A Comprehensive Nadex Review

The North American Derivatives Exchange, or Nadex for short, is a Chicago-based exchange specializing in the trading of managed risk financial products. Formerly known as HedgeStreet, Nadex launched in 2004 as the first internet-based US regulated derivatives exchange. With a core emphasis on retail traders, Nadex offers a variety of fixed risk financial products for trade. We explore the Nadex platform in detail in this comprehensive “Nadex Review”:

Nadex Review:  What’s Inside The Nadex Platform?

The Nadex platform lists 2 core derivative products for trade on a variety of underlying assets, Bull Spreads and Nadex Binary Options. For purposes of this Nadex Review we are concentrating solely on the Nadex binary options portion. Under these financial structures, retail traders can place trades on stock index futures, commodity futures, and spot forex markets. Nadex recently filed with the CFTC to list binary options on political events, most notably the upcoming US Presidential Elections. The Nadex application is currently under review.

Nadex Review: The Nadex Binary Options Difference

Clearly if you are reading this article on our Binary Options Weekly site you have a general idea of how binary options work from the standpoint of non-US based, non-regulated platforms. Nadex is different because it really is regulated and as such there are some key differences to keep in mind before trading Nadex binary options.

1)   The Nadex platform is more comparable to a TradeMonster, eTrade, and other traditional online brokerages and as such the first thing you’ll probably notice are the Fees. Unlike other non-regulated online binary options platforms like TradesRush where there are no trading fees, the trading of Nadex binary options incurs a commission which ranges from $0.25 per contract all the way up to $0.90 depending on the total number of contracts traded.

2)   Another area that is sure to stick out when trading Nadex binary options is Spread. Without substantial volume Nadex market makers are forced to price binary options with a decent spread in order to protect themselves from fast moves and to build in a profit margin for the business. As trading volume picks up I’m sure you’ll see the spreads decrease on the Nadex platform.

3)   Returns: Nadex binary options are priced based on a 0 to 100 scale. Thus if you purchase a Nadex binary option for 62, the maximum profit you can attain is $38 (100-62) and the maximum loss on the position is $62 your initial outlay. This works both ways in that if you sell that same Nadex binary options at $60 the maximum gain on the position is $60 (the amount collected) and the maximum loss is $40 ($100-$60). So as you can see the returns are not set at a specific percentage like most of the non-regulated platforms.

Traders can see and transact on binary options prices throughout the trading day. Nadex lists a variety of expiration dates for its binary options, most notably intraday, daily, weekly, and event based maturities.

As you can see there are some major differences between the Nadex platform and say the binary options trading platform at TradeRush, but as the popularity of these financial derivatives increase you are sure to see some convergence between the two types of platforms in a regulated environment which would be a win-win for everyone.

For those looking to trade binary options on the side I highly recommend either Banc de Binary or TradesRush for the simplicity, lack of fees, and generous returns (up to 700%!!!). If you are thinking about pursuing binary options trading from a more professional standpoint definitely check out Nadex. Either way make sure you download our free binary options trading course to prepare you for your trading journey. You can do so by entering your information in the sign up box in the upper right corner of this site or by clicking on the link below:

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Nadex Review