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Anyone heard or trading with Nadex (North American Derivatives exchange) ?


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Anyone heard or trading with Nadex (North American Derivatives exchange) ?

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  #1 (permalink)
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Quoting 
Nadex is an exchange where retail investors can trade simplified, capped risk derivatives contracts on a wide range of global financial markets.

I found them via ads on futuresmags website,basically it's for trading options and from my understanding you don't need to have a broker to trade with them.

experience share is appreciated.

website: Binary Trading Options | Binary Trading | Nadex

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SevenEightSix View Post
I found them via ads on futuresmags website,basically it's for trading options and from my understanding you don't need to have a broker to trade with them.

experience share is appreciated.

website: Binary Trading Options | Binary Trading | Nadex



I have no clue how to price a binary option, but I know that the one I am trading against has hired mathematicians for pricing them.

I am not convinced that I have an edge under these conditions.

If I cannot calculate the value of a binary option, I am just gambling.

I am not a gambler.


What do you think has been my conclusion?

- Saya tidak ingin membuat broker kaya -

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  #4 (permalink)
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Fat Tails View Post
I have no clue how to price a binary option, but I know that the one I am trading against has hired mathematicians for pricing them.

I am not convinced that I have an edge under these conditions.

If I cannot calculate the value of a binary option, I am just gambling.

I am not a gambler.


What do you think has been my conclusion?

- Saya tidak ingin membuat broker kaya -

siapa ajar kamu bahasa melayu?

it is not similar to options? I'm not sure how options work

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  #5 (permalink)
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SevenEightSix View Post
siapa ajar kamu bahasa melayu?

it is not similar to options? I'm not sure how options work

I've seen you post questions about various CFDs "brokers", and now binary options.

Why don't you just open a futures account?

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  #6 (permalink)
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Lornz View Post
I've seen you post questions about various CFDs "brokers", and now binary options.

Why don't you just open a futures account?

I have a futures account

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  #7 (permalink)
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SevenEightSix View Post
I have a futures account

Ok

Just know that the way these products are structured makes them quite "expensive"....

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  #8 (permalink)
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SevenEightSix View Post
I found them via ads on futuresmags website,basically it's for trading options and from my understanding you don't need to have a broker to trade with them.

experience share is appreciated.

I remember seeing something about this at Elitetrader a while back -- scroll down about 5 posts at the following thread for a first hand account:

Forums - binary options

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  #9 (permalink)
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SevenEightSix View Post
siapa ajar kamu bahasa melayu?

it is not similar to options? I'm not sure how options work

I have a basic idea how to value an option, but this would not be enough to have an edge. But with binary options it is even worse. Those are just packages of different derivatives, which have been created to make the creators rich. If I trade them, I am certainly not getting value for money.

And then I do not touch things, which I do not understand.

Saya telah menghabiskan beberapa bulan di Indonesia.

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  #10 (permalink)
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You can use a slight variation of Black-Scholes or a binomial model to price binary options.

Also, when it comes to binaries, if you have really great futures trading system, think about all of the times when you placed too tight of a stop, you got stopped out, and then you would have made good money in your futures position.

Additionally, you could use all kinds of variations on the martingale money management strategies to really take advantage of binaries.

If you are swinging for the fences with each binary trade, you will eventually lose everything in your binary trading account.

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  #11 (permalink)
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I have been demoing Nadex on and off for around 3 months and let's just say that things habe been going very well.

Now I wonder how realistic their demo version is ? You know what they say, when it looks too good to be true...

Does anyone have a live account with them ?

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  #12 (permalink)
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I was the New York Traders Expo yesterday and attended a presentation.

From what I understand, the options don't have much in common with traditional options. I mean there is NO time decay and NO volatility premium, they move lock step with their underlying instrument.

The options product just lets you 'bet' with limited risk and limited capital.

options expire daily, weekly. and even intraday.

I plan on creating a free demo account and see what develops. There are some interesting hedgeing strategies that can be developed.

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  #13 (permalink)
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with a pretty rich options background, I wish I'd have though of that.

As with all of my posts with this one especially, please read between the lines.

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  #14 (permalink)
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have seen mentioned on bloomberg here and there, probably better than etf's if true there is no slippage , not sure that's true

keep us posted

"Successful trading is one long journey, not a destination" Peter Borish Former Head of Research for Paul Tudor Jones speaking on conversations with John F. Carter
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  #15 (permalink)
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the inside market?

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  #16 (permalink)
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"Successful trading is one long journey, not a destination" Peter Borish Former Head of Research for Paul Tudor Jones speaking on conversations with John F. Carter
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  #17 (permalink)
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wldman View Post
with a pretty rich options background, I wish I'd have though of that.

As with all of my posts with this one especially, please read between the lines.

[if i read your post correctly] after the presentation, for those of us who have read Jessie Livermore's biography, the image of a bucket shop comes to mind . If its true that 90% of the traders lose, it pays to be the house!

in all fairness, we as traders, all we do is make bets.

I think what nadex does, at least for the binary options is to allow a smaller retail account be able to trade the markets. for example, I believe 5 nadex options = 1 emini sp500 futures contract. so a trader can adjust the risk, trade 1/5 or 1/2 the emini. or be able to trade more volatile mkts like crude oil or gold with limited risk and limited capital.

no need for a broker, you open an account directly with the 'exchange'. with as little at $100

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  #18 (permalink)
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I don't want to cloud up your view with my reality. There is no certainty that what works for me or what doesn't work for me will mean anything to you.

If I believed that Nadex was the place to trade I'd open an account there. You should do the same.

My simple response was that given my background I will not be opening an account there this afternoon. I was just asking that those contemplating such would consider the structure of the "market" and discover how and what is working for or against them.

When I suggest "read between the lines" I should provide a broader context. Here is a valuable mantra:

Be open and consider all things, evaluate them for what they are and the specific value that they provide to your end. RETAIN what is valuable and LET PASS without harm, that which is not valuable.

My statement that I will not be opening an account there this afternoon is all I will say about that. Guys can do their own research and make their own determination. My statement just means that it does not work at this time for me.

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  #19 (permalink)
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Hello,

I am posting this to encourage anyone who is considering Nadex. The more volume traded better for everyone. Nadex’s “Bull Spread” will allow you to trade the underlying instrument WITHOUT a stop loss. You can laterally have a 10-point margin of error on an ES futures contract if you are properly hedge with an accompanying Nadex contract. Of course you have to pay for the privilege: The cost can be as small as one ES point for every ES contract traded.


If you don’t want to trade futures, you can just trade the “Bull Spread” on Nadex. The costs are very competitive and again - you have a defined risk.

The Nadex website does a poor job at explaining how to hedge...too bad.

I guess this stuff is only for the advanced trader....



Good Luck,

dVL

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  #20 (permalink)
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I had never heard about this until I came across this thread. I just opened a demo account to see how it works.

This post is neither a recommendation for or against trading with them., but rather my impression after a short review of their platform and website.

They are regulated by the CFTC. But then again, MF Global was regulated and we saw how well that turned out.

Their focus is on small traders. They have very small account requirements which can be wiped out in one trade.

It's very different from trading a regular futures or forex account, which could lead to an expensive learning curve.

You have a fixed maximum risk which is shown before you place an order. However that risk could be $500 per contract. If a small trader was concerned with limited risk, he might be better off trading a forex mini account.

It is an interesting concept and will appeal to some traders who want something more exotic than trading regular forex or futures accounts. My concern is that with low account requirements and complicated trading concepts a lot of small traders will pay a heavy price.

That's just my $0.02 worth.

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #21 (permalink)
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All the trading forums are full of crabs that want to pull down any other crab that tries to crawl out of the bucket. They want to drag everyone down. That’s why I seldom post anywhere anymore.

There is a hedging video on the Nadex youtube channel. It gives a quick explanation on hedging. They need to do more stuff on hedging. I only found one video called: "Offsetting Positions"

I can't post links becaue I only have one post.

Good luck,

dVL

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  #22 (permalink)
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with one post under your belt you have both the right and the experience to judge futures.io (formerly BMT) and it's members. All kinds of crabs here not wanting any other crab to climb out of the bucket...right.

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  #23 (permalink)
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wldman View Post
with one post under your belt you have both the right and the experience to judge futures.io (formerly BMT) and it's members. All kinds of crabs here not wanting any other crab to climb out of the bucket...right.


Well here is a topic that no one knows anything about: Nadex. All the experts come out to give a negative opinion. It happens over and over just as it happened in this thread. Why would anyone post a negative opinion on something they know nothing about? What is the real reason? To help?

