or decrease your gain or loss. For example, if you buy three Nadex binary options at $40, your maximum risk is 3 X $40=$120 and your maximum gain is 3 X $60 = $180. Try to keep your risk on each trade to a small percentage of your account’s capital.
Each trader is responsible for providing the capital to fund their trade. If you buy an option at $50, your maximum risk is $50. You need to have at least $50 in your account to fund the trade. The seller of the option, also risking $50, must have at least $50 to fund the trade.
The minimum deposit required to open a Nadex account is $250 (for direct trade members), although no minimum trading balance is required once the account is open since you can only open positions if you have enough capital.
FCM and Market Maker members are required to maintain minimum balances starting at $100,000 but have no membership fees.
Trading fees are $1 per option to enter or exit, and a $1 settlement fee per option (if in the money) at expiry, depending on the order lot sizes. Lots of 1 to 50 are charged the fees, and lots of 51 or over are not.
There is no charge if you are out of the money (out of the money means the strike price is above the market value, in the money means the strike price is below the market price). Fees are charged to enter and exit positions. If you hold an option until expiry and lose, you are not charged the exit fee. Nadex offers a demo account where you can try binary options trading risk-free.
Thoughts to Takeaway
If you want to trade binary options in the U.S., Nadex is the main place to do it. Nadex options differ from binary options traded elsewhere in the world. The structure is transparent, and each option has a price, underlying asset, and an expiry. At expiry the option is worth $0 or $100, creating a profit or loss for the traders involved.
Holding the option until expiry isn’t required. Buy, sell or close your options positions at any time up until expiry. You can open a basic trading account for as little $250, and there are no trading minimums except that you must have the capital available to cover the maximum risk on each trade you take.
Nadex is a fully regulated trading exchange, regulated by the CFTC (Commodity Futures Trading Commission), and is legally permitted to accept US residents as clients. Nadex operate in the US, but form part of the IG Group which is based in London. They offer a real exchange, with both buy and sell positions fully open to traders.
Delivering cutting edge trading tools, and advanced features, Nadex provide a high quality trading experience. The fully documented exchange fee highlights the transparent nature Nadex take to their service. They describe their business as:
“Serving the function of matching buyers and sellers of a contract in an unbiased manner (Nadex does not profit from gains or losses on a trade, rather it simply receives a fully disclosed exchange fee)”
Nadex offer their clients the following features and benefits:
How To Use The Trading Platform
Nadex provides a real exchange trading experience. This means traders have the option to buy or sell on both sides of the asset. The trader can also request their own strike price. If another client wants to trade the other side of the option, then it will be opened at that price.
The first choice to be made is the asset to trade. This can be located via the ‘Finder‘ window on the left of the trading platform. Selecting a market opens up the time frames on offer for expiry of the option (times are listed in Eastern Time).
The markets window will refresh once the expiry and asset have been selected. This will display the current price levels that can be traded. Generally, there will be roughly 10 price levels – for example, trading the Nasdaq offers 10 levels. Each level is traded based on whether the closing price (the price at expiry) will be above or below the level shown. The settlement price on Nadex binary options is 0 or 100, so the exchange prices will fluctuate between 0 and 100. 100 represents a positive outcome, (so an asset did finish above or below a certain price) and the option will settle at zero where the option had a negative outcome, so for example where the asset price did not finish above the target price. Remember a trader can buy or sell both a positive outcome, or negative.
Clicking the asset in the market list, or the ‘Bid’ or ‘Offer’ figures – will trigger the trading ticket screen to open. If the bid or offer buttons are clicked, this will result in the ticket opening with the ‘sell’ or ‘buy’ option pre-selected.
The trading ticket confirms expiry time, price level, bid size and the current bid and offer prices. Users then need to click the sell or buy buttons (if not already selected) and confirm the size (investment amount) of the trade. The figures along the bottom of the ticket will highlight the maximum loss and maximum payout based on the scale of trade entered – the ‘max loss’ can be intimidating, but trader can close trades at any time if the price moves against them. Traders can also alter the Price – this is the exchange element of Nadex trading. Traders request a price at a higher or lower level than the current price to wait and discover if their position is ‘matched’.
