Nadex Review: Huge Change & A New Direction for 2020

Nadex Review

Nadex offers a great platform for active traders with an interest in day trading, low fees, comprehensive educational material and good customer support.

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Nadex Review - Reviews & Ratings

Nadex is an ideal platform for active, short-term traders of binary options and spreads. The company is fully regulated, offers low, transparent fees, and great educational material. Its research and Insights, however, are lacking.

FAST FACTS:
• Demo Account: Yes
• Regulation: A CFTC regulated exchange
• Account Minimum: $250
• Fees: $1 contracts, and $50 maximum per trade
• Best for: Active traders with an interest in day trading
• Asset coverage: Forex pairs, stock indices, commodities, and unique products such as Bitcoin

Investor Warning: Trading on Nadex involves risk and may not be appropriate for all. Members risk losing their cost to enter any transaction, including fees. You should carefully consider whether trading on Nadex is appropriate for you in light of your investment experience and financial resources. Any trading decisions you make are solely your responsibility and at your own risk. Past performance is not necessarily indicative of future results. None of the material on nadex.com is to be construed as a solicitation, recommendation or offer to buy or sell any financial instrument on Nadex or elsewhere. Nadex is subject to U.S. regulatory oversight by the CFTC.

Overview and Summary

  1. Nadex is a North American Derivatives Exchange, founded in 2004.
  2. In 2019, the IG Group made a bold decision to move back to Chicago, the original destination of its head office, where it launched its new website with a mission to turn Fx trading on its head.
  3. As Nadex specifically caters to trading binary options and spreads, there are numerous features that focus on enabling and supporting this.
  4. Nadex spreads give traders significant benefits when it comes to leverage.
  5. Nadex’s fees are low, and transparent, with a good leverage. But on the downside, Nadex doesn’t offer account promotions or special offers similar to competitors, like Oanda.
  6. Nadex has an innovative, free desktop trading platform that runs on PC and Mac once you have internet. The platform is pretty standard, but it’s fast, reliable, easy-to-use, and intuitive.
  7. Research tools and Insights are lacking on the website. There is limited analysis on individual securities and no third-party research providers, so any traders that value researching before trading will need to do it in their own way.
  8. Active traders with an interest in day trading are best suited to Nadex.

What is Nadex? A Forex + Binary Options Broker

Nadex is a North American Derivatives Exchange, founded in 2004. Based in Chicago, the exchange focuses on short-term binary options and spreads.

Screenshot of Nadex HomepageThe exchange is fully regulated and allows traders in the US to trade binary options legally. The company is a subsidiary of London’s IG Group.

2019 brought massive change to the company as it re-established itself in the U.S., believing that it had more to offer US retail FX traders, and could compete with the limited competition.

Before its departure from the U.S in 2011, the Group had an extremely strong reputation in North America, and benefited from the leadership of Rod Drown, a highly regarded industry figure and CEO of IG Markets US division for several years, from 2007 – 2010.

In January 2019 the company made the decision to place Daily FX and Nadex under the company’s US division, IG Group LLC. This resulted in its return to Chicago, where it launched its new website, a move that was seen as a mission to turn Fx trading on its head.

While expectations for the company were high, all was quiet until late 2019 when it was announced that CEO Tim McDermott was to be replaced by Ian Peacock, President of IG’s US division. This was a bold but exciting move for the company.

Speaking on this, senior executives at IG Group said,

“We are particularly excited by the potential opportunity here. We’ve seen early positive signs and believe in our brand, high levels of customer service and tighter spreads. As discussed, the US FX market has been historically underserved with 3 providers in the retail margin FX market before IG entered – we estimate there are 90,000 active margin FX traders in the US.”

2020 should prove to be an exciting year for the company whose shown its commitment to the potential it sees in the region, and offering traders more.

Pros

  • Varied selection of binary options and spreads
  • Low fees and minimums
  • Great educational content
  • Excellent customer service

Cons

  • Limited research reports and tools
  • Instrument list isn’t great in comparison to competitors like Oanda
  • No promotions or bonuses offered
  • Learning curve for binary options
  • Not as many order types as competitors

Is Nadex Safe?