I think futures.io (formerly BMT) does a wonderful service - especially with the webinars. I will just keep on the sideline.

Regards,
dVL

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  #24 (permalink)
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ask yourself the same question, I guess.

I did not see any overwhelming opinions that where ignorant and negative. Maybe a bit of confirmation bias...people see what they are looking for. Also, how could you possibly know what people "know about" to the point that you could make a statement like that.

The TS asked for opinion. Opinion usually sweeps a wide path covering the full range from nonsense to nonsense the other way.

You get to be the judge..for you. nobody else.

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  #25 (permalink)
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wldman View Post
with a pretty rich options background, I wish I'd have though of that.

As with all of my posts with this one especially, please read between the lines.



The only reason I will respond is because there is so precious few examples and information out there on Nadex. A disservice is done when innuendo is done with no facts at hand.

I can only go by what someone posts as to what they know or not know. Separating fact from opinion is the point here so here are some facts.

We had a low of 1384.25 today on the E-Mini contract. If you wanted to go long on Nadex, you would BUY the “Bull Spread” with a floor of 1385. If you were smart and waited until the ES was close to the floor, your maximum loss on the trade was around $50 and you would not have any stop loss to worry about. The ES could drop like a rock, but you would only loose $50. (Assuming you bought 5 Bull Spreads to equal one ES contract).

Lets take the flip side - say you wanted to hedge your long ES position at 1384.25. You could of SOLD 5 Bull Spreads at the same time you went long one ES contract. If you sold a Bull Spread when the price was near a 1385 ceiling, you would have a 10 point stop loss and it would only cost you about $50 – one ES point (depending on conditions). This hedge was not available today because there were no Bull Spreads with a ceiling of 1385, but this is just an example.

Fact - not opinion. Does an “at the money put” costs around $50? If you can get an at the money put for $50 then call me an idiot.

Hope this helps the informed,

dVL

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daVinciLite View Post
The only reason I will respond is because there is so precious few examples and information out there on Nadex. A disservice is done when innuendo is done with no facts at hand.

I can only go by what someone posts as to what they know or not know. Separating fact from opinion is the point here so here are some facts.

We had a low of 1384.25 today on the E-Mini contract. If you wanted to go long on Nadex, you would BUY the “Bull Spread” with a floor of 1385. If you were smart and waited until the ES was close to the floor, your maximum loss on the trade was around $50 and you would not have any stop loss to worry about. The ES could drop like a rock, but you would only loose $50. (Assuming you bought 5 Bull Spreads to equal one ES contract).

Lets take the flip side - say you wanted to hedge your long ES position at 1384.25. You could of SOLD 5 Bull Spreads at the same time you went long one ES contract. If you sold a Bull Spread when the price was near a 1385 ceiling, you would have a 10 point stop loss and it would only cost you about $50 – one ES point (depending on conditions). This hedge was not available today because there were no Bull Spreads with a ceiling of 1385, but this is just an example.

Fact - not opinion. Does an “at the money put” costs around $50? If you can get an at the money put for $50 then call me an idiot.

Hope this helps the informed,

dVL

How do you determine the expectancy of your trades?

I understand that I can do this and that, but how do I know that I have an edge in doing something?

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daVinciLite View Post
...We had a low of 1384.25 today on the E-Mini contract. ...

And i had a plan in place: spoo-nalysis

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  #28 (permalink)
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Fat Tails View Post
How do you determine the expectancy of your trades?

I understand that I can do this and that, but how do I know that I have an edge in doing something?


I'm not sure about your question? I am writing about the mechanics of Nadex contracts and how they can be used as a hedge to reduce your risk. Trading strategy is another topic all together.

I am an order flow/cumulative delta and market profile trader.

dVL

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  #29 (permalink)
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end of thread?

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daVinciLite View Post
...I am an order flow/cumulative delta and market profile trader.

In a curriculum vitae that sounds cool indeed

What do you do in life? 'I am an order flow/cumulative delta and market profile guy'

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  #31 (permalink)
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wldman View Post
end of thread?

not quite, I think

I've been playing around "money-making" online since 2001.
Learned a lot along the way.
Took a voluntary break from it since 2006 because I was really busy doing other stuff.
Heard about binary options early this year and checked out a few of the "standard" offers/platforms.
Thought to myself "OMG, no way, that's the same old semi-illegal bunch at it from a different angle....."

But I am a curious person, so I dug deeper and my friend Google spit up this NADEX thing.

That one is completely different from anything else I've seen before!
1, it is fully legal to participate for US persons
2, they offer extensive education for free
3, you can have a free demo account for 2 weeks
4, you can start with just $100
5, you know exactly what your risk is for every trade
6, the fees are reasonable, just 90 cents per "contract"

So I signed up for a demo account and tried out some ideas that I had.
It took me two days to understand how to consistently make a predictable profit.

After the demo period was over I signed up for a real account and put the required minimum $100 in it.
I have been working with that "capital" ever since, just one little contract daily, trading for just the approximately 30 minutes that I can spare during my lunch break.

So far I haven't lost on a single trade.

The main thing I learned is:
You don't have to be able to predict where a certain index, currency, or commodity is going to head towards within an hour, or a day, or a week.
All you need to be able to predict is what the other people in the market will believe is going to happen within the next 15-30 minutes.

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  #32 (permalink)
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check out apexinvesting.com they have a ton of free education on nadex
And a cool scanner for finding the right spread to trade


lili View Post
not quite, I think

I've been playing around "money-making" online since 2001.
Learned a lot along the way.
Took a voluntary break from it since 2006 because I was really busy doing other stuff.
Heard about binary options early this year and checked out a few of the "standard" offers/platforms.
Thought to myself "OMG, no way, that's the same old semi-illegal bunch at it from a different angle....."

But I am a curious person, so I dug deeper and my friend Google spit up this NADEX thing.

That one is completely different from anything else I've seen before!
1, it is fully legal to participate for US persons
2, they offer extensive education for free
3, you can have a free demo account for 2 weeks
4, you can start with just $100
5, you know exactly what your risk is for every trade
6, the fees are reasonable, just 90 cents per "contract"

So I signed up for a demo account and tried out some ideas that I had.
It took me two days to understand how to consistently make a predictable profit.

After the demo period was over I signed up for a real account and put the required minimum $100 in it.
I have been working with that "capital" ever since, just one little contract daily, trading for just the approximately 30 minutes that I can spare during my lunch break.

So far I haven't lost on a single trade.

The main thing I learned is:
You don't have to be able to predict where a certain index, currency, or commodity is going to head towards within an hour, or a day, or a week.
All you need to be able to predict is what the other people in the market will believe is going to happen within the next 15-30 minutes.


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  #33 (permalink)
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Go to this playlist has video on heading with Nadex much better with their spreads vs their binaries
daVinciLite View Post
All the trading forums are full of crabs that want to pull down any other crab that tries to crawl out of the bucket. They want to drag everyone down. That’s why I seldom post anywhere anymore.

There is a hedging video on the Nadex youtube channel. It gives a quick explanation on hedging. They need to do more stuff on hedging. I only found one video called: "Offsetting Positions"

I can't post links becaue I only have one post.

Good luck,

dVL


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  #34 (permalink)
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Simple read the price ladder on dailies to price them
Fat Tails View Post
I have no clue how to price a binary option, but I know that the one I am trading against has hired mathematicians for pricing them.

I am not convinced that I have an edge under these conditions.

If I cannot calculate the value of a binary option, I am just gambling.

I am not a gambler.


What do you think has been my conclusion?

- Saya tidak ingin membuat broker kaya -


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  #35 (permalink)
fort worth texas/usa
 
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Posts: 13 since Apr 2012

The are priced great you just need to know how to trade them

Ie worst thing you can do is hold to expiration...buy at $10 sell at $30 that is 200% return...greed kills binary traders is holding out to make $90 at expiration

Fat Tails View Post
I have no clue how to price a binary option, but I know that the one I am trading against has hired mathematicians for pricing them.

I am not convinced that I have an edge under these conditions.

If I cannot calculate the value of a binary option, I am just gambling.

I am not a gambler.


What do you think has been my conclusion?

- Saya tidak ingin membuat broker kaya -


Lornz View Post
Ok

Just know that the way these products are structured makes them quite "expensive"....


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  #36 (permalink)
fort worth texas/usa
 
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The creators?? Who is that??
Nadex is an exchange they only make fees ...traders and market makers on other sides .... If you understand them which is not hard you can make a lot I'm up 5k in 3 months starting with only $250
Fat Tails View Post
I have a basic idea how to value an option, but this would not be enough to have an edge. But with binary options it is even worse. Those are just packages of different derivatives, which have been created to make the creators rich. If I trade them, I am certainly not getting value for money.

