Nadex: The First U.S.-Based Exchange to Offer Binary Trading Opportunities in 29 Global Markets

Nadex: The First U.S.-Based Exchange to Offer Binary Trading Opportunities in 29 Global Markets

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Amber Brooks
By: Amber Brooks
Posted: September 26, 2016
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In a Nutshell: Nadex, short for the North American Derivative Exchange, provides simple and accessible trading options for individuals with all levels of experience. You can log in to your account from a desktop or mobile device and trade in 29 global markets on as many as 2,500 contracts at a time. Whether you want to trade on the price of crude oil or Bitcoin, the Nadex exchange is an easy — and quick — avenue into the market, particularly for beginners. The site’s resources educate traders so they can make responsible choices and take reasonable risks with their money. Based in the U.S., Nadex is regulated by the Commodity Futures Trading Commission, ensuring that its practices are aboveboard. Anyone can trade in multiple markets from a single account by using Nadex’s reliable and convenient exchange platform.

Imagine a truck driver cruising down the highway at 70mph, one hand on the wheel, the other hanging out the window. He’s been on the road for five hours with another three ahead of him. Miles of boredom stretch between him and his destination. As the sun sinks down to tinge the road pale pink, he starts looking for something to occupy his wandering mind.

He turns on the radio, but he doesn’t find music stimulating enough — he’s heard it all so many times — instead he decides to tune in to the day’s financial news.

As he skates in and out of traffic, he learns the ins and outs of the market too. It keeps him alert and gives him important tidbits like flooding in Mississippi is causing crude oil prices to rise. When he reaches a pit stop, he swings down from his truck, stretches his legs, and takes out his phone.

He opens his online trading account and opens a contract on crude oil, putting in $50 and clicking “Buy.” Then he gets back on the road. By the time he reaches his destination, his trade will be complete — and if the price of crude oil went up, he’ll be $50 richer.

The Nadex exchange platform is open to individuals who want to apply their financial knowledge and take a limited risk through trading. Users can trade binary options and spreads from anywhere using a desktop or mobile device. Trading binary options is as easy as answering a yes/no question, and returns come back in less than a week.

Dan Cook, Director of Business Development for Nadex

Dan Cook, the Director of Business Development at Nadex, has seen a lot of growth in the binary market.

Dan Cook, Director of Business Development, tells us that a growing majority of the people who frequent Nadex are non-professionals and professionals who don’t have an official background in finance but still want a piece of the pie.

“We have a large set of truckers,” he says, “who’ve really adapted to our mobile platforms — hopefully they’re not driving down the road hauling 60,000 pounds and checking their positions — but when they do stop, they can log in and express opinions on the market.”

In an average week, over 5,000 short-term contracts are traded on Nadex.

Touting itself as the first and largest U.S.-based exchange for binary options, the user-friendly software welcomes both newcomers and seasoned pros. From a desktop or mobile device, you can access your account and take advantage of short-term trading opportunities in 29 global markets. In a secure and inclusive space, Nadex lists over 10,000 contracts a day.

“What I love about Nadex is we’ve democratized the markets,” Dan explains, “allowing individuals to participate in contracts with a smaller size and limited risk.”

A Regulated Space, Nadex Levels the Playing Field

Currently, Nadex is the only exchange in the U.S. to offer binary options in a wide range of markets. The desktop, mobile, or demo version makes trading accessible to individual users. Nadex mobile provides a seamless interface and constant connection to the market.

The platform is regulated by the Commodity Futures Trading Commission (CFTC) and follows all rules closely to protect consumers.

“One of the biggest things I would suggest to anyone for any trading,” the Director of Business Development states, “is to make sure you’re dealing with a firm that is regulated by recognized financial authorities like we are.”

Stability, transparency, and accountability are the precepts that make this exchange a safe place for traders. Members are trading against other members, not against Nadex, so the company has no vested interest in the outcome — besides wanting its members to succeed and continue to use the platform for trading.

Screenshot of Nadex's demo page

Founded in 2004, Nadex provides a legal and mobile-friendly way for individuals to participate in the market.

A good place for beginners, the Nadex demo offers a test drive of all the features of the software for no cost and no risk. In hypothetical trades, you’ll play with virtual funds, starting at $25,000, for an unlimited period of time. Who knows how much hypothetical riches that will lead you to. The demo never expires and serves as a helpful learning experience for traders looking to try strategies and build confidence.

When you’re ready to trade for keeps, you’ll create an account and put in a minimum of $100 (real money) starting balance to use on trading opportunities — there are no broker commissions and no obligation to trade.

How it Works: Apply Online and Start Trading in 5 Minutes

Becoming a member of the exchange typically takes no more than five minutes. When you fill out a brief application, several automated checks verify your identity to protect you from fraud. After that, you’re in and ready to start trading immediately.

Screenshot of the Nadex application page

“Binaries aren’t a different market,” Dan says. “They’re just a different way to express opinions about the market.”

Nadex is very simple, even for beginners, to use. Basically, get your ticket, make your prediction, and wait to see if you’re right. At the top of the page, you’ll see how much money you have available for trading. You can put in money using a debit card or bank transfer and then use the provided filters to make as many as 2,500 trades at a time.

