Broker (commission, trading fee)
What is a broker?
Brokerage firms, often simply referred to as brokers, execute buy and sell orders for their clients in exchange for a commission. Most investors and traders send their orders to a broker, who sends them to the exchange.
On Nadex, you don’t go through a broker. Instead, you become a direct member of the exchange and execute your own orders.
Discount and full service brokers
Brokers are middlemen who take buy and sell orders from the client and pass them on to the trading venue to be executed. That venue may be a regulated exchange or a less secure venue.
Traditionally, investors traded through brokers who offered a range of services including market research, advice, and long-term planning. Such brokers are called full service brokers. Some may even have power of attorney or discretion to adjust orders or trade on the client’s behalf. Typically, full service brokers will take extra measures to ensure that client orders are filled as well as possible.
Discount brokers simply place the client’s orders into the market place and report on whether it was filled and what price it is trading at. This is usually done on an online trading platform. Because the order placement is automated, discount brokers can charge lower commissions. They typically don’t offer advice or personal services.
Do you need a broker?
Back in the days before the internet and online trading platforms, brokers filled the crucial need of trade execution. There was simply no other way to access the world’s financial markets.
In many markets you will still need to go through a broker in order to place trades. If so, the most important first step is verifying the legitimacy of the broker you choose.
If you are in the US and trading stocks, you can check the registration of your broker with the Financial Industry Regulatory Authority (FINRA).
If you are in the US and trading futures or forex, you can check the registration of your broker with the National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC).
If you are a self-directed trader, the question now should be, do you really need a broker at all?
The trading world has evolved in many ways since the days of picking up the phone and having someone execute a trade on your behalf. At the forefront of this evolution is Nadex.
Nadex provides fair and transparent direct market access to trade products based on the world’s most popular markets, without having to go through a broker and without having to pay additional commissions, just to do what you were going to do anyway.
Trade without a broker on Nadex
Nadex is all about putting the power of trading in your hands. On Nadex, you don’t need to go through a broker. All trading is fully self-directed, meaning not only do you not have a broker telling you what and how to trade, but you send your orders directly to the exchange with no intermediary. As a CFTC-regulated exchange, Nadex does not give trading recommendations or engage in trading.