And then I do not touch things, which I do not understand.

Saya telah menghabiskan beberapa bulan di Indonesia.


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  #37 (permalink)
fort worth texas/usa
 
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I do...I love them

Demo is like live except when other demo traders place orders it can make thing a bit odd
TheSeeker View Post
I have been demoing Nadex on and off for around 3 months and let's just say that things habe been going very well.

Now I wonder how realistic their demo version is ? You know what they say, when it looks too good to be true...

Does anyone have a live account with them ?


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  #38 (permalink)
fort worth texas/usa
 
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Binaries are pure math

Other traders and market makers set inside to a point but it is derived from underlying and tied to black schooled type model

Nadex is an exchange so you ate 100% anonymous to other side (ie don't know who u ate if gettin in/out winning/losing)
Unlike bucket shops like bancdebinary


wldman View Post
the inside market?


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  #39 (permalink)
fort worth texas/usa
 
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Their are bucket shop binaries ie Cyprus ec...but Nadex is exchange their binaries are completely different ...see why Nadex binaries video on the Nadex you tone channel under the application playlist
cedar View Post
[if i read your post correctly] after the presentation, for those of us who have read Jessie Livermore's biography, the image of a bucket shop comes to mind . If its true that 90% of the traders lose, it pays to be the house!

in all fairness, we as traders, all we do is make bets.

I think what nadex does, at least for the binary options is to allow a smaller retail account be able to trade the markets. for example, I believe 5 nadex options = 1 emini sp500 futures contract. so a trader can adjust the risk, trade 1/5 or 1/2 the emini. or be able to trade more volatile mkts like crude oil or gold with limited risk and limited capital.

no need for a broker, you open an account directly with the 'exchange'. with as little at $100


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  #40 (permalink)
fort worth texas/usa
 
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They have a bunch of new videos by apex on YouTube they do a great job at explaining the spreads and how to hedge
daVinciLite View Post
Hello,

I am posting this to encourage anyone who is considering Nadex. The more volume traded better for everyone. Nadex’s “Bull Spread” will allow you to trade the underlying instrument WITHOUT a stop loss. You can laterally have a 10-point margin of error on an ES futures contract if you are properly hedge with an accompanying Nadex contract. Of course you have to pay for the privilege: The cost can be as small as one ES point for every ES contract traded.


If you don’t want to trade futures, you can just trade the “Bull Spread” on Nadex. The costs are very competitive and again - you have a defined risk.

The Nadex website does a poor job at explaining how to hedge...too bad.

I guess this stuff is only for the advanced trader....



Good Luck,

dVL


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  #41 (permalink)
fort worth texas/usa
 
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Nadex spreads not Nadex binaries should be used to hedge see apexinvesting.com to learn how to do this they give a ton of free education webinars daily radio show and have a live Nadex scanner that shows you how to this and does a. The math in real time
daVinciLite View Post
I'm not sure about your question? I am writing about the mechanics of Nadex contracts and how they can be used as a hedge to reduce your risk. Trading strategy is another topic all together.

I am an order flow/cumulative delta and market profile trader.

dVL


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  #42 (permalink)
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@drmartinjr3i, please confirm that you are in no way affiliated with Nadex or with Apex, and are not a broker or vendor with any product or service for sale.

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  #43 (permalink)
Montery Park CA
 
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I heard Nadex too ...because they have so many adv on different media.
I'm considering too because the stop loss in my future trading is a really big problem to me.

Such as today, I was waiting for the chance to long the NQ. However, my first entry was wrong timing and got stopped out, and market finally raise up in the second attempt and I take profit at once when I recovered my first trade loss.

I mean I did not sit on my trade comfortably because I had already loss my first trade. The scarey was over me when I place second trade. What if I'm wrong again?

I have to admit that I could not spot the right place/times to entry. I mean the place which I entry and then market will go to the direction I want it to goes without testing my tolerance.

Option may able to help me but to trade the normal option in day trading is very difficult unless they are going to be expiry real soon. So Nadex maybe something I will try.

But now I think I better to get a real job first. I already spent many months and so discourage that I could not made it... yet.

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  #44 (permalink)
fort worth texas/usa
 
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Would definitively check out Nadex Spreads as they will solve the problem you are referring to.

Nadex has a demo account 2 weeks). You can use it to get your head back in the game. Also you can get it extended one year if you have a live account ($100 funding requirement no platform, trading, or data fees)






esnq View Post
I heard Nadex too ...because they have so many adv on different media.
I'm considering too because the stop loss in my future trading is a really big problem to me.

Such as today, I was waiting for the chance to long the NQ. However, my first entry was wrong timing and got stopped out, and market finally raise up in the second attempt and I take profit at once when I recovered my first trade loss.

I mean I did not sit on my trade comfortably because I had already loss my first trade. The scarey was over me when I place second trade. What if I'm wrong again?

I have to admit that I could not spot the right place/times to entry. I mean the place which I entry and then market will go to the direction I want it to goes without testing my tolerance.

Option may able to help me but to trade the normal option in day trading is very difficult unless they are going to be expiry real soon. So Nadex maybe something I will try.

But now I think I better to get a real job first. I already spent many months and so discourage that I could not made it... yet.


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  #45 (permalink)
fort worth texas/usa
 
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I follow apex and trade on nadex...

I am not a broker at all

Not trying to sell any product

Just love nadex and telling people how to get from free education on it... people asked questions i told them where to find it...if that is an issue let me know...not trying to violate any rules or promote buying anything....figure you would appreciate someone pointing to where to find answers to many of the questions asked about how to trade on nadex


Big Mike View Post
@drmartinjr3i, please confirm that you are in no way affiliated with Nadex or with Apex, and are not a broker or vendor with any product or service for sale.

Mike


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  #46 (permalink)
Miami, FL
 
 
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It’s nice to see more people learning about Nadex. They are really coming along with more volume each year. Not using it right now but a great place to learn how to trade with limited risk.

dVL

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  #47 (permalink)
Toronto, Canada
 
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This is a very suspicious thread.

Smells like marketing.

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  #48 (permalink)
fort worth texas/usa
 
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What is being marketed...Just talking about Nadex....
0bl1vion View Post
This is a very suspicious thread.

Smells like marketing.


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  #49 (permalink)
Indianapolis, IN
 
 
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I agree - @drmartinjr3i seems to be advertising something here.
What I don't know is, why?

I mean, just because you like Nadex, that doesn't mean that you have to rub it into people's faces that you do.

I learned that most people don't recommend something out of the "goodness of their hearts".
When people get so excited about whatever, that they have to tell everybody and their brother about it, there is usually the hope of some kind of "extra benefit" hidden in the back of their heads.

@drmartinjr3i, what is the extra benefit you're hoping for?
More people on Nadex, so that volume will go up?
I've only been playing with this for three months now - and sufficient volume for my little hobby was available at all times.

So just relax. Those people who like Nadex will find their way there without you pushing them.

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  #51 (permalink)
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for what it's worth I've been trading Nadex since March with no issues. Their capped commission is a nice plus if you wanna really bring out the balls. Contracts that settle out of the money are not charged commission too. Honestly, the volume is pretty bad except for the big few contracts you would expect. you can see daily volume here https://www.nadex.com/content/dailybulletin.pdf But with that said, I never got slippage of any sort. You will be eating spreads constantly if you aren't patient or don't know what you're doing on the intraday contracts. The barrier to entry of playing around with spreads is very low. You can setup large straddles on the ES for only a few dollars on a daily basis

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  #52 (permalink)
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dmh24 View Post
Honestly, the volume is pretty bad except for the big few contracts you would expect.
(..)
But with that said, I never got slippage of any sort. You will be eating spreads constantly if you aren't patient or don't know what you're doing on the intraday contracts. The barrier to entry of playing around with spreads is very low. You can setup large straddles on the ES for only a few dollars on a daily basis

Didn't you meant to say that volume is practically non-existent? But all kidding aside , have the volume on Nadex grown in your experience since you started in March? (i.e. is it growing?)

Can you say something about the depth of the order book and the spread? The Nadex "idea" looks interesting, but with those low volumes it's not so appealing.

Depending on the width of the bid-ask spread, large straddles on the ES for a few dollars can be a big drawback, since the commission will then be a higher percentage of PnL.

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  #53 (permalink)
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Nadex is not a scam, in fact it's the only place where I would want to trade daily options. It's an options exchange registered in the US and not some bucket shop from Cyprus or the Virgin Islands.

