Nadex vs Offshore Brokers: Legal & Better
The most obvious reason to trade binary options on the Nadex exchange is because it is legal. Most offshore binary "providers" and "brokers" are not legally authorized to accept US clients.
In 2013, the CFTC issued a fraud advisory stating that only certain "designated contract markets" could legally solicit US customers to trade binary options. Nadex offers the widest range of binaries. Even if you aren't a US citizen, you should trade on a trusted, regulated exchange.
Nadex offers more strike prices and more contracts on more markets than most offshore binary providers. And we combine the all-or-nothing power of binary options with the ability to get out before expiration. You choose how and when you want to exit your trade.
More Strike Prices
The strike price of a binary option is the price the underlying market has to settle above at expiration. In this Gold contract, for example:
Gold >$950 at 1:30PM
the strike price is $950. The binary option expires and settles at 1:30PM Eastern Time.
For the binary option to pay $100 to the buyer at expiration, the Expiration Value just has to be above $950.
If the Expiration Value is equal to or less than the strike price at expiration, then the buyer gets zero and the seller receives the $100.
Nadex lists a range of strike prices for each expiration time. We list over 20 different strike prices for each daily gold expiration – staggered at intervals of $3. Having so many strike prices at small intervals allows you to trade with precision and flexibility.
The Most Markets
Nadex lets you trade stock indices, forex, commodities, and economic events from a single account. The old Wall Street way says you must limit yourself to one market and one part of the economy. You have to choose: you're a stock investor, or a forex or futures trader. You need a separate account to trade each asset class, each with a minimum balance, and more risk than many people can handle. And you have to go through a broker. That's the Wall Street way.
The Nadex way says individual traders should have access to many markets from a single account, which you can open online in five minutes and fund with a debit card with a low opening balance. You are a direct member of the exchange, which means you don't need a broker or pay brokerage fees.
If you see an opportunity in the S&P 500 stock index futures, you can trade that opportunity through Nadex binary options. If you want to trade the euro/US dollar exchange rate, you can trade that. If you spot a trend in the price of crude oil or gold futures, you can trade that. You can trade all three at the same time. Every day, you're affected by all aspects of the economy. You shouldn't have to limit your trading to just one slice of it. Nadex lets you go where the opportunity is.
Exit When You Want, Not When the Broker Does
One frequent complaint the CFTC cited was that Internet-based binary brokers manipulated their software to deliver losing results to the trader (and profits to the broker, who was taking the other side of the trade). One of the tricks is to extend the expiration until the trade becomes a loser.
Nadex never takes the other side of the trade. We're an exchange, not a broker, so our job is to provide a fair marketplace for our members and to match buyers and sellers. We're the referee, not the other team. And our revenue comes from our exchange fees, not trading results. While one of Nadex's multiple market makers is an affiliate and may be on the other side of your transaction, Nadex does not benefit in any way from this trading activity.
This gives you the true power of the all-or-nothing outcome of binary options. The Expiration Value only has to be above the strike price for you to get the full payout of $100 per contract. But if you want to exit before expiration, either to lock in profits or cut your losses, you can do that, too. Obviously, volume and the price at which you try to exit will affect how easily you can get out, but the result will always be fair.