Nadex ( CFTC regulated "Exchange"

moka2

Established member
529 13
Had a few question about Hedging with Nadex spreads and Nadex in general
Let me explain:
1) Apex investing ( a private "Education" firm) had a video showing how one can hedge a futures position ( the real market) with a Nadex spread ( instead of just using a stop loss on the Futures position .
Sounded great but what they don;t explain is rate of change / Delta during the spread's life
In ordered to be perfectly hedged the spread has to move dollar to dollar with the futures position!
I asked the presenter of Apex this question but never got a proper answer
It is all good to promote something but one should explain the negative side also

Has anybody tried this?

2) Nadex is it a true exchange like CME etc? because it seems the main market maker and Nadex is owned by same company! IG ?
So how can that be a true exchange without conflict of interest?
I understand as it's popularity grows there will be enough independent buyers and sellers and many market makers making it a true "Exchange"

3) Cost as an example ES contract, The Nadex is 1/5 orf the real ES so teh cost is not just 0.9 per side apples to apples it is $4.50 per side
4) For non US residents it is possible to open Futures accounts with FCMs no problem, so when Nadex declared that they will be available through fcm I thought that is great so I can use them but al these years have passed and NO FCM is offering that, Asked Nadex and all they say is ask your FCM!
weird

Dont get me wrong I think Nadex idea is great as compared to bucket shops overseas but the above things have made me uneasy .
 

hyperscalper

Member
89 10
Nadex and "American Style" binary options

I recently became involved with Nadex as a client wondered how short term trading could be successful. My work has involved extremely high precision short term analytics for normal Forex trading, so I reasoned that Nadex Forex-based Contracts would be easily tradable through those same analytics.

Nadex is available only to "north american" users, but I believe it is true that IGmarkets .com provides access to Nadex from most other countries. I haven't verified this, but if you are non-U.S. and want the most powerful Binary Options available anywhere, consider looking at IGMarkets.com or Nadex.com itself if you are Canada, Mexico or U.S.

WHY? I first looked at the "scam" type binary options providers where returns are fixed usually at 60% and range sometimes up to 90% returns on a "bet", er.... rather, an "investment". So you Risk $10 to make perhaps $7. As has been pointed out, not a great set of odds, especially if short term analytics are not there to support the decision-making. More like "flip a coin" trading, which cannot be professional.

Nadex accepts only Limit orders, so the professional trader has "price control", which is very different from the market order behavior of most Binary Options platforms. You should not underestimate the value of having this price control through limit price orders.

ENTER NADEX and these "American Style" binary options. Returns on 5 Minute Binary Options on Forex underlying contracts ranges from 1:1 or so, to as high as about 9:1 return Reward:Risk with very small Fixed Risks. Also, with these Options, the contract need not be held to Expiration. With 5 Minute options there's little time, so usually we go to expiration. But with the longer term Binary Options, we can trade them Long/Short and need not hold to Expiration.

I am just learning all of the possible Strategies myself which are enabled by Nadex, so I won't go over any of this much further. I'm not an "agent" of Nadex and don't get any kickbacks for this information; I'm just a trader and developer of Analytics on Forex.

Allow me to post a "neutral" video which outlines many of the advantages of Nadex Binary Options. As Nadex is regulated, its own videos are quite neutral and explain key ideas pretty well.

http://www.nadex.com/trading-academy/trading-videos/binary-options-videos.html

I always want an API for Trading, and Nadex does not offer an easily accessible API; however, they do offer a FIX connection which I will personally be implementing to my trading system. Cost is $500 (Market Data) plus $500 (Order Entry) with some cost being rebatable, and there is a UAT (User Acceptance Testing) procedure which I have not yet used. I don't like this, and the work which will be involved, but Nadex Binary Options and Bull Spreads are definitely superior to normal Forex trading, and these are the underlyings which I am targetting.

My Strategy is to buy OTM (out-of-the-money) 5 Minute Binaries so that I risk perhaps 25 to make 75. This can be done either Long or Short. Also, ITM (in-the-money) contracts can be purchased but you might have to risk 80 to make only 20, so ITM is not a good Strategy unless you are absolutely sure they will STAY in the money... :)

In extremely narrow range markets, with micro trend analytics, the difference between a Win and Loss can sometimes be 0.1 PIPs !! So sometimes it is razor thin whether the underlying is above or below the Strike criterion in Binaries. A very interesting game, if you have high precision short term predictors. Again it is extremely important to buy OTM (out-of-the-money) contracts to make sure your Reward:Risk ratio is high enough, and to base your decisions on hard analytics.

Nadex "American Style" Binary Options are the very best choices, believe it or not, so I would urge everyone to try to gain access to them. $100 gets you onboard as a U.S. resident, and for the rest of the world, look to IGmarkets.com to find whether you can gain access to Nadex Binaries. (I do believe you may need U.S. residence to do this but I don't really know.)

Hope this was helpful and informative !
Good Trading !

HyperScalper
 
Last edited:

moka2

Established member
529 13
I

Nadex is available only to "north american" users, but I believe it is true that IGmarkets .com provides access to Nadex from most other countries. I haven't verified this, but if you are non-U.S. and want the most powerful Binary Options available anywhere, consider looking at IGMarkets.com or Nadex.com itself if you are Canada, Mexico or U.S.

IG operates in Australia but does not offer the Bull spreads that Nadex does
Nadex won't let Non US resident open an account
Weird
By the way what you thunk about hedging Exchange traded Futures with Nadex Bull Spreads? Any thoughts?
Is the delta of Nadex spreads fast enough to match the Futures contract?
 

hyperscalper

Member
89 10
Nadex finally something good exclusive to the U.S.