The market filters include market (commodities, events, forex, etc.), asset (gold, crude oil, currency, etc.), time (from five minutes to one week), and price (buy or sell at this price). After you select your preferences and click “Save,” you can either wait for the trade to expire or close early if you change your mind.

One of the great benefits of Nadex is the ability for individuals to lock in their profits before the expiration time.

Nadex offers two types of trades: binary options and spreads. Both of these are available in the same interface, and you can do either or both depending on how risk-averse or financially savvy you are.

1. Trade in Binary Options: Check Yes or No

Nadex specializes in trading binary options, offering these simple avenues to get you into trading.

As the name “binary” implies, there are two options for traders to select: Is the price of gold going to be higher than this number? And you say either “yes” (buy) or “no” (sell). You go all in and, depending on if you’re right or wrong, you’ll either make or lose money — but you’ll never lose more than you put in.

Nadex tells you the maximum profits/losses for any trade you make. Really, this site can tell you anything you care to know about binary options with definitions and tutorials about binary options.

Binary options last no longer than a week. These types of contracts are a one-time deal of an over/under on a certain price at a specific time. A binary option will have one of two outcomes at expiration: either the trader will receive the full value of the contract or they receive nothing.

“We really believe in these contracts,” Dan explains. “We believe in the limited risk aspect of them.”

2. Trade in Spreads: Cap Your Losses

Similar to binary options but without the all-or-nothing payouts, a Nadex spread lets you trade movements (either up or down) between two price levels. With the spread option, you give up the potential for unlimited profits but also rid yourself of unlimited losses.

Nadex clearly defines the risk for members, showing the range of returns (from best-case to worst-case) you will get back for your trade. These protections are built into every spread.

The spread price closely follows the market — which differentiates it from a binary option. The value will stay within the lower and upper price level (called the floor and ceiling, respectively) listed when you traded in. This is a short-term and fast-moving option that’s safe for individuals. Nadex highlights the maximums and minimums for you so you know what you’re getting into before you choose that spread.

Nadex’s online resources relate everything traders should know about spreads including what spreads are and what their benefits are.

Once you make your selection and place your order, you can watch your real-time profits and manage your spread trade until it expires — or until you choose to leave. However, you will never lose more than the maximum loss, so it’s a relatively safe bet. As the site says, with spreads you can buy time to be right and protection against being wrong.

The Learning Center Teaches Traders to Make Good Choices

Education is a priority for Nadex because it makes trade more accessible and profitable for its user base.

“If someone’s interested in the market and new to trade, the Learning Center is definitely the best place to start,” Dan says. “We’ll give them all the time they want so that they can be comfortable and be sensible when they come into trade.”

The company’s webinars, training videos, and handbooks are all excellent multi-media resources for people with any level of knowledge or experience. The website clearly and thoroughly explains all topics relating to its exchange from basic term definitions to advanced trading strategies.

Screenshot of Nadex's trader education page

“Really any form of trading looks a lot like gambling,” Dan says, “but where trading differs is managing the risk and having an expected outcome through the analysis of the market.”

Several times a week, educational webinars allow viewers to ask a trading professional questions live (the archived versions of these discussions are also available). Hundreds of videos await beginners on Nadex’s website, so anyone can study up particular types of trade.

Relevant trade examples, using a concrete hypothetical, walk readers through how to execute trades such as buying or selling a position. Additionally, free real-time charts and dates let traders check out what analysts are saying about the market before choosing to buy or sell. All these resources of trader expertise offer users the fundamentals to make good decisions on an exchange.

No Sales Pitch, No Cold Calls, Just Stellar Customer Service

The Nadex team emphasizes customer service, helping clients understand and use the platform. From a simple password reset to arcane questions about the market, Nadex is there for you. Call (877) 776-2339 to get connected with an invested customer agent.

“Probably our largest team is our customer service team,” Dan says. “It’s very important, particularly because this is a new market, that when the phone rings we answer it.

The Director of Business Development also tells us this business has a policy of no cold calls, no sales pitches, and no gimmicks. The team’s role is to help customers, not tell people what to do with their money. New account holders will get a courtesy call from Nadex, just to see that they feel comfortable with the software and everything is set up properly.

Far From a Gamble: At Nadex, Traders Learn to Profit

It doesn’t take a PhD in economics to become a trader. Anyone can learn the basics, get an account, put in some money, and see what comes of it. Whether you’re a truck driver on the road or a lawyer in court, Nadex is a versatile option for trading in the market at low-risk and low-cost.

Nadex logo

Accessible and convenient, Nadex is a great tool for on-the-go traders.

“Nadex is a really unique experience,” Dan says. “If somebody wants to trade oil, gold, or stock index futures, they can go to other places, but most platforms are designed for institutions, whereas we’re designed for the individual trader.”

In the end, you’ll get out of it what you put in. The more you know, the easier it’ll be to take calculated risks and make profits on the exchange. Binary options and spreads offer a clear choice and minimized risk, but it takes analysis to trade responsibly.

On the Nadex platform, you don’t lose more than you put up for trade, so the power is in your hands to decide what you’re willing to spend and potentially gain.

“We’ve just scratched the surface of binary trading,” Dan adds. “As I look to the future, I see continued growth. Ten years from now, I think it’ll be much more of a household name as the word spreads about this legitimate industry.”