While account hacks and scammers have become more frequent in the binary space, Nadex is a trusted, CFTC regulated United States exchange, and legal in the US only.

Nadex US Regulated Screenshot ImageThe company is designated by the Commodity Futures Trading Commission as a Designated Contract Market and Derivatives Clearing Organization.

The CFTC is a US Government agency with a mission “to protect market users and the public from manipulation, fraud, abuse, and systemic risk.”

Nadex go beyond meeting physical, electronic, and procedural safeguards to keep clients personal data secure.

Nadex holds all funds in segregated bank accounts at Fifth Third Bank and BMO Harris Bank.

In addition, Nadex’s pricing is transparent, and the company explains its products, markets and trading platform well.

The firm has a useful and informative FAQs page, and even has some tips on how to make an informed and safe choice when trading binary options with an offshore broker or provider, including asking whether they are based in the US and if it is legal for them to solicit customers in the US? “Hint: it’s not,” they write.

An Exchange vs. a “Broker”

As a CFTC-registered Exchange and Clearinghouse, Nadex complies with the following regulations;

  • Nadex does not participate in trades, and it matches buyers and sellers
  • All customer funds are held in segregated accounts in top-tier US banks
  • Unlike brokers whose fees come from taking a market position, Nadex’s income comes solely from exchange fees.

Nadex Investment Products

Screenshot of Nadex Markets Overview

Nadex is the first CFTC-regulated exchange that enables US and international members to legally trade a wide range of markets. This allows customers to trade binary options and call spreads on Forex, stock indices, commodities, and economic events, like the Fed’s funds rate.

The firm is also launching two new contract types that enables customers to turn economic forecasts into trades. The contracts allow for the speculation of both weekly jobless claims reports and nonfarm payroll, in addition to how the market affects them.

Chief Commercial Officer at Nadex, Travis McGhee said, “The non-farm payroll and weekly jobless claims reports are large releases that give important insights into the health of the US economy. These are significant numbers that directly affect US markets.”

Once you sign up to Nadex you will have access to the complete range of markets and binary option contracts.

Customer Support

The Nadex customer support team is knowledgeable and helpful. Nadex account specialists can be contacted from 7:00 AM to 8:00 PM ET, Monday to Thursday, and current Nadex clients can reach a representative from 3:00 PM ET Sunday through to 5:00pm ET Friday, by phone or email.

The website has a number for U.S callers and international callers, but there is no live chat, which is a bit of an inconvenience when you just have a quick question.

Special Features

As Nadex specifically caters to trading binary options and spreads, there are numerous features that focus on enabling and supporting this. Customers rave about them in reviews, and they might help you take your trading to the next level. Some additional Nadex features  include:

Market Data

Nadex Market Data Screenshot Image

Clients get access to free, real-time streaming of market data directly from the exchange, because Nadex itself is an exchange, and not a broker.

Advanced Charting

A range of sophisticated charts and tools will help trades develop a good set of techniques, including an Out the Money (OTM) strategy.

Traders can place orders directly through the platforms price ladder charts, in addition to giving users the ability to select your markets, chart analysis and place an order from one screen.

News Trading

Nadex is ideal for traders who utilize market news to create and hone a binary strangle. The exchange provides daily commentary and videos on current market events that can help you decide and strategize your next move. All content is created by Nadex’s own experts.

Nadex Call Spreads

Nadex’s binary options and spreads have a maximum profit and loss that traders will be aware of in advance. This means that there is limited risk and you will never lose more than the displayed amount, which you will see on your order ticket before you confirm your trade.

This also means that Nadex clients won’t be charged commission fees. Instead, traders will pay a set fee of $1 per contract.

With this, it is good to know that Nadex will waive settlement fees if a binary options trade expires. Nadex will not trade against its traders, because trading and settlement fees are the firm’s main source of income. This will potentially lower your trading costs, and might increase your profits.

Leverage

Nadex spreads ensure that traders will also have significant benefits when it comes to leverage.

Image of Nadex Effective Leverage Bull Spreads

Usually, US forex traders will get a leverage of 50:1 at best. Nadex spreads however, do not involve margin, and are completely collateralized. Nadex products are not leveraged, but more of an option for the short-term. That said, in most cases, Nadex spreads can be priced lower than the current market price.

