Okay…I have a big question! Today, I made a trade on my demo Nadex account for a binary, it was Dow Jones-30. Expiration at 2:00. When it expired I was in the money, but the indicative index was much lower and I didn’t get awarded the win. I am trying to figure out why. When I bought the Dow, the price offered was 58.00, but I put in 57.50. Did this have to do with the loss? Please help me understand this. Thanks!
My demo trade lost today?
scottfreedom
#2
The indicative is the actual price it closed at. It’s a formula that Nadex uses to calculate the last 25 trades. If the indicative price was lower that is what it expired at. The price you put in was ITM at the time you bought it and that does not affect you losing at all. It’s the price that it expires at that matters. You could have paid 5 or 95 and if it expired below the strike you bought, it expired worthless. If you let it go into the dark zone, the last 2 minutes the price can move a lot. So if you bought it at 57.5 you should have sold it before the DZ even if it was say 50. You would have lost 7 dollars but that’s better than losing the 57.5.
For a little better idea of how the indicative price works, watch this video. It’s on clarity price but it works the same way and I have clarity price on all my charts as a lot of other here do also.
darrell
#3
Scott great reply.
To add to notes… may want to review what ITM means on a binary from my binary basics. ITM is defined exclusively by the indicative price and its relation to the strike. If you look at your settlement ticket from nadex it will give you what the indicative settlement price was of the underlying market. If it was at or below the strike a bought binary would not be ITM at expiration.