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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) ?

  #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 http://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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  #55 (permalink)
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  #56 (permalink)
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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 http://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)
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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)
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NADEX SPREADS are TOO WIDE


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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