Hi, that’s fairly old stuff. Nadex has not proven to be that attractive, and
here’s why. (I restrict my comments to Forex based underlyings only.)
The idea of “hedglets” or the ability to put a cap on your Downside, as well as
your Upside seems like just a “great idea”. In fact, because it is a derivative
over an underlying like Forex, and for other reasons, we are not doing work
with Nadex. If you think that Forex markets are RANDOM, then this approach
of Nadex makes sense. But if not, then it rapidly loses its appeal.
Instead, the automation and flexibility of Forex is my target market,
with Analytics which make it far from “guessing” or “randomness”.
Why is Nadex a problem? First of all, it’s not possible to fully automate Nadex,
due to their restrictive attitude toward allowing automation. Without getting too
far into the weeds, it’s basically not automation friendly, and a very closed
system designed to protect the interests of their Market Makers. IMHO. This
is my opinion.
Pricing, when you need good pricing, near News Events will be so poor that
you have difficulty making any money. Spreads are poor because their MM’s are
not stupid, and will not take the risks. In addition, and related to this, their
liquidity is very low.
Manual traders are unable to do anything other than to have the occasional
"win". They may think they’re doing “great”. In fact, if you’re looking to build
a business on Nadex, it’s really not possible in any way which involves
automation to “scale up” the business. Only with automation, at least on
the “position management” side, can you “sleep at night” and have a
scalable business. With Nadex, that is not a practical possibility, unless
you think you can code to a FIX interface, and survive their certification
So my approach has been to leverage the availability, pricing, and automation
of Forex over the 28 major Currency Pairs. And through using Currency
Analytics, choose the Pairs which are the highest probability trades. This
is really far superior to fighting the Nadex system, and doing purely
Last I heard, you couldn’t put in Targets or Stops on their platform. So
many basic features which traders expect, are not possible or at least not
in any way practical on Nadex’s platform.
So there’s a lot of HYPE about Nadex, and I would just leave you with this
one idea. IF you are “only guessing” then Nadex style “hedging” gives you
a defined maximum loss. BUT WHAT IF YOU ARE NOT GUESSING? With
better analytics, and higher probabilities of knowing where a Forex pair
is moving; the features of Nadex are suddenly quite UNINTERESTING.
The only way to work with Nadex on a professional basis is to buy OTM
(out of the money contracts) over a timeframe which allows price to move,
and “knowing” where it is going to move. Those who promise “jumping
on” ITM (in the money) contracts to make profits are really very much
uninformed. Risking 80 to make 20 as a concept is stupid. However,
perhaps risking 15 to make 85 (actual results are less) is a more
attractive proposition and THAT’S WHY PEOPLE GRAVITATE TO NADEX.
Really, most of the time, they are GUESSING.
Leaving you with one final thought, IF you are ONLY GUESSING, as a
trader (Nadex or straight Forex) then you WILL LOSE. No amount of
smart trade management or technique can ever turn BAD decisions
into GOOD results.