As each option can be openly traded, clients can close their open trades at any time – so profits can be taken, or losses reduced. The maximum and minimum figures on the ticket represent the two outcomes if the option is left to expire without further trading.
Once the trade is setup as required, traders click the ‘Place Order‘ button. Once matched, it will then appear in the ‘Open positions’ window. If the trade is ‘unmatched’ (either all of it, or partially) it will move into the ‘Working Orders’ screen. Both ‘Open Positions’ and ‘Working Orders’ will update as the order is matched. In addition to these windows, Nadex will also send an email confirmation. Another mail is also sent confirming when an order is settled.
Nadex offer binary trading on forex pairs, commodities (gold, silver etc) and stock indices. There is a full range of price levels for each asset, so if a trader is looking for a quick price move in a particular stock index, or a longer term trade in a currency pair, Nadex will provide it.
Nadex offer well over 5000 contracts to trade at any one time.
Touch Bracket™ contracts
The Nadex Touch Bracket™ contracts are a new type of contract that Nadex have introduced. The contract operates between two ‘brackets’ (a floor price, and a ceiling price). The price moves alongside the actual asset price between these price levels. The attraction of these levels are that they act as a built in risk management tool, no slippage – guaranteed. The cost of opening the trade is the maximum capital put at risk.
The flexible ‘micro lot’ trade sizes mean these contracts can be secured with low capital requirements for novice investors, but scaled up for professional trades to get the maximum out of their leveraged trades.
Nadex offer one the best, and most complete, mobile trading apps on the market. The application is free, and has been written and optimised for a variety of mobile platforms. The app is called NadexGo
The application operation slick, quick and importantly, contains every feature available on the full website. Account maintenance to charting, everything is there for traders in the trading app.
The layout is clear while still showing all the data a trader needs, making trading very simple. The dealing ticket trading area appears the same as on the full website platform, as it has already been optimised for ease of use.
The NadexGo mobile app includes every feature of the full site, and leads the way in the binary options sector.
Call Spreads Payouts
The payouts at Nadex are not easy to compare to other brokers – other brokers do not offer genuine exchange trading. The binary options will payout depending on the strike level that the trader was able to open the option at.
As an example, if a trader brought at 50 and the make up was 100, the payout is effectively 100% (they could have risked $100 for example, and received $200 when the trade settled), but if they brought at 70 and the make up was 100 then the payout dips to around 50% (The amount risked was larger and the profit was less).
Note there are trading fees incurred for opening a trade position as well as closing a position prior to expiration which is at $1 per contract per side. Otherwise contracts that are held until expiration will be charged $1 per contract settlement fee if finishing in the money. These charges are transparent (you will know exactly what each trade will incur), and still represent a ‘better value’ trade, than a more traditional option. Full details of Nadex fees are available on their site.
Nadex do not generate a lot of complaints. Traders on occasion struggle with the platform because it is very different to more widely known ‘over the counter’ brokers. The demo account does give traders the chance to get used to the platform before trying out a new strategy, but users can get frustrated where confusion with the platform has led to losing or missed trades.
The education materials supplied by the firm are very good. The platform is unique, and does require specific training material. Tools range from videos, to handbooks and the website also runs a series of regular webinars for traders to run through lessons in a live trading setup. Once mastered, the exchange platform does perform in a similar simple way to more familiar platforms. The fees charged for trading are clear and transparent, and again, do not tend to cause complaints.
The brand is certainly not a scam. Owned and operated by IG Group in London, themselves regulated by the FCA in the UK. The US exchange is overseen and regulated by the CFTC to offer trading to US residents.
The regulation for the firm could not be more strict, and users can login, deposit and trade in absolute confidence.
Withdrawal and Deposit Methods
Nadex allow US residents to fund their accounts via debit cards, ACH transfer of wire transfer. Non-US residents can use debit card, or wire only;
Where a wire transfer is above $5000, Nadex will refund the $20 banking fee into the trading account.