The leverage that is available is insane, theoretically you could get a leverage of up to 900 and thus turn 100 USD into 1k in one trading session if you manage to catch the move of the day. If....

That being said, you're dealing with options here...if you cannot trade stocks, futures or spot FX you surely will lose your shirt trading options.

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  #54 (permalink)
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I haven't noticed any real speak-able change in volume. my thoughts of it are biased from checking the daily report .. daily! But yea, basically non-existent for all but a few contracts in only a few strikes

This terminology is quickly getting confusing, but the bid/ask spread on the weekly spread contracts is usually only 1-2 ticks. Binary and intraday spread contracts bid/ask spread are often much worse. Binaries are usually points apart. however keep this in mind, one tick on a spread always equals $1 (with no ticksize relation to underlying), and binaries are always $1 per 1 point, with a ticksize of 0.25. Strangles near expiration can be 'cheap' plays for $30 or so at $40 risk on binaries you will actually get filled at :P Can't say I recommend doing that though. Boxing spread contracts is the only sane thing to do atm

As far as order book goes, you can only see 3 levels, and only from the order ticket. It seems suitable for the volumes or even open interest really. here is a sample (of a $4 bid/ask spread too!)

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dmh24 View Post
(...)

Thanks Dmh24 for the screenshot en further information.

For me, Nadex is something that has potential, but for now, the lack of liquidity doesn't make it appealing. Worth tracking though.

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  #57 (permalink)
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I agree, there is not enough volume on Nadex to make it a"serious" trading platform.

For me this is just a hobby, though - something to entertain myself during the coffee-break.
It's also a good way to practice and refine my strategy.
I find it easy to understand the "mechanics" of how people behave in the market.
The limited volume helps beginners by keeping it all simple.

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  #58 (permalink)
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dmh24 View Post
for what it's worth I've been trading Nadex since March with no issues. Their capped commission is a nice plus if you wanna really bring out the balls. Contracts that settle out of the money are not charged commission too. Honestly, the volume is pretty bad except for the big few contracts you would expect. you can see daily volume here https://www.nadex.com/content/dailybulletin.pdf But with that said, I never got slippage of any sort. You will be eating spreads constantly if you aren't patient or don't know what you're doing on the intraday contracts. The barrier to entry of playing around with spreads is very low. You can setup large straddles on the ES for only a few dollars on a daily basis

Hello,

I am a little out of the loop here because I am not currently trading with Nadex, but from what I understand Nadex has business relationships with “liquidity providers.” It’s their job to make sure there are orders for the other side of your trade, although those orders my not be at prices you want . The actual amount of executed contracts does not effect the contract value. What matters is the amount of orders in the order book. The orders in the order book can be another customer like yourself or a “liquidity provider” that is contracted with Nadex.

There can be a lot of orders in the order book but if there is no one trading on the other end there will be no volume of course.

Since the Nadex contracts are based on an underlying contract that is traded on a different exchange: i.e. CME, FOREX, the actual executed volume on the Nadex exchange should have little effect the Nadex contract value. I say this loosely because there is some difference when you get close to a floor or ceiling.

Also, there can be no “slippage” since all orders are limit orders on Nadex.


Hope it helps.

dVL

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  #59 (permalink)
Indianapolis, IN
 
 
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yes, I've seen these "liquidity providers" in action.

Sometimes when I set up an order on Nadex, I can see it sitting there being the only working order at the price I entered - and then, all of a sudden, like "magic", the numbers will go up to the regular 20, or 100, or 500 orders that you would normally see on any of their binary options.

What I like about Nadex is, that you aren't really buying or selling any options on any of the underlying instruments. All the traders on Nadex are just trying to make an educated guess about the likelihood of a certain value being reached by the underlying instrument at a specific time.

You watch what other people think about that likelihood, and you are really just trading people's opinion.
I find people the easiest thing to predict.

For example:

if my analysis of the EUR/USD tells me, that it is on a steady uptrend and that uptrend will continue for at least an hour according to the technical analysis provided by my favorite signal provider, I know that all the other traders on Nadex will come to the same conclusion that the EUR/USD is trending up.

But, of course, there is uncertainty in the underlying EUR/USD value - so it will fluctuate back and forth a little bit.
Even in an uptrend, there will be times that it looks like the EUR/USD is retracting - and traders on Nadex will become skeptical, they will buy at lower prices or sell more.

I buy when I see this happening.

If my initial assessment was correct - the EUR/USD is on an upward movement - Nadex participants will regain their confidence after a few minutes, when the EUR/USD turns back around and continues in its original upward direction.

I sell when I see this happening.

In Forex this trading style could be dangerous, you have to be very quick, leverage can work to your disadvantage.
With Nadex, though, the risk is limited. You always know ahead of time what your maximum loss could be.
Movement is slower too, because it takes people some time to analyse the underlying instrument's movement and then decide to buy or sell their binary options.

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  #60 (permalink)
Michigan, Jackson
 
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Recently simulated NADEX. My interest was in trading the DAILIES IN THE MONEY call (buy) or put (sell) trades in the direction of a turning market. Problem was the spreads were way too wide (out of the money). When I saw market opportunity to place a trade I could not find low risk at the money calls or puts. I "complained" to NADEX and after two weeks they called me up on the phone and said they heard the same complaint from other traders and have now reduced the spreads by increasing (in) (at) the money option prices. I don't know. "Once burned, twice shy."

They also need to add a realtime in the money options finder primarily becaue the unsuspecting are too easily deceived by the ceiling and floor prices of the contracts from which are figured your risk to reward. However, that is deceiving when you note how far out of the money your strike price is and therefore how far the market must move before the end of the day to settle your contract in the money. Not my cup of tea. Better to trade more highly liquid options markets for real.

That said, NADEX bull spreads can limit one's risk by hedging your futures contracts with bull spread contracts. I think NADEX provides you with the calculation for producing those hedges. If not, well then they need to provide that too.

Overall: NADEX needs tighter spreads, a low risk/reward options finder, and an automated hedging calculator.

Perhaps that is coming. For now, NADEX is legit (probably the only legit binary options dealer), but not as market transparent as I think they should be.

COTtrader
"Ken"

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  #61 (permalink)
Indianapolis, IN
 
 
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Maybe that's the thing that makes Nadex so "different"?

You're not really "betting" on the final outcome (in or out of the money) of a certain option.
I never wait for any of my trades on Nadex to "settle" above or below a specific price (for the binaries).

I watch the underlying instrument's chart on my favorite real-time chart provider
and I also watch the chart for the corresponding option on Nadex.

I look for very clear (visible even for my untrained eye) directional moves, which have to be solid enough to be sustained for at least an hour (better five hours). I look at the 5 minutes, 15 minutes, hourly, and daily charts before deciding on an instrument to trade. Some days I don't find that kind of certainty - then I don't do it.

When the price on Nadex is somewhere between 40 and 60, I put in a buy order slightly below the low end of the Nadex price range for uptrending (with certainty!) underlying instrument - or I set up a sell order slightly above the high end of the Nadex price range for a (visibly!) downward moving underlying instrument.

As soon as my initial order is "triggered", I set up the corresponding closing order - figuring in the fees (.90 per contract, max. 9) and adding my target profit. About an hour later I come back to see if I'm "done" yet.

So far my average trade from open to close lived for only 20 minutes - I'm in and out of there long before any of those options settle.

I've also lost some of my trades.
When my initial assessment was incorrect, or I was curious to experiment, or there wasn't enough time left on the option, my closing order was never triggered - because I misjudged the direction or the timing of things - and then the opening trade eventually settled, out of the money in those cases.

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  #62 (permalink)
morristown, nj
 
 
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drmartinjr3i View Post
The creators?? Who is that??
Nadex is an exchange they only make fees ...traders and market makers on other sides .... If you understand them which is not hard you can make a lot I'm up 5k in 3 months starting with only $250

since you are doing so well, why don't you share your strategy to stay profit?

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  #63 (permalink)
Indianapolis, IN
 
 
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newbie2013 View Post
since you are doing so well, why don't you share your strategy to stay profit?

he/she did already - just look for posts from @drmartinjr3, and you'll find a nice description of that strategy - which I adapted a little for my own level of comfort. And yes, it works nicely. Mostly because it's simple psycology and has little or nothing to do with the underlying instruments.

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  #64 (permalink)
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Here's some of my impressions after trading with NADEX for about a year, on and off:

1. They have 2 main products, binary options in 2 hour, daily, and weekly durations, and "bull spreads" which are really equivalent to bull or bear spreads depending on if you buy or sell them. The "bull spreads" are only available in intraday forms, or daily but the daily only has one really wide spread spanning the day's starting price so it's of limited use.