Other Trading Fees

Nadex fees are clear and transparent. Clients will be given due notice and all fees will be clearly outlined. A $25 returned deposit fee will apply. Overall, Nadex offers low fees for trading and a good leverage, with a lower risk level.

One downside to Nadex is that it doesn’t offer account promotions or special offers similar to competitors, like Oanda and Stockpair. The firm will put on some free trading days now and then, which you can keep an eye out for on their website.

What Nadex Does Best

Education

Screenshot of Nadex Educational Courses Menu

Nadex puts a good amount of effort into creating useful guides on binary options and spreads; what they are, and how they work. Everything is explained simply, and is easy to follow.

Again, the fact that Nadex is not a broker works in the trader’s favor, because Nadex’s success is dependent on a traders long term success. It’s a win, win.

So, it is in Nadex’s best interest to provide clients with the best education, and they do; from free trading courses to videos, and trading e-books. The firm covers as many levels as possible, with an introduction to binary options for new traders to more complex guidebooks on trading in volatile markets.

This collection of references will help any trader go from novice to expert in a matter of time, while helping you make the best decisions along the way.

Desktop Experience

Nadex Desktop Trading AppNadex has an innovative, free desktop trading platform that runs on either a PC and Mac once you have internet. The platform is pretty standard, but it’s fast, reliable, easy-to-use, and intuitive.

As the platform is specifically designed for trading both spreads and binary options, it has all that’s needed for the trading of these, but it doesn’t go much beyond this.

The charts, which we highlighted above, are customizable, and there’s a limited selection of indicators, including Bollinger Bands, Average True Range, Moving Average, and RSI. The platform also has a good range of drawing tools, such as Fibonacci, and Eliott.

Mobile Experience

Nadex Mobile Trading PlatformIn August  2018, binary option trading apps were banned, leaving Nadex without an app on iOS and Android. CEO at the time, Tim McDermott said,

“As you may have heard, unregulated binary bucket shops have forced the hands of tech giants Apple and Google to ban binary option trading apps… Against our best efforts, we were forced to remove binary options from our iOS and Android apps in October [2017] and May [2018], respectively, despite being a U.S.-based, CFTC-regulated exchange.”

In response to this Nadex launched NadexGo, an advanced web app that needed no updates or downloads. The app allows users to see Nadex’s product range and offers real-time access to the market, great tools that you can use for account management, full charting and analysis features. Overall, it’s pretty much the same as the version for desktop, but pocket-sized.

Where Nadex Could Do Better

Research & Insights

Insights and research tools are lacking on the website. There is limited securities analysis and no third-party providers for research, so any traders that value researching before trading will need to do it in their own way.

Nadex’s educational section however does provide webinars that offer market analysis and insights from experts. The news section also includes market commentary, with analysis on specific commodities and currencies.

How To Open An Account With Nadex

Opening an account with Nadex is pretty simple. Simply choose between a US and an international account, accessible for people across 40 countries.

Nadex Open an Account PageThe application process should only take five minutes and you will be asked for the following information:

  • Date of birth
  • Proof of address
  • Social Security Number or National Identification Number

You may need to upload supporting documents to confirm your information, and once you are approved you are under no obligation to trade until you are ready.

Demo Account

Traders can access a demo account. You will receive $25,000 of virtual money to play with, and if you like it, you can apply for an account, and fund it through a variety of ways including; debit card, wire transfer, ACH, or paper check. Traders outside of the U.S can fund it using a debit card or international bank transfer.

The Bottom Line

Nadex is a fully regulated exchange that offers some fantastic special features, low and transparent rates, helpful customer service and a comprehensive educational section.

Nadex’s platform is excellent and its mobile version is pretty much the same but in a smaller size. The firm’s research tools and insights let it down most.

Overall, Nadex is the perfect ‘option’ if you are a short-term binary options or spreads trader. It can be accessed on over 5,000 contracts, covering a wide range of assets including; Forex, stock indices, and commodities, in addition to trading on economic events.

Active traders with an interest in day trading are best suited to Nadex.

About Author

Tim Fries Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim is also the co-founder of Protective Technologies Capital (protechcap.com).