Withdrawals are only available via ACH or wire transfer. Non-US residents can only use wire transfer. The withdrawal options can be found in the ‘Account funding‘ menu within ‘My Accounts‘. ACH transfer withdrawals are free and take roughly 3 to 5 days, while a wire transfer will require a $25 fee to be paid, but is generally processed the next day.
Withdrawal details are not straight forward with Nadex, so it is worth clarifying them well before trying to request a payout. Many of these stages are required due to the CFTC regulations – but delays are a regular problem among traders and their brokers – it is an area to research thoroughly before funding an account. This ensures there are no shocks and traders know exactly what to expect when requesting a withdrawal.
Who regulates Nadex?
Nadex are regulated by the CFTC (US Commodity Futures Trading Commission). This represents one of the strongest levels of regulation in the sector.
Who owns Nadex?
Nadex are owned by the UK based IG Group. They have offices in London, and are listed on the London Stock Exchange. IG Group also operate the UK broker IG Index.
The Nadex website is available 24 hours a day, but many assets will only be available to trade based on their own regional trading hours. Like the London based stocks for example, will only be open for trading during UK trading hours but some products like the S&P500 are traded electronically around the clock. Some Forex pairs are traded across the globe and will therefore be open around the clock on week days – but the trade volume will vary at times.
Is Nadex a broker?
NADEX isn’t a binary options broker in the “traditional” sense. NADEX is an exchange and an exchange is where traders can meet to conduct business. Nadex provide the platform, which ensures that everything is compliant with CFTC regulations, and is the clearing house for Nadex trades that process all monies and other duties required.
Each time you trade, you are paying a $1 exchange fee per contract per side. Remember the exchange makes its money by facilitating the trade, not when you lose.
This is important as it takes away any conflict of interests that can arise when trading with an EU style broker. NADEX does not care if you win or lose, they charge a small fee per contract (full details on their site) and this is where their profit comes from.
Offshore style brokers make money when you lose, it is not in their interest for you to win which is why “account managers”, signals and autotraders offered by some brokers are often scams.
What makes NADEX even better, and where the real fun comes in, is who they facilitate your trading with. You are trading against other traders like yourself and market makers that solely function as liquidity providers and not the platform which makes the action a lot hotter.
How You Make Money On NADEX
How you make money on NADEX is by buying and selling binary options. These options function just like an EU style binary in some respects and do not in others. On the one hand they can be held until expiration in which case you will lose all or receive the maximum payout. On the other hand they are based on set strike prices and can be bought and sold continuously up to and until the time of expiry.
The biggest difference between them and why they trade differently is how they function. An EU style binary option uses the asset price at the time you make your purchase as the strike price. If price moves up or down from there you will lose or make money, depending on what type of option you bought. A NADEX binary option is based on a set strike price, chosen from a list of possibilities, and can be in or out of the money.
With an EU style option you can trade any amount you want, all you do is enter the number in the trade screen. At NADEX options are sold in lots so, for example, you want to buy EUR/USD at 1.0545 you will buy 1, or 2 or 10 lots, whatever you chose. The price of each lot will depend on the strike, if it is in or out of the money, and to some extent market pressure. The price of the options will run between $0 and $100 dollar, $0 is the minimum payout and $100 is the max. In the money options will cost more naturally, out of the money options will cost less. If, at the time of expiration, the option closes in the money you will receive $100 per lot. If the option closes out of the money you receive $0. Before the option expires the price will vary depending on the price of the underlying asset. The profit you make is the difference between what you pay and what you receive for in the money, $100. Typically, at the money options will cost about $50 which means a return on trading of $50, or 100%, way better than the 70% to 80% you get with EU style binary.
To say that NADEX binary options are a little confusing for new traders is a bit of an understatement. There are some truly major differences between trading these US CFTC regulated binary options and the more traditional spot binaries offered by the European and off-shore brokers. The great news though is that these differences open up whole new avenues for trading and profits that will never be available with other forms of binary trading.