2. The bid/ask spreads are basically wide, so don't plan on scalping anything. It appears as if most of the liquidity is provided by market makers. The spread on FOREX is about 3 pips, sometimes 5 pips. The US 500 ( ES equivalent looks like a spread of about 0.40-0.50 ). The binaries are usually about a 10% spread ( ie Bid 50-Ask 55 ). I haven't seen slippage, but with those spreads it will feel like you slipped.

3. The risk control is the best aspect - you have 100% certainty of limited risk, and you can select some "swing for the fences" type plays in front of news events for not a bad price.

4. The leverage can be really strong, especially with 2 hour binaries nearing expiration. You can see swings from 20 to 80 on the contract in a couple minutes sometimes.

5. Contrary to previous posters, there is definitely a "time value" to the options. For instance if a bull spread on AUDUSD covers 1.0370-1.0390 and the spot price is currently at 1.0370, you will only be able to "buy the spread" for maybe 1.0375 or 1.0376 if there is 2 hours left. Binaries also show "time value" which will burn off when out of the money. For instance, if price is 25.00 with 1 hour left, it will probably be about 10.00 with 20 minutes left. This can help you if you buy in-the-money binaries, or hurt you if holding out of the money ones.

The best value I found was trading the 2 hour binaries for Forex moves. Unfortunately, this is only available during the 8 AM-3 PM ET timeframe, so it doesn't work for Asian session trades when it would have the most value in my opinion, since that is when prices are dead and you want something to amp up the leverage.

Occasionally, there can be a use for the box spreads when price is near some sort of support/resistance zone, and you want to put on a low risk trade at minimum risk, say overnight on Forex.

If trading long binaries, a good strategy is to buy around 25, and sell at 50 when it crosses just past the strike. Another potential strategy is to buy binaries at 55 or so, expecting to hold until expiration, which allows time to work for you in the event the price just stagnates.

NADEX is OK for learning at a cheap price with real money. Say, if somebody blew out their account and was trying to rebuild it would give somebody a way to trade for minimal $$. Or to try out some new strategies. You can put some box spreads on for maybe $6 or $7 at times, so it doesn't always have to be a $50+ binary option.

The biggest drawback besides the spreads are that the majority of products are intraday and daily, so you will tend to get mentally coerced into a scalping/intraday mindset, and will not be able to put swing trade positions on and ride them through very much adverse price action. I found my 2 hour box spreads were sometimes expiring before the move got fully underway. Also, NADEX is closed between 3 PM-6 PM ET, so you can't trade FOREX across that time. Weekly binaries are OK for swing trades sometimes, but you are screwed if you see an opportunity on late Thursday or Friday, since the only options available at that point expire Friday at 3 PM ET. You can't trade for next Friday like you could on a normal weekly option.

Another drawback is that you cannot place any advanced orders, such as stop orders, brackets or anything like that. You are stuck with Limit orders only. That means you need to only buy options that you feel comfortable holding to expiration for the most part, or else have a hard target and place the Limit order at the time of the trade. Attempting to "stop out" is problematic since you have to watch the screen and be there to put the exit orders in.

If anyone wants to learn about trading NADEX, check Youtube and look for their channel, and there is also a company called "Trade with Precision" that was putting on free webinars for them as well. Lately, NADEX has taken to using APEX for their recent webinars, but I think the "Trade with Precision" webinars were better and less hype.

Also, FWIW - I am not affiliated with NADEX, Trade with Precision, or Apex.

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  #65 (permalink)
Indianapolis, IN
 
 
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yes, that assessment would be absolutely correct - given my personal (limited) experience with Nadex.

It's what makes this my favourite trading platform, because it has everything I want.
I just need some "entertainment" during my lunch break, to keep the brain active.
I like the strictly limited risk, the low amount of capital needed, and the "instant gratification" easily attained.

I focus on their daily forex binaries, I only go long, and I never wait for my contracts to settle.

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  #66 (permalink)
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Looking into NADEX right now myself. Low risk, US Regulated. I like that. Currently Demo-ing.

Anyone tried Spread Straddles/Binary Straddles?

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  #67 (permalink)
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Binary options are actually very cool betting instruments. Nadex seems to use a standard options pricing model which assumes a normal probability distribution. couple that with the all or nothing fixed payout It actually seems to provide an asymmetric amount of leverage. It becomes a VERY cheap way of picking tops/ bottoms.

.
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  #68 (permalink)
Indianapolis, IN
 
 
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in my opinion the best part is that you don't even have to wait for the "all or nothing" settlement payout you can take profit early.

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  #69 (permalink)
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Hello everyone!

I am currently trading futures but I am not profitable because I keep getting stopped out. My situation is similar to some guy that posted in this thread. Iam usually right in predicting the market but get stopped out before I am right.

Can someone please explain to me how their commissions are compared to regular futures brokers. I currently pay $5.52 for round turn.

Thanks

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  #70 (permalink)
Indianapolis, IN
 
 
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Nadex charges a flat 90 cents fee per contract, capped at $9.

Means, if you buy or sell one contract, you pay $0.90.
If you buy or sell 10 contracts (with one order), you pay $9.
If you buy or sell 100 contracts (in one order), you still pay $9.

So, in a nutshell, your "round-trip" will cost you anywhere between $1.80 and $18 - depending on how many contracts you are moving around.

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  #71 (permalink)
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lili View Post
Nadex charges a flat 90 cents fee per contract, capped at $9.

Means, if you buy or sell one contract, you pay $0.90.
If you buy or sell 10 contracts (with one order), you pay $9.
If you buy or sell 100 contracts (in one order), you still pay $9.

So, in a nutshell, your "round-trip" will cost you anywhere between $1.80 and $18 - depending on how many contracts you are moving around.

ES has $12.25 per pip; how much(# of contracts) contracts of US 500 bullspreads are needed to match this $12.25 per pip?

How much will this total of contracts be(collateral)?


Thanks for your answer

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  #72 (permalink)
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nytrader View Post
I am currently trading futures but I am not profitable because I keep getting stopped out. My situation is similar to some guy that posted in this thread. Iam usually right in predicting the market but get stopped out before I am right.

@nytrader:

So, if you're always experiencing the same situation by getting stopped out all the time, you should think about if your stopps may be a bit too tight for your selected timeframe you're trading.


nytrader View Post
I currently pay $5.52 for round turn.

That's just not a very advantageous fee you're paying...of course this depends on the instrument you trade,
but perhaps you may want to talk to your broker, depending on the amount of trades you take per month...

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  #73 (permalink)
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nytrader View Post
ES has $12.25 per pip; how much(# of contracts) contracts of US 500 bullspreads are needed to match this $12.25 per pip?

How much will this total of contracts be(collateral)?


Thanks for your answer

Nadex works differently, I suggest you study their explanations about how stuff works first before trying to compare this kind of trading to anything else you may have done so far.

Basically 1 contract at Nadex can have a price anywhere between $4 and $96.
Your task (if you want to make a profit on that trade) is to buy a contract "cheap" first, and then sell it "expensive" later on - or vice-versa.
If you just buy an option (=contract) now, and then wait until the option expires (without selling it first) you will receive a payout of either $0 or $100.

No pips involved, just all plain dollars.

So, to make up for your $1.80 fee per contract and trade, your goal should be to sell for a price at least $2 higher than what you buy it for, which would give you a $0.20 profit.
Realistically, of course, you will want to aim for more than $2 of a spread per contract.

Also, just for those of you who are used to trading other things, with Nadex there is absolutely no leverage, consequently no margin calls either - and I wouldn't recommend setting up any stop-loss, because prices will most likely swing between the floor and ceiling multiple times during the life-span of any of their options.

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  #74 (permalink)
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Ahh I only started learning about options 2 days ago so it's kind of confusing. It's very different from normal trading from what I can tell. You are not actually buying/selling anything instead you are just betting money like you would in Vegas in a casino?!

Am I right?

I haven't played with the demo yet so it will make more sense when I do...

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  #75 (permalink)
Indianapolis, IN
 
 
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well, I wouldn't call it "betting" - in my opinion it's more like "making an educated guess".

If you know how to read candlestick charts (on the underlying instruments, i.e. Forex or Futures) it is fairly easy to predict whether or not a certain strike value will be reached within a few hours.

It is similar to "normal" trading in a way.
You "buy in" on an opinion. People in the market have expectations about the final outcome of each "bet" offered.
Something that seems highly likely will have a higher price than something that nobody believes will happen.

