What is Nadex?
The North American Derivatives Exchange, Inc (widely known as Nadex) is an exchange platform established in Chicago around 2004. The firm specializes in short-term binary options, touch bracket, and call spreads for stocks indices, Forex, and Bitcoin. Nadex is one of the first exchanges in the United States that would later grow into the largest of its kind.
Nadex is also part of the North-American unit of the I.G. Group, a leading brokerage and investment holdings group in the world. In addition, Nadex is also part of the FTSE 250, a London-based financial firm with a market capitalization of over $3.5 billion. With its high-profile connections, it isn’t so surprising that the exchange managed to reach the size it has today.
Nadex as a firm also boasts unparalleled support for their client base, with high-level customer support and a learning center focused on providing educational materials and webinars that are hosted regularly.
Catering mostly to U.S. citizens, Nadex provides innovative and regulated investment opportunities locally rather than having clients focus on offshore firms that may otherwise be unregulated. Though, Nadex still provides services to over 41 countries outside of the United States.
However, due to the history of binary options trading, many have pointed the finger on Nadex as being a scam of sorts. In this review, we will identify the exchange’s features and offers to see if any of these accusations could potentially hold any weight.
Nadex: Services and Offerings
• Trading Instruments
Nadex is one of a few exchanges that are able to legally provide binary options, touch brackets, and call spreads for its clients. Their financial instruments include stock indices, currency pairs, commodities, economic indicators and events, and even cryptocurrency such as BitCoin.
Nadex mainly focuses on binary options, which is the most popular investment on the platform. Here, prices can vary between 0% and 100% from a minimum of $1 to a maximum $100.
• Account Types
In the U.S., Nadex offers two types of accounts – Individual and Business accounts. However, only Individual accounts are available for countries outside of the United States. Individual accounts’ requirements include name, address, date of birth, and Social Security number. Accounts created abroad require the user’s national ID number.
Business accounts are available for trusts, LLCs, partnerships, and corporations in the United States. Opening this type of account requires additional documentation including a W-9 and government ID from each account signer.
Both accounts require a $250 minimum deposit to open.
A free demo account can be created for clients to test the trading platform in a simulated risk-free environment.
• Trading Platform
Trading with Nadex can be done through a web-based platform.
The Nadex web-trading platform features a search operation that allows traders to quickly find assets to trade. The platform also has a “Box” feature that allows traders to fund their account without ever leaving a page.
Nadex also has an instant calculation feature that displays the maximum profit and loss from a specific trade before you open a position. This can help the trader keep track of their assets quickly.
While there are no trading applications specifically available for Android or iOS smartphones, the web-based trading platform can still be accessed through the phone’s web browser. However, screen sizes and performances could vary the experience greatly.
Nadex also doesn’t have a desktop application which may be seen as restricting for a trader with a powerful PC.
• Payment Options and Fees
Nadex handles its fees in a clear, easy-to-understand manner. While there are cheaper options available, one thing to note is that there are no third-parties per trade.
All contracts cost a minimum of $1 per trade.
Other costs include $25 in returned deposit fee and a $25 wire withdrawal fee. However, some special accounts such as FCM members and Market Makers may have access to lower fees.
Payment options include wire transfer, credit and debit cards, checks, and ACH deposits. Payment and withdrawal fees depend on where the account was opened. A minimum $25 processing fee may be charged by the financial service provider. Meanwhile, ACH transfers do not have fees.
Processing time can also depend on the country, with usually a one-day processing time for U.S. wire transfers. International wire transfers can take up more than one business day.
As of writing, Nadex does not offer any form of bonuses.
Nadex: Is it safe?
Binary options brokers have had a very troubled history since its inception, with many ending up being exposed as fraudulent operations. This had resulted in binary options firms to be illegal in several countries. This in turn, has led many to regard such financial services as nothing more than a scam. This is why many brokerage firms turn to reputable financial authorities. With such authorities backing them, many of these brokers guarantee their client security should an unfortunate event hinder the clients’ security or best interest.
That said, Nadex is regulated by the Certificate in Trade Finance Compliance (CTFC) in the U.S., which is in compliance to the Commodity Exchange Act. The CTFC is a highly reputable financial body and financial services holding its licenses are often deemed as trustworthy.
Nadex is an excellent online broker with an impressive selection of educational content including videos and webinars.
Their trading platform works inherently well albeit being limited to a browser-based platform. In addition, their online platform could use with more specialized research reports and tools. This can be especially true as binary options can be complex for traders who are more accustomed to CFD brokers.
However, if you are interested in investing in binary options, Nadex is a fully-regulated and legitimate exchange and it wouldn’t hurt to give it a try.