This guide shows you how to trade a binary option on Nadex. It does not assume strategy for trades but the mechanical process to trade a binary option for the first time on Nadex. It is slightly different than what you are used to if you have traded with some of the offshore brokers. These steps also assume you have set up your account on Nadex already.
Step 1. Choose a contract to trade.
Start by choosing a contract to trade. You can do this by glancing at the left-hand side of the screen at the Finder panel. This shows you all available markets.
For example, you might look under “Forex Binaries.”
There you will see a list of currencies.
You can pick one, for example AUD/JPY.
If you click on it, it will expand, and you will see a number of different timeframes. If you choose one of those, for example, “Daily (3am),” you will get a list of possible contracts in the center of the page.
Say you are interested in trading the top contract, AUD/JPY >82.20 (3AM). You can see that this contract has around 11 hours and 40 minutes left and will expire tomorrow. 82.20 is the strike price. Click on it once and you will select it. This will open a ticket window, as seen below.
Place your order.
On this ticket, you will see the live bid and the offer price. There are two values you need to fill out before you can place your order—size and price.
If you have traded on other binary options sites, this may throw you off, since most other sites just as you for an “amount” and that is it.
Here is what this means:
Price refers to the cost of a lot.
Size refers to how many lots you want.
So all you need to do is fill in the price and size that you feel comfortable with, and then pick “Buy” or “Sell” depending on whether you expect price to be trading above or below the strike price for the selected contract.
At the bottom of the ticket, Nadex will calculate your maximum potential profit or loss automatically.
That means you always know exactly how much money you stand to win or lose on any given contract. If you have ever traded Forex, you are familiar with the dreaded “margin call.” That is something that will never happen on Nadex.
Once you have selected everything to your satisfaction, you click the orange button which says “Place Order.” The platform will show you a confirmation window, and the order will appear in a new section for open contracts in the middle of the screen.
Here is a more detailed explanation of how trading on Nadex works.
At that point, you are all set. All you need to do is wait for the trade to expire. You then win the payout if you were right about the direction that price was going to go. If you turn out to be wrong, then you forfeit your investment. You can watch a trade play out in demo mode to see how this works.
What if you want to get out of the trade? Nadex has it set up so that you can click on your open contract, and a second ticket will come up which allows you to place an opposing order. This will allow you to exit early and minimize your losses (or prevent a loss).
This ability to close out of a trade early is very important, and something that many overseas brokers do not offer. A lot of strategies literally depend on it for success, so it is excellent that Nadex makes it available.
Always Start With Demo Trading!
Now you should have a pretty good idea how to place a trade on the Nadex platform. As I said, it does take some getting used to. That is all the more reason to start out with demo testing! A lot of traders are tempted to jump straight into live investments, because they want to make money right away.
But you should never do that. You should always demo test first for the following vital reasons:
You need to make sure you truly understand the platform. Why lose money over avoidable mistakes? You need to make sure your strategies are going to work! There is no reason to learn that lesson by losing money when you do not have to!
Many binary options traders have never demo tested before, not only because they do not realize its importance, but because most brokers do not even make it available. If they do, they restrict it. Nadex does not restrict its demo account. You do not even need to make a deposit in order to use it.
So take advantage! Demo until you are sure you know what you are doing, and then make your first deposit. Right now, Nadex is offering fee-free trade days as a promotion to new customers. The more money you deposit, the more fee-free days you can enjoy. If you still want to learn more about Nadex first, then read our Nadex review, and check out our article, Introducing Nadex: A Unique Binary Options Opportunity.