You make money in this market pretty much the same way that you would in any other market:
you buy something "cheap" and sell it "more expensive".

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  #76 (permalink)
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lili View Post
well, I wouldn't call it "betting" - in my opinion it's more like "making an educated guess".

If you know how to read candlestick charts (on the underlying instruments, i.e. Forex or Futures) it is fairly easy to predict whether or not a certain strike value will be reached within a few hours.

It is similar to "normal" trading in a way.
You "buy in" on an opinion. People in the market have expectations about the final outcome of each "bet" offered.
Something that seems highly likely will have a higher price than something that nobody believes will happen.

You make money in this market pretty much the same way that you would in any other market:
you buy something "cheap" and sell it "more expensive".

Yes, I understand it's the same just different "mechanics".

Still getting used to this expirey thing, but very interesting. I used their demo today and got some multiple high P/L ratios without even trying. I bought the binary CL contract >@93.40 exp at 2:30 , and that big move happened at 2.

Today was a losing day though I was trying thigs out.

I am deff liking this it's simple to use, but deff needs some good strategies to make money.


`````

One thing I don't understand is why this position got closed?
Buy------------------ 01/14/13----------------- 14:42:56------------------------ 1 US 500 (Mar) 1430.0-1510.0 (4:15PM) @ 1465.8 -----------------------$-358.00

ES was well above 1430 and I didn't know they can just close like that?

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  #77 (permalink)
Indianapolis, IN
 
 
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hm? I don't know how to answer that question, but you can always look at Nadex's own statistics for all their options on a particular day, and find the numbers for those settlement prices.

Click on "Tools" (top right corner on your main page), then click the link "Nadex Results Page" in that window that pops up. It will take a little bit of time until the Results page populates - then you can scroll through endless pages of last weeks results, or search for a specific option.

While I was practicing and fine-tuning my strategy on the demo account I had some pretty hefty loosing streaks - until I finally got the hang of it.
I'm really enjoying this game now

Hope this helps.

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  #78 (permalink)
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nytrader View Post
Yes, I understand it's the same just different "mechanics".

Still getting used to this expirey thing, but very interesting. I used their demo today and got some multiple high P/L ratios without even trying. I bought the binary CL contract >@93.40 exp at 2:30 , and that big move happened at 2.

Today was a losing day though I was trying thigs out.

I am deff liking this it's simple to use, but deff needs some good strategies to make money.


`````

One thing I don't understand is why this position got closed?
Buy------------------ 01/14/13----------------- 14:42:56------------------------ 1 US 500 (Mar) 1430.0-1510.0 (4:15PM) @ 1465.8 -----------------------$-358.00

ES was well above 1430 and I didn't know they can just close like that?

Hello nytrader, It looks like you bought a "bull-spread" at 2:42pm that expires at 4:15pm/14Jan, hence position automatically closes at 4:15/14Jan. But, I can't really answer why the 358 loss. The math on bull spreads baffles me....lol...I found that you need to be able to predict huge moves in the right direction to be successful at "bull spreads". I stick with the binaries, much simpler to figure out. Hit my strike price, "in the money"; miss my strike price, "out of the money"...

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  #79 (permalink)
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wiredawg View Post
The math on bull spreads baffles me....lol...I found that you need to be able to predict huge moves in the right direction to be successful at "bull spreads". I stick with the binaries, much simpler to figure out. Hit my strike price, "in the money"; miss my strike price, "out of the money"...

agreed, me too - binaries are really easy to play, bull spreads require an advanced math degree.

I like the fact that you don't have to wait for the final results on any of those options.
Even the binaries at Nadex have the potential for some nice "slow scalping" (as I call it) long before they settle in, or out of, the money.

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  #80 (permalink)
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nytrader View Post
Yes, I understand it's the same just different "mechanics".

Still getting used to this expirey thing, but very interesting. I used their demo today and got some multiple high P/L ratios without even trying. I bought the binary CL contract >@93.40 exp at 2:30 , and that big move happened at 2.

Today was a losing day though I was trying thigs out.

I am deff liking this it's simple to use, but deff needs some good strategies to make money.

@nytrader

I'm curious how's your demo account doing?
Did you develop your strategy yet?
Do you still like it?

I've been trading on Nadex for about 4 months now, seriously getting the hang of it.
I believe I have a solid, working strategy - but, of course, 4 months isn't really enough evidence to back that claim.
And I still wonder why aren't there a lot more people doing this? Maybe I'm totally missing a vital point?

Isn't it odd that you can find thousands of posts, threads in forums, trading journals, websites, blogs, ..... talking about daytrading and forex and futures and options - but only a handfull of side-notes on Nadex, mostly published by Nadex and their associates?

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  #81 (permalink)
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My take on Nadex

I am a die-hard automated trader. For years and years. But nadex caught my eye, and I haven't been able to let go of it. Here are the things that I really found interesting:

(1) Reduced risk of drawdown
In my job, I am constantly searching for ways to reduce risk. With nadex, not having a "stop loss" means that there is no "I am wrong" exit point. This immediately reduces the risk of accumulated losers. In traditional directional trading, with stop losses of any sort, there are always the strings of accumulated losers with stops being hit. This contributes to the larger drawdowns of equity curves. So with no stops, you will still have drawdowns, just less of those huge hitting drawdowns.

(2) Reduced Risk/Reward ratio
You can't scalp Nadex. If you think more like an options trader and trade volatility instead of direction, then nadex becomes a goldmine. Here's why. Traditional options expire monthly. So that's one trade per month. And 1 contract is hundreds of dollars. So unless you are trading a very very large account, you can't distribute your risk with a good Risk/Reward distribution. ie. you have to place large bets, and most of your bets are correlated, which equates to one HUGE bet.

On Nadex, I can place a single contract trade for $3. Margin is $3. Maximum loss is $3. Stop Loss = None. Plus these expire daily (or every 2 hours for spreads). This means in a single week, I can put on 10-20 volatility plays that are absolutely not correlated (because they are volatility trades based on the localized price movement). So for about $50 per week I can have a well distributed set of trades in play, looking for a reward:risk of 2:1 and often way better.


I think the mistake is to look at Nadex as a traditional instrument like a futures or forex contract. They can be played that way, but that's not their design. They are volatility hedge instruments. So if you think like an options trader, you can move your normal directional futures/forex trades from a futures contract to Nadex and dramatically reduce your risk and overall exposure. It does take a different kind of thinking.

Quick Story: My middle son wanted a new pair of gaming headphones. Expensive gaming headphones. The deal in our family, is that you have to buy stuff you want with trading earnings (all three kids trade). But he wanted them THIS WEEK. So he looked up the news announcements for the week (and he wanted to order them by Wednesday). So he found all the news announcements for Monday and Tuesday. Then he put on trades out of the money, and some way out of the money straddling the news on gold and oil. News hit tuesday, his orders triggered. That afternoon he closed one of his way-out-of-the-money positions in profit, the out-of-the-money trades (which are now in the money) he held onto. By Wednesday night, he had enough money for his headphones (2nd day air delivery) and a few dollars to spare. Of course he won't trade again until he wants something new, but the point was that his total exposure for those trades was $20. He had 4 trades at $5 each (plus commission).

It's a prime example of non-directional volatility trading with low risk.

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  #82 (permalink)
Michigan, Jackson
 
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cjforex View Post
My take on Nadex

I am a die-hard automated trader. For years and years. But nadex caught my eye, and I haven't been able to let go of it. Here are the things that I really found interesting:

(1) Reduced risk of drawdown
In my job, I am constantly searching for ways to reduce risk. With nadex, not having a "stop loss" means that there is no "I am wrong" exit point. This immediately reduces the risk of accumulated losers. In traditional directional trading, with stop losses of any sort, there are always the strings of accumulated losers with stops being hit. This contributes to the larger drawdowns of equity curves. So with no stops, you will still have drawdowns, just less of those huge hitting drawdowns.

(2) Reduced Risk/Reward ratio
You can't scalp Nadex. If you think more like an options trader and trade volatility instead of direction, then nadex becomes a goldmine. Here's why. Traditional options expire monthly. So that's one trade per month. And 1 contract is hundreds of dollars. So unless you are trading a very very large account, you can't distribute your risk with a good Risk/Reward distribution. ie. you have to place large bets, and most of your bets are correlated, which equates to one HUGE bet.

On Nadex, I can place a single contract trade for $3. Margin is $3. Maximum loss is $3. Stop Loss = None. Plus these expire daily (or every 2 hours for spreads). This means in a single week, I can put on 10-20 volatility plays that are absolutely not correlated (because they are volatility trades based on the localized price movement). So for about $50 per week I can have a well distributed set of trades in play, looking for a reward:risk of 2:1 and often way better.


