Commissions & Fees
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As any trader knows, the right broker could make a huge difference in your trading. NADEX, or the North American Derivatives Exchange, is one of the top exchanges. Read on here to find out if NADEX is the broker that has what your trading has been looking for.
The north American Derivatives exchange, or NADEX, is the leading exchange in the United States offering both binary options and spreads. It is regulated by the CFTC and based in Chicago, Illinois. Member funds are held in major US banks, allowing for secure and innovative ways to participate in global markets. NADEX gives you access to multiple markets with access to over 5000 hourly, daily, and weekly contracts traded six days a week, 23 hours a day. This is a brokerage firm that focuses on short-term trading, much as many other binary options brokers have around the world. In fact, NADEX is owned by IG Group, as it is the North American unit of that corporation. The corporation has a market capitalization of over US$3.5 billion as of February 2016 and is FTSE 250 listed.
Unlike many of the other binary options brokers around the world, NADEX isn’t in some type of regulatory trouble, is not in the process of trying to shore up its finances and is wholly and fully regulated in one of the most difficult regulation environments in the world. In order to be regulated in the United States, it takes larger amounts of capital than many other countries, including Europe. Because of this, the NADEX is without a doubt the safest and the premier binary options exchange as far as regulatory concerns and financial banking issues are concerned.
Account Opening for NADEX
NADEX allows individuals open up accounts with no deposit, but obviously you need to deposit money to place a trade. The minimum deposit is $100, and the process is quite quick. It can be done in just five minutes, with documentation being able to be uploaded through the platform itself. In general, it’s like any other brokerage firm where you need to show some form of government identification, and a utility bill or a bank statement showing residency.
It should be noted that in order to withdrawal money, you need to have the bank account and debit card or credit card verified. This is also a very quick and seamless process, as there seems to be people working in the accounting department 24 hours a day. Personally, I had my bank account verified at 9 PM local time on a Wednesday, with the turnaround taking less than an hour. Obviously, different types of banking accounts may take a little bit more time than others, but the fact that they could turn it around that quick in the middle of the night speaks volumes as to how quickly they can move overall.
As mentioned previously, the minimum deposit is $100, which can be done directly through the platform. Transactions are instantaneous, and your account is credited right away. However, depending on the deposit method, you may need the funds to clear before withdrawing them.
NADEX Product Offerings
As mentioned previously, NADEX offers binary options and call spreads. Some of the binary options that they offer our stock indices, Forex, commodities, and crypto currency. They even allow for binary options to trade economic events such as a federal funds rate increase. By trading binary options, you are betting on the future price of a financial asset with a fixed risk parameter.
Call spreads are simply betting on the movement between two price levels in either direction. In other words, you are risking a certain amount to the downside while aiming for a certain amount to the upside. You won’t face unlimited risk, and you won’t necessarily get stopped out only to watch the market turned back around. You are essentially betting on a range, and the overall direction. If it goes higher and you are long, you make money. However, if it goes against you lose money but only to a certain agreed upon level.
The following indices are available to trade through binary options and call spreads:
- Wall Street 30
- US 500
- US Tech 100
- US SmallCap 2000
- China 50
- FTSE 100
- Germany 30
- Japan 225
The following Forex pairs are available to trade through binary options and call spreads:
The following commodity markets are available to trade through binary options and call spreads:
- WTI Crude Oil
- Natural Gas
The following events are available to trade through binary options:
- Nonfarm Payroll
- Weekly Jobless Claims
- Fed Funds Rate
The following market is available only through call spreads:
NADEX Commissions and Fees
There are no fees per se at NADEX, only commissions. It is done in a very transparent and extraordinarily fair way. If you place an order with less than 50 contracts, the fee will be one dollar if you were to enter or exit before expiration. If you have more than 50 contracts placed at the same time, everything above that is free. Keep in mind that it is one dollar per side, meaning that if you open and close a 50 contract trade before expiration, you would be looking at $100 worth of commissions. Beyond that, if you hold on until expiration, if your trade is in the money, the fee is one dollar per contract. However, if your contracts are not in the money, then there is no settlement fee.
It takes a minute to get used to, but it is quite a fair way to charge, as it is straightforward and simple. However, keep in mind that if you are a short term trader, the fees will add up after a while. For example, if you were to place 20 trades over the course of a day, you could be looking at $40 in commission. If you hold on until expiration, it could be another $20 if you are in the money. However, with the way binary options move, I have found that the commissions will be more than likely the least of your issues. You will either be heavily in the money or not.
