Nadex Binary Options The Best For US Traders
NADEX Binary Best For U.S. Trader
Respected Binary Options Brokers
This is a list of binary options brokers that I have dealt with or reviewed. These are all well respected binary options websites, some of whom are CySEC regulated or in the process. Some platforms that were one considered to be "U.S. Friendly" may soon not be because of the regulatory process. Once accepted by CySEC they will not be allowed to operate with U.S. customers until approved by the CFTC and probably the SEC. Any broker seeking to do business in the U.S. will likely have to work in conjunction with some centralized market place such as the NADEX.
- AnyOption - This is one of the oldest and best known of the good binary options brokers. They have been a legitimate source of binary trading since the beginning and the first platform I got to use. It is also my favorite. I have been told by insiders that Anyoption is in the process of getting CySEC approval but at this time is still operating in the U.S. Accounts are held safely and are easy to access.
- 24Options - This is another great binary platform, especially for day traders. This platform does not have many expirations longer than 24 hours but has a wide variety of options for intraday trading. Accounts are safe and withdrawals are easy provided you complete your paper work properly.
- Banc De Binary - The Banc emerged as a new favorite during my researching of the binary option industry. The bad news is that it was the first binary options broker to get CySEC regulation outside of Cyprus and has since had to close its doors to U.S. traders. The good news is that it is also the broker who is leading the charge to gain CFTC regulation.
Why Choose NADEX Binary Options
There is one reason why NADEX is the best binary options broker for U.S. traders. It is the only CFTC regulated binary options exchange in the U.S. that retail traders can use. This means it is the only legally operating binary options exchange in the U.S. There are other sources of CFTC regulated binary options but in order to access those markets you must use a third party broker/dealer.
Although the industry has been changing, many off-shore binary brokers are not regulated. This is bad because it allows brokers to operate without transparency and without the safety afforded by oversight and standardized practices. Up until recently off shore brokers have been able to operate with U.S. based customers because they were not considered to be true financial instruments. Many were even considered to be gambling websites. Off-shore, European style, binary options were the red-headed stepchild of the investment world and the the industry was full of scams.
Last year CySEC changed the designation of binary options to financial instrument. Now it is a requirement in Cyprus (where most of the off-shore binary options industry is located) for all brokers to be licensed. Because of Cyprus' membership in the EU this licensing allows CySEC regulated brokers to operate throughout the European Economic Arena. This fact has also attracted other EU based binary brokers to seek CySEC regulation as well. What this means for U.S. based binary options traders is that it is illegal for them to market and sell binary options in the U.S. or to U.S. traders. This is evidenced by the recent shut down of Banc De Binary's U.S. arm. According to press releases the Banc is in talks with the CFTC and SEC for regulatory approval but no such licensing has yet been granted.
CFTC Chief Of Enforcement officials have been quoted as saying "It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called prediction contracts, unless they are listed for trading and traded on a CFTC-registered exchange or legally exempt." The rules on binary options based on stock prices is less clear.
What Is A Registered Binary Option Exchange
The CFTC, or Commodities and Futures Trading Commission, is the regulatory body governing the trade of commodity and futures contracts. The CFTC gets its mandate from the Commodities Exchange Act and gives it power to regulate, license, review and sanction the operation of such exchanges. So, what exactly is an options and futures exchange?
A registered exchange is a central location for the marketing, purchasing and trading of options and futures contracts. It is a place for the market to come together that is safe from unethical or devious practices. The exchange is a neutral third party and derives no income from either side of the party. The Exchange makes money based on a simple fee schedule that is applied to each trade, regardless of size or direction.
What Is The NADEX
The NADEX is a registered binary options exchange in the United States. NADEX itself is an acronym which stands for North American Derivatives Exchange. The NADEX is located in Chicago Illinois and is operated through subsidiaries as an impartial third party market maker. It is also subject to oversight by the CFTC.
The NADEX offers two kinds of trading, binary options and bull spreads. BInary options are an all or nothing fixed return trading vehicle with predetermined risk/reward scenarios. All possible outcomes of the trade are known before purchase because there are only two: The option closes in the money and you receive the maximum return or it closes out of the money and you lose (NADEX options are tradable and can be closed prior to expiration and will experience a loss or gain depending on the current price of the option).
Bull spreads are a kind of combination futures and an options spread trade. Like a future, when you buy/sell at a certain level you profit and loss is tied to the number of pips the underlying asset moves. Like in a spread trade the maximum profit and loss are limited by the spread. For example, if you were buying the EUR/USD at 1.3150 with a spread of 1.3000-1.3350 then your max loss would be 150 pips and your max return would be 200 pips.
Expiration Of NADEX Binary Options
Example Of NADEX Order Screen
Features Of Trading NADEX Binary Options
There are a lot of features and bonuses to trading NADEX binary options besides being regulated. Now I know that legality is a big issue for everyone but just because its legal doesn't make it great. Just look at the CBOE binary options on the VIX and SPX. They are so limited that I don't even bother trying to trade them.
- Multiple strike prices Values rang between $0.00 and $1.00, depending on the underlying and other market factors.
- Predetermined profit and loss. An option with a price of $0.50 ($50 per lot) pays costs $50 to buy and receives $50 to sell. Buyers profit if the underlying closes above the strike and sellers profit if it closes under the strike.
- Cash Settled All NADEX binary options are cash settled. Open positions can be held to expirations, offsetting positions are closed with the trader profiting or losing the difference.
- Limit Orders Placing limit orders is one of the best things about NADEX options. This feature is sadly lacking from all the off-shore binary options brokers I have reviewed.
- Direct Market Access Traders have transparent access to the markets. It is easy to see how many contracts are being traded, availability and the bid/ask spread.
- No Fees There are no hidden fees. Each trade costs $0.90 pre lot (contract) for a total of $1.80 for opened then closed trades. Options that expire out of the money are not charged a settlement fee. Maximum fee is $9 per trade, or $18 to open and close.
- No Margin Account There are no margin or day trading requirements for binary options traders. No single contract will cost more than $100 so that is all it takes to open an account. There are also no maintenance or volume requirements.
NADEX Watchlist Of Popular Daily Contracts
Is NADEX the best binary broker for U.S. traders?
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Assets Available For NADEX Binary Trading
NADEX does have at least one limitation when compared to off-shore binary options brokers. It only has a few tradable assets, about 20 or so compared to hundreds available through Anyoption or 24Option. What it lacks in quantity it does make up for in quality. In addition to the major US indexes the list also includes three major international indexes, 8 major currency pairs, commodities and even economic events. I was surprised by the last. It is possible to trade binary options on the Fed Funds Rate, weekly Initial Jobless Claims and Non-Farm Payrolls.
- Indexes are traded through proxy indexes that mimic the Dow, S&P 500, Nasdaq 100, Russell 2K, FTSE 100, Xetra DAX and Japans Nikkei 225. Trades are based on futures contracts in each of these markets.
- Currency pairs are traded whenever a major market is open and include all the relevant USD, EUR, JPY, AUD, CHF and GBP dominated pairs.
- Commodity prices are tradable based on the underlying assets open on the corresponding exchange; NYMEX, COMEX or CBOT. Available assets include gold, silver, copper, oil, natural gas, corn and soy beans.
- Economic Events are traded on a month to month or week to week basis depending on the announcements regularity. Traders can buy or sell based on whether the Initial Jobless Claims are over or under a certain number at the next release. Available assets include Fed FUnds Rate, Jobless Claims and Non Farm Payrolls.
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