Nadex (North American Derivatives Exchange) is a US-based, retail-focused, CFTC regulated exchange that offers binary options, call spreads and Touch Brackets, making it our top choice for US traders. Nadex is owned by IG Group, a prominent international provider for CFD trading, Spread Betting and Share Dealing. The company headquarters are based in Chicago, Illinois and subject to US law. Nadex’s legal information is completely transparent and easily available on their website.
Is Nadex A Scam?
Nadex is a US exchange regulated by the Commodity Futures Trading Commission (CFTC). Nadex is NOT a scam, but the real thing. For further reference, see the CFTC Fraud Advisory announcements on Binary Options.
Editor’s Note – Why Nadex DOESN’T Suck in 50 Words
Nadex is one of only a few legally operating, CFTC designated, binary options exchanges based in the US (Cantor Exchange is another worth mentioning). This means a number of things for both US-based and international traders (Nadex accepts accounts from various countries around the world). First and foremost, it means CFTC oversight, secure withdrawals and access to all the top assets you have come to know and love.
Why Nadex Might Suck
You might not like Nadex because it is not the same as the trading you remember from old off-shore binary options brokers. Nadex is not based on spot prices and you are not trading against the house, which means market pressures affect your trading, and binary options are listed with fixed strike prices.
Should I Open an Account with Nadex?
Although trading with Nadex is much different than European style binary options, the idea is the same. Nadex offers several types of trading instruments – binary options, call spreads and Touch Brackets:
Nadex Binary Options are financial instruments that turn every trade into a simple question: will this market be above this price at this time? Binary options are based on the 0-100 model and are bought and sold in lots. This means if a trade expires OTM, it is worth nothing. If a trade closes ITM, it is worth $100. Please note that your profit or loss is reflective of what you paid to place the trade, including fees. You can click here for more on how to trade Nadex Binary Options.
Nadex Call Spreads are a single contract with a floor and a ceiling range. The floor represents the lowest level the contract can trade, and the ceiling represents the highest level a contract can trade. We think call spreads trade like spot Forex but have training wheels in the form of profit/loss limits, but it’s the binary return options that we are here for.
Nadex Touch Brackets enable you to make trades based on price action within a predefined price range. Each contract has a floor and a ceiling offering a natural price target with known risk and reward. Touch Brackets track the movement of the underlying market price. If the Nadex Underlying Indicative Index touches either the floor or the ceiling of the Touch Bracket, then the contract expires immediately. That way you know maximum profit targets and the maximum risk if your trade goes against you. And, you can always place an order to close a position prior to expiration.
The asset list at Nadex is pretty good. Not as large as others I have seen, but the good news is that it is growing all the time. There are currently 8 major indices, 10 Forex pairs, 7 commodities, 1 cryptocurrency, and 3 Economic Events contracts to choose from. Indices include the major US, European, Japanese and Chinese markets. All the major Forex pairs are represented, as well as commodities including gold, silver, copper, oil, natural gas, soybeans, and corn. The only cryptocurrency is Bitcoin.
You can trade quite a few markets in short-term five and twenty-minute binary options contracts. Expiry is where you might get a little confused but don’t worry, it’s not too difficult to understand. Each asset has a list of set expiry times which can range from 5 minutes to intra-day, to end of day and end of the week. You can hold your binary options until expiry and get your expected return, or you can sell it at any time beforehand that you choose. Nadex binary options are completely tradable, so long as there are willing buyers and sellers, which is similar but far more advanced than Early Out or Close Now features you find elsewhere.
Bitcoin Trading At Nadex
Nadex entered the cryptocurrency market with the addition of Bitcoin Call Spreads. So far they only have two Bitcoin contracts, one with a weekly and one with a monthly expiry, but we expect to see them add more as cryptocurrencies gain wider acceptance. The call spreads are a bit different than the standard binary option, but still, are very easy to trade. You can sell your position to lock in profits or cut losses at any time you want.