I think the mistake is to look at Nadex as a traditional instrument like a futures or forex contract. They can be played that way, but that's not their design. They are volatility hedge instruments. So if you think like an options trader, you can move your normal directional futures/forex trades from a futures contract to Nadex and dramatically reduce your risk and overall exposure. It does take a different kind of thinking.

Quick Story: My middle son wanted a new pair of gaming headphones. Expensive gaming headphones. The deal in our family, is that you have to buy stuff you want with trading earnings (all three kids trade). But he wanted them THIS WEEK. So he looked up the news announcements for the week (and he wanted to order them by Wednesday). So he found all the news announcements for Monday and Tuesday. Then he put on trades out of the money, and some way out of the money straddling the news on gold and oil. News hit tuesday, his orders triggered. That afternoon he closed one of his way-out-of-the-money positions in profit, the out-of-the-money trades (which are now in the money) he held onto. By Wednesday night, he had enough money for his headphones (2nd day air delivery) and a few dollars to spare. Of course he won't trade again until he wants something new, but the point was that his total exposure for those trades was $20. He had 4 trades at $5 each (plus commission).

It's a prime example of non-directional volatility trading with low risk.

CJ, Past thread discussion relating to binary options and Nadex in specific is here:



Ken "COTtrader"

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  #83 (permalink)
OC, California, USA
 
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Having traded on Intrade during the election last year the risk/reward of binaries on NADEX was pretty easy for me to grasp.

I've been demo-ing NADEX for a couple of days now, still trying to get the hang of their system and practicing my execution. Still don't understand the how the spreads work, I guess they're like vertical call/put spreads but the pricing is weird, need to go through the videos more.

I have been focusing on binaries though, particularly pre-high volatility moments like cjforex mentioned, I'm interested to see how the CL binaries trade/price in front of inventory reports (I'll be watching this Weds) and how the market spreads out or if the further OTM strikes get more expensive in front of the news. Also, look at low-vol Bollinger squeezes in the underlying and buy cheap straddles.

Everybody has only talked about buying binaries, does anybody sell? For example, if ES is at 1450 and the 1440 is bid/ask 92/95 I can sell that for 92, or be a little greedy and try to sell it for 93.50, risking $6.50 that the ES won't close above 1440, I may not win that often but the times I do the payout is $93.50 on a $6.50 risk. With these kind of trades the usual "risk 2% of your account" probably needs to be dialed down to < 1% to endure large strings of consecutive losses. The other nice thing is that you don't have to wait until settlement, if ES starts to drop near the strike you might be able to buy it back at $70-60 for a nice 5-6x return on risk and capture that profit.

P.S. Bought the VIX 14/20 call spread today, we're hovering near recent lows again, which were 7-year lows, and we're due for a pullback...7 days of straight-up price action needs a pause at some point. If the VIX continues lower I'll buy back my short 20 call for less and buy more 14 or 13 strikes.

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  #84 (permalink)
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I'm really amazed at the minute quantity of info related to NADEX, both here, and on other communities. Is it because they offer binaries and that has become a dirty word in trading due to all the shady operators of Euro-style binary options?

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  #85 (permalink)
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Fat Tails View Post
I have no clue how to price a binary option, but I know that the one I am trading against has hired mathematicians for pricing them.

I am not convinced that I have an edge under these conditions.

If I cannot calculate the value of a binary option, I am just gambling.

I am not a gambler.


What do you think has been my conclusion?

- Saya tidak ingin membuat broker kaya -

Can you calculate the value of a futures contract?

A lot of price movement is caused by speculation. Certainly on the ES, probably 80-90% is short term speculation.

A binary market exists for the ES and will move with it, arbitrage stops markets going out of synch.

These markets are really just another way to place a bet IMO. I don't know how to calculate the value of a futures contract and to be honest, I don't think it would be of benefit if I could.

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  #86 (permalink)
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lili View Post
All you need to be able to predict is what the other people in the market will believe is going to happen within the next 15-30 minutes.

This is, quite possibly, the most interesting realization regarding trading NADEX in the short term.

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  #87 (permalink)
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NADEX is like any other Binary Options Platform.
They will take your money.

The good: They allow you get out of TRADE if you think it's going bad. (provide you have training as to how to do that) and they take your trading fees) Unlike the offshore/European Binary Options: Choose Wrong, Lose, it's over.

The Bad: It's Betting. Not really Investing. This is cuz you walk away with nothing if your wrong about the bet and all this in the given/limited time span. At least in the Stock Market: Today the investment is 10$. Drops to 5$ value in say the same time frame, But you still hold the Stock or Investment and like a Broken Clock it will be right again 2x a day. So you still have a chance to get your money back and have something in hand unlike this game when it Expires in the given time frame: Game Over.

The Ugly: You not really getting 100% of your investment like a Stock Market. You only walk away with a partial with Fees and returns from the investment put in. where as if you invest into a stock market: 10$ investment and you earn 20$ per share You make far more than you would here.

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  #88 (permalink)
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I've traded for a long time and NADEX is terrible!!!

1. There's no volume data.
2. All contracts are based on "NADEX Indices" that you can't find real data on anywhere else.
3. Virtually NO liquidity (dominated by so-called market makers, and hard to get fills)
4. Huge Spreads (the most active contracts have minimum 7 to 8 point spread)
5. Slow and latent data (somehow the market makers spreads adjust 1 to 3 seconds ahead of market movements reflected on charts and last-sale data)

Do NOT be seduced by this market. They make it almost too easy to set up an account and start trading within minutes by advancing funds against your electronic checks.

You might get lucky with an occasional winning trade, but if you spend any time trading here you'll realize you're at their mercy----too little info and market makers who use huge spreads to squeeze the #%^! out of you.

There are plenty of better places to trade.

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  #89 (permalink)
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I've traded for a long time and NADEX is terrible!!!

1. There's no volume data.
2. All contracts are based on "NADEX Indices" that you can't find real data on anywhere else.
3. Virtually NO liquidity (dominated by so-called market makers, and hard to get fills)
4. Huge Spreads (the most active contracts have minimum 7 to 8 point spread)
5. Slow and latent data (somehow the market makers spreads adjust 1 to 3 seconds ahead of market movements reflected on charts and last-sale data)

Do NOT be seduced by this market. They make it almost too easy to set up an account and start trading within minutes by advancing funds against your electronic checks.

You might get lucky with an occasional winning trade, but if you spend any time trading here you'll realize you're at their mercy----too little info and market makers who use huge spreads to squeeze the #%^! out of you.

There are plenty of better places to trade.
January 19th, 2014 03:42 PM

Orange~ I can feel the frustration buddy. I've been there with NADEX myself. When I first started with NADEX I was losing $$ most of the time. I didn't have a clue what I was doing. It took me a while to get use of the platform, entering trades, setting profit targets, and setting up stop losses, how to pick the right strike prices, and picking the right bull spreads.

But after watching countless videos on youtube and using NADEX demo account for a couple of months. I can honestly say I have been consistenly profitable. I agree the spreads could be better, but you shouldn't worry about that. When you understand "Price movements" you'll be able to pick the right strike prices and spreads. BTW the BEST link on here for trading is "Price Action Trading System" by Mack.

If you like you can send me a personal email and maybe we can Skype and I'll share my screen on how to place trades etc. I hated the charts on NADEX a year ago, but they have made some great changes and you can use them as well. Remember they are the indicative charts and Not the underlying, but the prices are very close. BTW You can get a lot of education on Big Mike's site I wished I would have started here when I first began my trading career.

Love to hear from you.

Walt

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  #90 (permalink)
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Awesome resource for trading strats for nadex. Apex Investing Institute

They have multiple videos and weekly webinars discussing them.

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  #91 (permalink)
seattle washington usa
 
 
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Lots of great opinions on here regarding Nadex. Anyone selling short daily strangles on the ES?

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  #92 (permalink)
Chesapeake Virginia
 
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EliteThink~

I usually go long or short using the indices (Bull Spreads) for the ES and I prefer the straddle for the ES.

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  #93 (permalink)
Raleigh, NC
 
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I trade Nadex also and think it is a nice add on to my futures trading. Really like trading TF on the bull spreads. Forex pairs are fine on the binary side but wish the expiry times weren't 2 hours. A set 1 hour window would be nice. But its working out fine so far. Just my 2 cents..

