Nadex—the North American Derivatives Exchange—is a U.S. based clearing house and exchange for derivatives (options), including binary options. It is regulated by the Commodity Futures Trading Commission which gives it a distinct advantage over many other binary options brokers; it is one of the few brokers with a government organization overseeing it.
Nadex was originally called HedgeStreet, and was founded in 2004. Since then, it has been giving traders a safe venue with which they can try to predict assets’ price movement. There is no guarantee that their trades will be profitable, but it is a highly regarded and trusted options broker, and this is a big advantage. This broker offers many of the same assets that the other major binary options brokers possess, including stocks and indices, currency pairs, and commodities. Nadex is based out of the United States, but they do have European and Asian indices available for trade upon their platform. This allows for a broader range of traders to make profits upon their site. It also helps traders to diversify their trading, and this is a good way to help protect yourself from a major hit to your trading capital. Nadex also lets traders make yes or no predictions upon economic events such as jobless rates, the Fed funds rate, and the nonfarm payrolls numbers. This is a feature that is not offered by the majority of other brokers.
The difficult thing about trading through Nadex is that buying options is not quite as user friendly. Still, trading here is quite simple once you get the hang of it. For example, if you want to trade the Dow Jones Industrial Average, a price will be given to you and you will need to predict whether the actual price will be above or below that price when the expiration time is hit. Say you think the Dow will be above 15,000 a 3:30 PM. You will be given a cost per contract. For the sake of simplicity, we’ll say that it costs $60 per contract and you buy ten of them. If you are right in your prediction, you will get $600—the cost of each contract times how many you bought. If you are wrong, you will lose $400 since the original cost is based on a scale of 1 to 100. If you buy at 60, 100-60= 40, so $40 times 10 equals $400.
This might sound complicated, but their site explains this in great detail, so make sure you look through everything before you execute your first trade. Their brokerage is meant to make option trading more understandable and more accessible to the average trader. One other way that they do this is by lowering the cost of speculation. With traditional options, buying a full sized lot could cost you tens of thousands of dollars. With Nadex’s site, however, the cost of doing business is much lower and the profit rate is better.
One of the negative features of Nadex is that they do charge fees for each transaction. Still, this site has a stellar reputation and is a great resource for the trader looking to branch out and expand upon their daily trading routine. Binary options are a great way to diversify and increase your profit rate with minimal effort. Nadex is a trusted place to trade and has grown quite a bit in popularity over the last several years. As this type of trading becomes more established, it is very likely that Nadex and other binary options brokers will continue to see an increase in the volume of trades conducted.