Before we move on to the more intricate details of opening and closing NADEX positions let’s review the specific difference between spot binary and NADEX. Off-shore spot binary options brokers, speaking of the standard high/low digital option trade, have two types of positions; calls and puts. If you are bullish you buy a call, if you are bearish you buy a put and in both cases you are buying from the broker. If you win the broker pays you, if you lose the broker keeps the money. At no time are you able to sell an option other than in an Early Out situation. At NADEX they only have one type of position, called a lot, and it can be bought or sold. If you are bullish you buy it, if you are bearish you sell it.
How Buying And Selling Works
This is how it works. NADEX lots are listed at different strike prices, some are In-The-Money, some are Out-of-the-Money and one or two will be Near- or At-the-Money. For this discussion I will focus solely on the At-The-Money strike for simplicity and because both the long (buy, call, bullish) and short (sell, put, bearish) positions will cost about $50. The thing to remember is that in both cases, buying or selling, you are doing so to open a position. So, buying a NADEX lot is the same thing as buying an EU style call, selling a NADEX lot is the same thing, almost, as buying an EU style put. The difference is that with NADEX you SOLD TO OPEN, not Buy To Open, the bearish position so you get a CREDIT for doing so.
Look in the example below. In this chart of NADEX strikes for the 1PM expiry of EUR/USD the 1.0868 strike is At The Money. If you want to buy a long position, a call, it will cost you the offer price. This is the price at which another trader is OFFERING TO SELL. If you buy it at $56.00 and the asset prices closes above the strike price, In The Money, your max profit will be $44 which is the difference between what you paid and the max payout at expiration, $100. If you want to sell a short position, enter a put, you will receive the bid price. This is the price at which another trader is BIDDING TO BUY the option, in this case $50. This means that you will receive a credit of $50 into your account and will get to keep it if the asset price closes Out Of The Money (the other traders loses, you win). Your risk is if the asset price closes In The Money, if this happens you are responsible for paying out the $100 max payout but not to worry, since you took in $50 already it really only cost you $50 so your risk is $50.
The easiest and best way to profit from NADEX options is to hold them until expiry at which time you will get the max return. However, some times you may want to close early in order to lock in profits or cut losses and this is another area where some confusion can come in.
What you have to remember is that you’ve already OPENED a position, now you need to close it. If you’ve bought a long position, a call (buy to open), then to close it you SELL TO CLOSE and receive the bid price. If that price is above the price you paid for the option then you will make a profit. If you’ve sold a short position, sold to open, then in order to close the it you will need to BUY TO CLOSE.
Opening And Closing
The key is remembering two things. First, there is only one kind of position that you can either buy or sell to open. The second thing to remember is that in order to close your position you must do the OPPOSITE of what you did to open it. If you buy to open you sell to close, if you sell to open you sell to close.
A Beginners Guide To NADEX
The biggest complaint about NADEX is that it isn’t easy. Granted, NADEX is not as easy as trading at an offshore, EU or CySEC style digital binary options broker. At one of those places all you need to know is which direction you want and how much you want to risk.
When you hit enter the price of the underlying asset at that time is your strike price, if the asset prices moves in the right direction from there you are a winner and paid the percentage indicated when you bought the option. At NADEX it isn’t quite so simple but believe me when I say that it is far superior to any other form of binary trading I know.
There are three things you need to know when it comes to trading at NADEX:
1. Options are priced in the 0-100 method
Because they are binary in nature there are only two possible outcomes at expiry, either $0 or $100. If the option closes out of the money you get $0, if it closes in the money you get $100. The detail that makes trading work is that while the option is live, before it expires, the value will fluctuate between $0 and $100 based on the movement of the underlying asset and market pressures. If the option is out of the money it will cost less, if it is in the money it will cost more.
Your profit at expiry is the difference between what you pay and what you receive. If you pay $45 and receive $100 because the option expired in the money you profit $55 or 122%. Please note that I said 122%, far better returns than what you will find elsewhere. What is important to note, you do not have to hold NADEX options until expiry, they can be bought or sold at any time. If your trade moves in the money and your option shows a profit you can sell but you will probably not get the maximum return.