The name “spread” comes from the fact that there is an upper and lower limit to prices, that is the spread. The limits cap gains and losses, but profits are based on the amount of pip movement in the underlying asset.
Nadex gets its share of complaints, but which exchange/broker doesn’t. The difference is that complaints here are from traders who aren’t allowed to join, traders who fail to understand the system and traders looking for more services. What you don’t find are complaints about scams, shady withdrawals or fraud. One common complaint I find is that there aren’t enough assets.
The number one complaint is that it’s not as easy as CySEC style options, but that doesn’t matter now as CySEC options aren’t the same as they used to be.
Nadex does not offer any promotions or bonuses at this time. In the past, they have run some limited fee-free promotions.
Nadex has fast withdrawals. They can be made by wire transfer or ACH transfer (US Only) to your bank account. All withdrawals are processed within one business day and returned to your account within 3-5 business days. If you funded via debit card, to make a withdrawal you will first have to send in bank account verification documents, including a bank statement with your name, account # and a transaction to Nadex shown. It’s a pain, but trust me, it’s worth it for fast, secure withdrawals and its meant to protect you.
Nadex extra’s includes Event Binaries, Call Spreads, and Touch Brackets. Also, their NadexGo app is a great platform to trade on.
Event binaries are options on economic events like the weekly jobless claims and monthly NFP numbers.
Call spreads are like binary options in that they have a max and minimum payout, but trade like forex with profit counted in pips while the asset price is within the “spread”. Other features include 100% tradability as in you can buy or sell whenever you want and are not limited to holding until expiration.
Nadex Touch Brackets are a combination of a spread and range option that trades just like a forex pair, except it is automatically expired if the upper or lower boundary is reached. Sounds just like the call spreads except with automatic expiry when the trade maxes out. The micro-lot sizes of Touch Brackets provide flexibility to trade with low capital requirements.
The Nadex mobile platform, NadexGo, is great. It is a Progressive Web App (PWA) that automatically updates itself in real time, so it is always functioning at its best. It includes charts, trading, and more. It’s fast, intuitive, and well-designed.
User Friendliness – 15/20
This is not the most user-friendly platform you will find. First off, it is not that simple to join. When you get on the platform you will find navigation a little confusing, but once you get a grip on it you will have no trouble with using Nadex trading platform. And, if you are like me, you will like it a lot.
Number of Assets and Expiry – 18/20
Nadex doesn’t have too many assets, but it does have all the ones that matter most: 8 indices, 10 currency pairs, 7 commodities, and 1 cryptocurrency. Plus you can also find economic event contracts, which I find to be a lot of fun. Additionally, new assets are being added regularly as the market calls for them.
Commissions, Support And Effective Returns – 19/20
Nadex has another difference from other brokers/exchanges – it charges small fees… but they are really low compared to what CySEC-style brokers keep when you profit. Nadex charges a $1.00 per side, capped at $50.00 per side. If you hold the position until expiration and it closes OTM (zero), then you will not be charged a settlement fee. Support is really good, they have a full staff available to answer your questions and help get you started. Effective returns can be really good, too.
Deposit, Payment and Bonus – 19/20
Nadex is the best exchange for any traders to deposit with (they allow accounts from various countries all over the world). Payments are fast, usually made within a few days of your request, provided the funds are available within your account and there are no verification issues to tie up your account.
Broker Extra’s – 19/20
There really isn’t one thing specifically that is extra about this exchange, except for the whole thing. For one, it’s not a “broker”, it’s an exchange. It has a vested interest in providing safe and legitimate trading because it is in business to provide the platform, not to take the other side of your trades. For another, the freedom for you to buy or sell whenever you want makes them infinitely more flexible than any other binary broker on the market. Trading with Nadex allows you to potentially increase your profits while keeping your risk always under strict control.
NADEX Overall Ratings (90) + CFTC Regulated (+3) = 93/100
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