I'm not really qualified to compare hedging against futures,
as I don't do hedging. Sounds like you understand the situation
well already.

I'm just a humble trader using high techology Forex micro trend
analytics to trade Nadex 5 Minute Binaries and short term
segments in the Bull Spreads.

Hey, you "rest of the world" outside the U.S. in general won't
deal with Americans, so I say "touche" to you :) Finally we have
something the rest of the world wants ! LOL

All of us wish the CFTC would die a horrible death and stop
forcing the rest of the world to be the "nanny for the IRS" but
I don't think we'll be able to turn back the clock... :(

Good Trading !
HyperScalper
 

trader619

Newbie
3 0
The binary options look easy but in reality it's really difficult. The reason why it's hard is that every contract has time decay build in. This could be your friend or worse enemy and most cases it will be your enemy.

Time decay simply means that with contract value will decrease or increase with over time, depending on trends. If you are with the trend (profit) but if you are against it you will lose.
 

marejp

Newbie
9 0
Even though Nadex claims to be available in 29 (cannot find the original source but that's the number I remember from somewhere) countries I'm not having any joy from South Africa.

Opening the account was a nightmare - should have been a warning.

Funding the account so far is impossible. Debit card not working, happens with foreign(??) debit cards according to the call center agent. Two emails later asking for documentation I need to wire money from this side (bank needs it) and I get ignored like a stop in a market crash.

Asked if there are anybody from this side of the world having any luck on a Facebook group and the post went awol.

To be honest, I had dealings with some dodgy bucket shops I trust more (definitely better customer service). The more emails I get the more it reminds me when Forex just started and everybody were trying to get on the bandwagon and we had all these "cult status" groups. It gets mentioned in some of the training videos (Wildcat Investment) that if they get more customers the product will be better - perhaps the reason for the flood of people willing to help and free offers all over the show.

Verdict - the idea was to take a break from trading forex, in the end it was a waste of time.

Enjoy
Johan
 
Last edited:

hyperscalper

Member
89 10
Use Nadex Spreads instead of Binaries

You were dealing directly with NADEX in the U.S. for this application?

First of all, if you are a Forex trader you would want to trade the
NADEX issues where the underlying is Forex, of course. However,
I have altered my view through experience, and Binary Options are
more of an "advanced" topic. The issues you should focus on at NADEX
are the SPREADS and use them for Volatility or News type trading, as
you can easily get 10:1 to 15:1 Reward:Risk ratios.

Sorry to hear about the problems you had. For me, NADEX is also
a hassle because the only CTCI (computer to computer interface)
they offer is a FIX API with all the certification hurdles, plus $500
for Market Data and additional $500 for Order Entry for the privilege
of writing all the code from scratch..... But I WILL be doing that,
despite the hurdles, and then anticipate writing a NADEX SPREAD
Scalping Robot in Java to sit on my Xeon Linux server. That's going
to be at least 6-8 weeks away, since coding up something like that
is a fairly big project.

hyperscalper


Even though Nadex claims to be available in 29 (cannot find the original source but that's the number I remember from somewhere) countries I'm not having any joy from South Africa.

Opening the account was a nightmare - should have been a warning.

Funding the account so far is impossible. Debit card not working, happens with foreign(??) debit cards according to the call center agent. Two emails later asking for documentation I need to wire money from this side (bank needs it) and I get ignored like a stop in a market crash.

Asked if there are anybody from this side of the world having any luck on a Facebook group and the post went awol.

To be honest, I had dealings with some dodgy bucket shops I trust more (definitely better customer service). The more emails I get the more it reminds me when Forex just started and everybody were trying to get on the bandwagon and we had all these "cult status" groups. It gets mentioned in some of the training videos (Wildcat Investment) that if they get more customers the product will be better - perhaps the reason for the flood of people willing to help and free offers all over the show.

Verdict - the idea was to take a break from trading forex, in the end it was a waste of time.

Enjoy
Johan
 

marejp

Newbie
9 0
Yep, definitely US - dialed in the telephone number myself.

Agree 100% with you regarding the spreads, binaries was not really an option (does this qualify as a pun?) Was toying with the idea of hedging some of my current spotfx trades with spreads and then as you said, some of the classic option strategies.

Like the idea about the robot and good luck with it. Picked up a few nice ideas in the process so it is back the editor for me as well. Fooling around with R, neural network and OANDA API.

Enjoy

You were dealing directly with NADEX in the U.S. for this application?

First of all, if you are a Forex trader you would want to trade the
NADEX issues where the underlying is Forex, of course. However,
I have altered my view through experience, and Binary Options are
more of an "advanced" topic. The issues you should focus on at NADEX
are the SPREADS and use them for Volatility or News type trading, as
you can easily get 10:1 to 15:1 Reward:Risk ratios.

Sorry to hear about the problems you had. For me, NADEX is also
a hassle because the only CTCI (computer to computer interface)
they offer is a FIX API with all the certification hurdles, plus $500
for Market Data and additional $500 for Order Entry for the privilege
of writing all the code from scratch..... But I WILL be doing that,
despite the hurdles, and then anticipate writing a NADEX SPREAD
Scalping Robot in Java to sit on my Xeon Linux server. That's going
to be at least 6-8 weeks away, since coding up something like that
is a fairly big project.

hyperscalper
 

babyjake1961

Well-known member
391 12
Their customer support by email is virtually non-existent. I asked them repeatedly why they stopped offering API to their clients and never heard back. A friend emailed them asking why they don’t accept clients from his country and they didn’t get back to him either. Even on demo, their bid-ask spreads are horribly high.
 

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