NADEX Platforms and Tools
NADEX offers three different platforms, including NADEX for Desktop, NADEX GO, and the Demo Account. The demo account gives you a simulated $25,000, and it shows you how to apply your strategies to the live account platforms.
NADEX for Desktop is a robust trading platform with the ability to show price ladder charts, which allow you to place orders directly from the chart. You can also select markets to analyze for your order placement all from the same screen. It runs on Mac, Windows, and even Linux systems. It is a relatively straightforward and simple platform to use, with decent charting. Keep in mind that this is a binary options broker though, so technical analysis only goes so far. If you are used to high-end platforms, this may be a bit of a letdown but it does do the job for the average binary options trader looking to bet on where the Australian dollar will move over the next hour. I have found over time that although I do like the charts on this platform, I do typically use other charting package is to get a better view of the “big picture.”
The platform doesn’t offer a newsfeed service, but quite frankly I don’t think that it is necessarily a deal breaker. Quite frankly, although most retail platforms will help the idea of giving you access to breaking news, by the time the average retail gets that news, the algorithmic traders have already placed their money in the market and you will be simply chasing the trade. These platforms are excellent for seeing support and resistance on short time frames, and that’s essentially what you’re looking at when your trading binary options. You want to know whether an asset is going to go higher or lower, not necessarily trying to invest in the longer-term moves or perhaps even the longer-term thesis.
I would give this platform a grade of “average”, not necessarily great, but not really bad either. It gets the job done and it is simple and intuitive to use. Execution is rather quick as you are plugged directly into the exchange, and not going through a third party vendor.
NADEX GO is the mobile version of the platform and works very much in the same manner. In fact, the two are hardly distinguishable at all, just graphically different. This is so that it can operate on mobile phones and tablets, but a simple few moments of observation and fiddling with the buttons will give you an idea as to how similar it is. I will say that the mobile app is better than most other platforms that I’ve seen.
Obviously, the biggest differentiator when it comes to NADEX is the fact that it is regulated in the United States. This means that American citizens can trade the binary options, and they are backed with a much more stringent regulatory body than most of the binary options brokers around the world. Quite frankly, if you are looking for safety of funds and regulatory adherence, NADEX is probably the only place you should be trading if you are looking for binary options.
The low barrier to entry is also a huge factor, as you can trade for as little as $100. You obviously can only lose a certain amount of money, as it is an options broker. The range of markets are pretty good, as it offers diversification in such indices as China 50, which isn’t necessarily easy to find in the United States. For those of you trading overseas, it may not be as big of a deal but it certainly is in America.
As I mentioned previously, NADEX verified by banking account at 9 PM Chicago time. This tells you just how on the ball they are when it comes to the idea of customer service, and I have found all of my dealings with NADEX to be extraordinarily quick and well handled. They are available six days a week, 24 hours a day. Basically, anytime the futures markets are open, there will be a way to contact customer service. They have a toll-free US phone number, as well as an international number that you can call. Beyond that, you can also contact customer service via email, which I have found to be rather quick as well.
If there’s only one thing that leads you to NADEX, it will be trustworthiness. They are simply far too heavily regulated and scrutinized by the CFTC to play games with your funds. NADEX is the sole option for American traders and was years in the making. Because IG backs NADEX, you also know that there is plenty of capitalization when it comes to the exchange. Unlike many market makers, they are not trading against you, they are matching orders. Simply put, if there are no orders at a specific price you are trying to get, you won’t get filled. Counterparty risk is simply not there, and even if it were, there is more than enough money to protect your account. By being regulated in the United States though, NADEX and IG have had to prove themselves through a strenuous regulatory process.
NADEX is the only game in town when it comes to trading binary options in the United States. Because of this, it has been scrutinized fully by the CFTC, and has been trusted by American traders for years. They do attract international clients as well, because unlike many of the binary options brokers out there, they are not unregulated or possibly regulated in a country that doesn’t do much stringent accounting. NADEX is probably the most trustworthy broker out there for this type of trading.
I have both deposited and withdrawal money from NADEX and have never had an issue.
- Heavy and reliable regulation with the CFTC
- Global markets able to be traded from single platform
- Call spreads available
- Predefined risk on all trades.
- Spreads on binary options are a bit wide
- No newsfeed
- Platform could be a bit more robust.e