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  #94 (permalink)
canton mi
 
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nadex is only good if used as a hedge with futures because of the 5-6% edge lose due to the
computer gen spreads that make winning in the long run hard especially with bull spreads. if one
can figure out a strat using binaries then you can get ahead but one must have discipline to not
get frustrated when your right but it expires against you due to the last 5 min being a window where you cant
get out. it is in my opinion a good place to learn to trade and improve one psychology.

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  #95 (permalink)
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shodson View Post
Having traded on Intrade during the election last year the risk/reward of binaries on NADEX was pretty easy for me to grasp.

I've been demo-ing NADEX for a couple of days now, still trying to get the hang of their system and practicing my execution. Still don't understand the how the spreads work, I guess they're like vertical call/put spreads but the pricing is weird, need to go through the videos more.

I have been focusing on binaries though, particularly pre-high volatility moments like cjforex mentioned, I'm interested to see how the CL binaries trade/price in front of inventory reports (I'll be watching this Weds) and how the market spreads out or if the further OTM strikes get more expensive in front of the news. Also, look at low-vol Bollinger squeezes in the underlying and buy cheap straddles.

Everybody has only talked about buying binaries, does anybody sell? For example, if ES is at 1450 and the 1440 is bid/ask 92/95 I can sell that for 92, or be a little greedy and try to sell it for 93.50, risking $6.50 that the ES won't close above 1440, I may not win that often but the times I do the payout is $93.50 on a $6.50 risk. With these kind of trades the usual "risk 2% of your account" probably needs to be dialed down to < 1% to endure large strings of consecutive losses. The other nice thing is that you don't have to wait until settlement, if ES starts to drop near the strike you might be able to buy it back at $70-60 for a nice 5-6x return on risk and capture that profit.

P.S. Bought the VIX 14/20 call spread today, we're hovering near recent lows again, which were 7-year lows, and we're due for a pullback...7 days of straight-up price action needs a pause at some point. If the VIX continues lower I'll buy back my short 20 call for less and buy more 14 or 13 strikes.

Are you still trading on Nadex?

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  #96 (permalink)
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tturner86 View Post
Are you still trading on Nadex?

Sorry, I'm not. I've been focused on other things. It's still something that looks interesting to me, but I don't have any specific trade plan or NADEX-specific strategy with a statistical edge that I can trade right now so it's not in my arsenal.

It seems hard because the spreads and commissions are kind of expensive, plus you have the somewhat strange expiration times to deal with, so the "vig" seems too much to overcome for me at least at this point.

This article in Active Trader on binary options helps illustrate this point.

Plus, I don't see any way to automate NADEX trades so that's kind of a non-starter for me. I don't want to sit in front of a trading screen all day.

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  #97 (permalink)
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shodson View Post
Sorry, I'm not. I've been focused on other things. It's still something that looks interesting to me, but I don't have any specific trade plan or NADEX-specific strategy with a statistical edge that I can trade right now so it's not in my arsenal.

It seems hard because the spreads and commissions are kind of expensive, plus you have the somewhat strange expiration times to deal with, so the "vig" seems too much to overcome for me at least at this point.

This article in Active Trader on binary options helps illustrate this point.

Plus, I don't see any way to automate NADEX trades so that's kind of a non-starter for me. I don't want to sit in front of a trading screen all day.

Thank you for the article. I looked into NADEX because I was intrigued by the simple to understand risk. I was wanting to use it to place small trades that I couldn't take in Futures because it would be beyond my risk allowance for a trade. But I found it very hard to find and execute a good trade on NADEX. Sure the $6 risk to a $94 profit is great R:R but it is also hard to fill that trade at times because there is no one to take the other side. (As I found out a few times of trying.)

Also I didn't like how I had to set for an hour or so looking through the binaries or spreads trying to find something worth while. And I agree with the weird exp times. NADEX seems intriguing and I like that it is US based and regulated, but at the moment was untradable for me.

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  #98 (permalink)
Jefferson City, Missouri
 
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EliteThink View Post
Lots of great opinions on here regarding Nadex. Anyone selling short daily strangles on the ES?


mrfxtrade View Post
EliteThink~

I usually go long or short using the indices (Bull Spreads) for the ES and I prefer the straddle for the ES.

Not selling straddles. I usually just trade the Box Spreads (Bull Spreads) on the: ES, YM, NQ, SI, GC & CL. Sometimes I will trade the weekly Binaries, not often tho...
If copper starts to move on a daily basis I might trade the Box Spreads on that too...
Currencies..... Well I will trade Box Spreads on those but only if I think they will move 30 pips or more before expiration. Lately, I have not been trading the Box Spreads on the currencies. Only time they move much is during news announcements/reports and the spread gets too far out of whack to trade....
When I get time I'm really going to let NADEX have it when I reply to their "We Value Your Opinion" survey they sent out last week. They need to hear about their ridiculous spreads, and their lack of liquidity in some markets. Like Gold for example.. only 5 box spreads at a time??? Really NADEX.. 5? Hideous! And why only 20 Box Spreads on CL? It's just as liquid as YM and ES basically, but can only trade 20 where as YM and ES you can trade 50 at a time. And their widening of the spreads at report releases makes it hard to trade. I think they should just drop all spreads to 3 points on everything and leave it like that 24/5!

My .02

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  #99 (permalink)
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@srgtroy found this:



CL is currently testing a bullish PRZ (potential reversal zone) for an Alternate Bullish Bat, the longer price holds above 92.27, the higher the probability of retracement mode attempt. This has a target of 93.34 and scaling point, aka a potential rejection point, at 92.68. I consider 92.68 a directional bias shift level because a hold above there invalidates a bearish cross and increases probability of testing 93.34 or higher.
A hold below 92.27 has initial target of 91.80 for a retest of the bottom of the PRZ. A break down of 91.80 has the extended targets 91.48, 91.23 and 90.73, so these become targets and potential bounce points once price arrives there.
So, watching price behavior at the underlying CL price of 92.27 offers clues as to which targets have a higher probability of being tested.
Given that view, let’s translate it into a viable trading strategy using Nadex listed binary options. We’ll use the daily options that expire today (September 9 10.45EDT) at 2:45PM EDT.
At the risk of stating the obvious, the reader will not be able to replicate this strategy exactly. What I am doing here is demonstrating the efficacy of Nadex listed binary options by way of a real time example.
We consider 92.68 to be a key support level which, if penetrated, will lead to a further decline. With CL currently at 93.25 there is a daily binary with a settlement price of 92.50.
The market in that binary at this writing is 90 bid and 92 offered. This means that the market as a whole believes that there is between a 90 and 92 percent chance that CL will be above that level on expiration.
Given that binary options settle at either 100 or zero we will sell the 92.50 binary at 90. This means that we risk $10 to make $90.
At the same we’ll look at the binary option with the same settlement time and a settlement price of 93.50. The market in this option is currently 30 bid and 32 offered. We’ll buy this option at 32.
This gives us the following scenario: A close above 93.50 makes the position $58 as both binaries settle at 100.
A close below 92.50 makes the position the same $58 as both options expire worthless.
However, if CL is between 92.50 and 93.50 at 2:30 the position loses $42 as the short binary settles at 100 and the long binary settles at zero.
Still, the trade risks $42 to make $58, a better than even money bet, in just a little less than 4 hours time.

MrTopStep

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  #100 (permalink)
Memphis,TN
 
 
Posts: 232 since Sep 2010

Good Afternoon,

I just recently started to really focus on day trading Nadex via their Pro platform, and my main reason for using Nadex to place trades on the various Futures markets , is to try and reduce my Risk , as well as to Reduce the cost to trade the Futures outright.

I like the BullCall spreads, for the reason, that when I look to place a trade , I always try and enter " At the Market " and keep as little of Risk on the trade as possible...... I.E. I will place the BullCall " Ceiling " for instance if I want to go short, as close to where the Future is currently trading, at the time I wish to initiate the trade.


Well, today, I entered Short, at the high of the days, on the ES, TF and NQ

But when I went to look at my fills, I was not filled at the price " Time " I thought I was when I initiated the trades

So I just sat here and watched the Bid x Ask, and noticed that there is not always an Ask nor is there always a Bid, and
I am assuming that there was no Bid at the time I went to place my short trades earlier this morning ?


Can someone please give some insight as to what the bid and or ask needs to be at a " minimum " in order to have the highest likely hood of getting filled?

For instance.... If I am only wanting to enter a trade 1 contract and I want to go short,
is having the Bid showing 5 , enough for me to get filled immediately, and as close to the At the Market price I am seeking / hoping for ?

Thanks for the help , much appreciate it - Michael

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