After placing several binary trades on the demo account and double checking the underlying indicative with a different source I still somehow manage to lose positions even though I should be in the money. I think nadex preys on naivety of the retail investor by telling them that theyre “regulated” by the government. They attract people that dont know any better by having low investment cost. Never trading with them again.
I don't understand Settlement Calculations On Nadex Binaries
maxmills2013
#2
Nadex is an Exchange not a brokarage. Theres no one on the other side trading against you. They don’t make money on whether or not you win or loose a trade. They make money from the transaction fee. All they profit on is the traders making purchases on contracts, has nothing to do with the outcome of the trades.
Before you placed a trade, did you use the scanner to see whether it was an ITM or OTM contract?
wmiller561
#3
I wonder if the other source you’re using calculates the price the same way nadex does. If it doesn’t use the same method the two prices could easily be different at expiration.
darrell
#4
Zander I can understand you frustration.
First most obvious point is scamming you in a demo would be the worst idea on a planet if someone was doing this. Which Nadex is not… Just something to think about
Second:
Nadex is regulated by the CFTC same body that regulates the CME.
It says so right on the CFTC’s site
Scroll down to title: CERTAIN REGISTRATION AND REGULATORY REQUIREMENTS OF THE CFTC “http://www.cftc.gov/ConsumerProtection/FraudAwarenessPrevention/CFTCFraudAdvisories/fraudadv_binaryoptions” to see where NADEX (North American Derivatives Exchange is registered and regulated by the CFTC)
Third, your statement that you checked other sources without quoting them does not really line up…What sources…What were you looking for… It shows there is an obvious misconception about how settlement is calculated.
There really is only one source and that is reuters and there is only one calculation method. I have a reuters data feed and their indicative is spot on as I have tested it more than a few times to check. The indicative is calculated as the last 25 trades (mid quotes on forex), dropping the highest and lowest 5 numbers and averaging the middle 15. All exchanges have settlement calculations.
It also sounds like you’re holding to expiration with is usually not a good idea. That is one of the biggest advantages of nadex. Being able to close before expiration. Like many other trades false assumptions are made and an exchange is blamed. Nadex is not trading against you. Multiple market makers and other traders are. Binaries do have a bad name internationally but Nadex has done a great job of bringing a true exchange model to binaries.
Here are a few things that may help you in learning more about Nadex.
Sort of a top 10 list of differences between Nadex (an exchange) and the internaitonal non-cftc regulated binary brokers - including settlement differences)
http://apexinvesting.net/forum/brokers-118/nadex-compliance-319.html#.VGBQjfnF9gg
http://apexinvesting.net/forum/brokers-118/international-binary-brokers-814.html#.VGBQkvnF9gg
http://apexinvesting.net/forum/content/143-5-common-misconceptions-regarding-binary-options.html
To your point stay in demo and don’t trade live till you do full understand the product. We are here to help you. Nadex, futures, forex etc…
Darrell
If the underlying asset is too close to the strike price at expiration, it could go either way. Sometimes that can go against you but there is a flip side to it, too. The other morning I had a contract for USD/JPY where I sold 109.2. The Nadex indicative index was around 109.19 before expiration but then it jumped to ~109.21 within seconds!! However, I ended up winning the trade.
(BTW This post is not a trade recommendation, just an example scenario)
So, it’s not always going to go against you when its that close. Sometimes it will go in your favor, even when it looks like you lost.
darrell
#6
Takes last 25 trades quotes bid offer drops 5 highest and 5 lowest and averages middle 15 is how its calculated