Nadex

Nadex

Type	Private
Industry	Finance
Founded	2004[1]
Founder	John Nafeh[2]
Headquarters	Chicago, Illinois , United States
Area served	United States
Key people	Travis McGhee, CEO
Products	Binary options, Knock-outs, and Call Spreads
Services	Derivatives exchange
Owner	Crypto.com
Number of employees	50[2]
Website	www.nadex.com

Nadex (Northern American Derivatives Exchange^TM) is a US-based exchange that empowers the ambitious, self-directed retail trader with access to opportunities across global financial markets including US and international stock indices, major forex pairs, commodities, and economic events. Nadex lists over 15,000 contracts daily across 30+ different markets, with contract durations from five minutes to five days. Nadex offers fully collateralized, short-term option contracts, for retail traders to access global markets 23/5 on any device.

Binary options are priced between $0-100, and Nadex provides the ability to trade in and out of positions to capture profits or cut losses early. The order ticket features max ROI, probability ITM, max profit and loss before entering any trade. Speculating on price action is simplified, and traders never have to be concerned with pattern day trader rules or margin calls.

History[]

Nadex originally was known as "HedgeStreet" and was based in San Mateo, California. The Exchange was launched in 2004 offering an electronic marketplace that offered trading in financial derivatives to retail investors. HedgeStreet shut down its business in late 2007.^[3] Shortly thereafter, UK-based IG Group Holdings plc. agreed to purchase HedgeStreet, Inc. for $6 million and began restructuring the exchange, its technology, and its products. In 2009, HedgeStreet was renamed as the North American Derivatives Exchange^TM (Nadex).

HedgeStreet was considered a pioneer in event futures, and the derivatives exchange is regulated in the US by the Commodity Futures Trading Commission (CFTC).^[2] The company operates the HedgeStreet Exchange, which launched in October 2004 and provides traders with a place where they can hedge against or speculate on economic events and price movements.^[1] The company operates the HedgeStreet Exchange, which launched in October 2004 and provides traders with a place where they can hedge against or speculate on economic events and price movements.^[1] The reasoning behind the creation of HedgeStreet was that with the rise of individual private investment in stocks, there might be a similar appetite for individuals to invest in derivatives.^[4] This focus on small investors created sufficient confusion that John Nafeh, founder of HedgeStreet, created the term "hedgelet" to help explain the company's business model.^[2]

In 2007, UK-based IG Group announced intent to acquire HedgeStreet^[5][6] and later in the year completed the purchase of the company. After the purchase, Nadex began to offer binary options similar to those already available on IG's platform.

In December 2021, Singapore-based Crypto.com announced their intent to acquire Nadex and the Small Exchange from IG Group.^[7] In March 2022, Crypto.com completed the purchase.

Operations[]

Platforms[]

The Nadex platform on desktop comes with streaming market data, is easy to navigate, and works on all PC types. The Nadex mobile app, NadexGO^TM, has all the capabilities that their desktop platform has, including products, markets, charts, and indicators. NadexGO^TM is a progressive web app. It will not use up a phone’s memory, and any updates will happen automatically. Each time the app opens, users will have the latest version. NadexGO^TM is compatible with all iOS and Android mobile and tablet devices. Simply visit mobile.nadex.com from a mobile device, log in to the demo or live account, and start trading.

Technology[]

Exchange technology is robust and well-tested, and typically has over 99.9% uptime on average. Market data and trading software are free, with top-of-the-line charting software available on desktop and mobile. Nadex offers a free demo trading platform to practice strategies before taking any risk.

Products[]

Nadex is the premier US exchange for binary options, call spreads, and knock-outs. Their products are fully collateralized; therefore, members can never lose more than they risk. Nadex Knock-Outs allow members to trade price action, capturing real-world market movements without owning the underlying asset itself. Knock-outs track the underlying market, moving with it one-for-one. Traders can profit when the market moves in the direction they predicted. Whether bullish or bearish, traders are always covered with a guaranteed stop on their positions. They can also close a position early to cut losses or take profits. Knock-outs offer effective leverage and traders will always know their maximum risk and potential profit on the order ticket before entering every trade. Call spreads are similar to knock-outs with a linear return and a defined floor and ceiling. However, call spreads can trade outside of the range without expiring and optionality is factored into the quoted prices.

Regulations[]

Nadex is regulated by the Commodity Futures Trading Commission. Unlike many other providers, Nadex does not take the other side of member trades or engage in trading of any kind. Member funds are held in segregated accounts in US banks.^[8]

Membership[]

Individuals can become members to trade directly on the exchange with access to a trading platform including order entry, market depth, historical data services, cash accounting, and position reporting. Membership is free, and members can currently open a live trading account with no minimum deposit.^[9]

Funding[]

The cost to place a trade is always equal to the maximum risk, plus any trade fees, which is required to be in a member’s account when the order is placed. US customers can easily set up a bank transfer via Plaid for free. US residents can also deposit via debit card, paper check, ACH bank transfer, or wire transfer (Telegraphic transfer), and can easily withdraw via debit card, ACH bank transfer, or wire transfer.

Fees[]

Members pay trading fees on each side of their trades: once to open and once to close. To enter a trade, there is a $1 charge for each contract executed. Traders may exit the trade in various ways: by placing a second, opposite trade, letting the contract expire, or closing their position early. If the position is exited before expiration, there is a $1 trading fee for each lot exited. If a position is held until expiration and it settles in-the-money, then there is a settlement fee of $1 per contract. If the position is held until expiration and it closes out-of-the-money (zero), there is no settlement fee.^[10]

Binary option contracts

Call spread and knock-out contracts

*Nadex will not charge a settlement fee which exceeds your total settlement payout for a position held until expiration. For example, if your position settles in-the-money at expiration, but your settlement payout is only $0.50, Nadex would charge $0.50 instead of $1.00 in fees.

See also[]

• Prediction market

References[]