Why Nadex Commissions Are A Good Thing

If you are considering trading at Nadex, you probably are already familiar with some of the many benefits. Nadex is US-based and CFTC-regulated. It gives you a lifetime demo account and places no restrictions on your withdrawals. You can use early close to exit both winning and losing trades when you need to. Nadex also offers an amazing proprietary platform with an abundance of technical indicators and drawing tools that you can use to plan your trades.

But there are some drawbacks—or so it would seem. One of the main snags? There are fees on every trade you win or exit early.

You can find Nadex’s fee page here.

Breaking Down the Nadex Trade Fee Structure

The Nadex fee structure is very simple and straightforward.

An order is made up of contracts.

For your first 1-10 contracts in an order, you pay $1 per contract capped at $50 (cap does not apply to in the money trades).

And that’s it.

Because Nadex keeps its fee structure simple, you always know exactly what you are going to pay for a trade upfront, and you can calculate that into how you budget your money and measure your wins and losses. Remember, if you close out of a trade early to try and break even on it, you will still lose money through the fees. You need to account for that when you are testing in order to measure the overall profitability of your trading method.

On the bright side, Nadex does not have fees for account setup, electronic check setup, or electronic check deposits or withdrawals. There are $25 fees for wire withdrawals and returned checks (standard in the industry).

Why You Want To Pay Nadex Trading Fees

Now you may be balking at the thought of paying so much just to trade on Nadex. Why sign up for a broker that is going to charge you just to make a transaction? Most binary options brokers have zero fees on any of their trades.

But really, you want to pay these fees. You are going to love paying these fees, and I am going to tell you why.

Compare How Other Brokers Make Money vs How Nadex Makes Money

Reason #1: There Is No Conflict of Interest at Nadex – There is at other brokers.

Other binary options brokers may not charge trading fees, but they still have to make a profit. So the question you should be asking is, “Where are the other brokers making the money?”

The answer is that other brokers make money when you the trader loses.

The vast majority of binary options brokers are not actual “exchanges.” When a trader places a buy or sell order, the broker takes the other end of the trade. So with one of those brokers, if you choose “high,” the broker is choosing “low.” If you win the trade, the broker loses money. If you lose the trade, the broker makes money.

This is an obvious conflict of interest. This is not how Nadex does things. I will get back to that in a moment, but first I want to emphasize why this is such a bad thing.

Basically, with other binary options brokers, it is in the interest of the broker for you to lose your money. In a sense, you are a gambler and the broker is the house. And you know the old saying: “The house always wins.”

What do other brokers do to ensure that they come out ahead? Here are just a few common practices:

• The broker will set up payouts and refunds in such a manner that there is a gap favoring the broker. So for example, you might get 10% back if you lose and 75% if you win. Notice how there is a gap there? That 10% back does not do a lot to make up for your losses when you only make a paltry 75% on your winning trades! You have to win way more than half your trades to be profitable. You are fighting an uphill battle.
• The broker may only offer trades that you are likely to lose in the first place. You cannot simply propose a trade and hope the broker will take the other end. You can only pick from the trades available in your platform. This may not be an issue with High/Low trades, but you can see how it could play out badly with One Touch or Range trades. The broker may only offer One Touch trades in dead markets, or Range trades in volatile conditions.
• You may not be given many tools to control your trades. A lot of brokers do not even offer early close. If they do, they may only offer it within certain set constraints.
• Disreputable brokers may cheat you (see this site). With one common scam, the clock runs down to the expiry time and you still find yourself stuck in the trade. It expires a few seconds or minutes later at a loss. When you demand your money back, the broker directs you to re-read the Terms and Conditions. There you see that the broker is not responsible for losses incurred through “technical problems.”

Nadex is different because Nadex is an exchange.

That means that you are trading against other traders, not against the house. You get to set up trades. So long as someone else is willing to take the other end, you are good to go. This opens a world of opportunity.

Because Nadex does not profit off losing trades, the site has to make money somehow—that is where the commissions come into play.

This is great, because there is no conflict of interest. Nadex is not going to take sides. Nobody is going to demand that you stand back and accept an unnecessary loss. You can control your trades almost completely with early close. Nobody is going to steal your money through a “technical error.”

If you are a serious trader, it is in Nadex’s best interest that you win and win often. Why? Because that means you will stick around and continue paying the fees that Nadex profits on. You will become a long-term customer, and that is bread and butter.

So this is a broker that actually has your back! You are not just paying to trade—you are paying to support a company that will support you in turn. Right now there are literally only a handful (if that) of brokers that are structured this way. And Nadex is by far the best.

Reason #2: You Can Win Massive Payouts

There is one other reason you will be more than glad to pay Nadex trading fees—and that is the ridiculously high profits you can win.

Nope, Nadex is not going to pay you stingy 75% on your winning trades. You can earn 200%+ even on High/Low trades!

Seriously, that is crazy.

Basically one winning trade on Nadex can easily be equal to any three winning trades on another website.

In other words, you have to work around three times as hard to make it anywhere else!

So your trades are going to cost around $10 (or less), but think for a moment. Imagine that you are investing $50. On most sites, you might score a 75% payout, so a profit of $37.50. On Nadex, you could get a payout of 200%, so $100. Subtract $10 from that, and you have $90. Clearly you are doing a lot better on Nadex even with the fees!

Where this can become problematic is when you close out of trades early at a partial profit, breakeven or loss. You still pay the fees, so in some cases you could wipe out your partial profit or wind up with a loss because of the fees.

But remember, on many other binary sites, you can only close out early in certain situations. Early close may not actually be available when you need it. So you may still end up preventing more losses through Nadex.

Always Adjust Your Strategy to Account for Your Fees

Long before you are ready to trade live, you will have to do a lot of testing. This will start with backtesting on historical data and progress to demo testing on the Nadex platform.

When you are backtesting, always remember to adjust your numbers to account for your fees! When you calculate your winnings, subtract the fees to see your real profit or loss. Otherwise you may overestimate how well you are doing.

In some cases, you will find that you are overestimating how well you are doing. If that is the situation, you may need to tweak your strategy a bit. Maybe for example you will find that you are using early close too often or too seldom, or just not at the right times. A lot of “break even” trades can really eat into your profit if the fees convert them all into losses.

You will have to test different techniques in backtesting and demo to figure out the best exit strategies. You may also need to adjust your money management plan. Risking 2% with fees is not the same as risking 2% without fees.

Conclusion: Nadex Fees Are Totally Worth It

Trading fee-free on another binary options website may sound like a great opportunity, but you really are better off trading on Nadex and paying the commissions. Nadex fees are fair, and Nadex trading is fair.

Isn’t it worth paying a little extra for the assurance of knowing you will not be cheated? So long as you have a profitable trading strategy, the 200%+ payouts will more than offset the cost of trading. In fact, you can profit with a lower win percentage on Nadex than you can on fee-free sites with lower payouts. So take advantage of this awesome opportunity. Open an account on Nadex—or learn more first by reading our Nadex review!

Keep On Reading

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