2. NADEX binary options trade in “lots” priced by the market
Things affecting price include the price of the asset, the strike price of the option and the amount of time until expiry. At an offshore broker there is no market pressure affecting prices, if you wanted to trade $500 you enter $500 in the amount box click enter and the trade is done, you have one position for $500. With the “lot system” if you want to trade $500 and 1(one) lot cost $50 you would need to buy 10(ten) of them. If the lot cost $65 you would only be able to buy 7(seven) without going over your limit.
3. Strike prices
Each asset will have a number of listed expiries with a number of available strike prices for each. The strike price is the price level at which the option will be in/out of the money. When it comes to pricing the At-the-money options will always trade near $50 which shows a roughly 50/50 chance for the option to move up or down. When the strike price is in-the-money, that is the asset price has already surpassed the strike price, it will cost more because there is a higher chance for it to close profitably. The strikes will get more expensive the deeper in-the-money you go until they are fully priced. When the strike price is out of the money, that is the asset price is below the strike price, it will cost less than $50 and will get cheaper the further OTM you go until they are completely worthless. In terms of standard, directional style trading, an ITM or ATM option is a less risky trade while an OTM option is more risky. Of course, with a strong signal an OTM option that costs only $30 or $40 will return 150% to 230%.
Simple Sell Strategies For NADEX Binary Options
NADEX binary options aren’t like EU style spot binary, you can actually sell them and get paid. Read on to find out how you can use these simple sell strategies.
Let’s first reiterate that NADEX options are sold in lots, option strikes are preset with some in the money and some out of the money, and that all options are worth either $0 or $100 at expiration. During the life of the option, the time between when it first becomes available to trade and expiration time, the price will fluctuate between $0 and $100 depending on strike and the movement of the underlying asset. In the case of a bullish position, a position in which you bought the strike in the belief that prices will move higher, your profit will be the difference between the price you pay for the position and the amount you are returned at expiry, either $0 or $100.
If the option expires out of the money and you get $0 you suffer a loss, the cost of the position. If the option expires in the money you get $100 and suffer a profit, $100 minus the cost of the option. If the option was purchased when at the money it probably cost about $50 and returned about $50, or 100%.
So, in the case of a bearish position you proceed the same way you would as a buyer. You “sell” the strike, meaning you pay the other side of the position from the buyer you’re matched up with. If the buyer put up $40, you would pay $60, which is $100 minus $40. The most you can lose is that $60. You profit if the option expires at zero, whereas the buyer profits if it expires at $100. In this case, if the binary expired worthless, you would get back your $60 plus the buyer’s $40, for a payout of $100.
Remember, ATM money options cost about $50 per lot. If you sell one for $50 and it closes in the money you a have to pay out $100, which is $50 of your money and $50 you received in option premium. If the option closes out of the money, which is what you want, you get to keep the premium (the owner of the option holds a worthless contract, you are required to pay nothing) and profit that amount.
The mechanics of buying and selling options at NADEX opens up quite a few possibilities. The simplest and perhaps most effective for directional binary options trades are hedging strategies. Hedging is when you use one position to offset the cost of another, or to help maximize profits before expiry. Think about this. You take a signal on a bullish trade and buy an ATM the option for $50. The underlying asset moves up to your next resistance target and stalls out but you are able to sell the next higher strike for $50 at the same time. This means that your total cost is now $0 dollars, all you have to do is wait until expiry. If the asset remains between the two strikes great, you make maximum return, if not you lose nothing.
More advanced traders can target non-directional strategies using sold options. These strategies work best in ranging markets, when asset prices are trending lower or when they are capped by resistance. One method is to target out of the money strikes that can be sold for a credit with a high likelihood of closing out of the money. Take for example this trade set up for the S&P 500. Prices are trending lower in the near term with two strike prices close enough to the money to have value, but far enough out to be fairly safe relative to price action. Please take note, these are already in the money so there is no need for ANY price movement. Sell these for a combined credit of $31.50, free and clear and all you have to do is hold them for 5 minutes.
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