Making money on Nadex isn’t as complex if you abide by certain rules.
These rules significantly improve your odds as you’ll soon find out. Before we get into these rules, it’s important to note that a detailed understanding of Nadex and how it works is important.
Nadex is a derivates clearing house that offers investors lots of opportunities to earn money. This CFTC-regulated exchange allows users to legally trade spreads and binary options.
The name Nadex is an acronym for North American Derivatives Exchange. In this article, we seek to show you how to take advantage of the opportunities offered.
Headquartered in Chicago Illinois, Nadex came onboard in 2004 and has since grown into a popular call spreads contract, binary options, and knock-out exchange.
The money-making tips provided below allow you to make informed decisions.
Making Money on Nadex Requires Sticking by a Set of Rules
You need to understand how trades are executed.
Also, navigating your way around the platform is crucial as it helps avoid costly mistakes. This requires making your research on the learning aspect as well as the knowledge.
What helps you Make Money on Nadex?
Serious-minded investors will need to abide by a set of rules that mostly include dos and don’ts about investing.
These include using longer-term expiry, avoiding premature entries, limiting the number of assets traded, limiting your risk exposure, and being flexible with your trade decisions.
Other ways to make money on Nadex include understanding market movements, taking losses in good stride, and paying attention to the spread.
You should also avoid using limit orders, make good judgment calls when in profit, and avoid waiting too long before selling.
i. Using Longer-Term Expiry
One of the mistakes people make when trading on Nadex is using short-term expiry for trades.
Binary options trading is risky. To be profitable, you’ll need to learn something from consistently profitable traders. They tend to go with longer-term expiry.
It’s best to avoid placing short-term expiry for trades as such actions when persisted could lead to loss of your investments. Longer-term expiry is better because it allows you to watch the market performance as prices fluctuate.
As stated earlier, getting some education will do you a world of good.
ii. Trading Real Money Too Early might Hurt You
As a newbie, one thing you need to know is how the market moves. A lot of traders make the silly mistake of committing real money too early without the right knowledge.
Thankfully Nadex provides a free demo account where you can practice until you get a hang of how to use its platform.
Here, virtual money is provided risk-free for beginners to place trades on their accounts. Based on results obtained by implementing your trading strategy, you get to find out if you’re ready to invest real money or not.
Learning and demo trading should go on until there’s marked improvement in terms of positive trades.
iii. Limiting the Number of Assets Traded
While there are tons of assets to be traded on Nadex, the fact remains that your trade balance won’t cover all assets when traded at once.
In other words, you’ll be spread too thin and your risks will be significantly higher which likely lead to the loss of your hard-earned money.
Here, you want to only trade what you can afford to lose. You could experience an information overload also called analysis paralysis. This will negatively impact your decisions and results.
By limiting the number of assets traded, you improve the odds of making money on Nadex.
iv. Limiting your Risk Exposure
One mistake most newbie traders often repeat is taking too much risk per trade.
Again, you must never risk what you can’t afford to lose. You could experience a wipeout within an instant which could lead to regrets. Your first goal should be to protect your capital while trading.
Taking calculated risk only exposes an acceptable percentage of your capital. Getting some education on risk exposure will do you a world of good.
v. Being Flexible with your Trade Decisions
The market is never the same every time. You’ll notice daily changes with some days being more volatile than others. This understanding allows you to become flexible with your trading decisions.
A good trading strategy will be one that’s flexible and flows or adapts with reality.
vi. Understanding Market Movements
We’ve severally mentioned the need to know what it is you’re doing.
The market can be unforgiving to ignorant traders. Make your research to understand why the market moves the way it does. Also, the behavior of your preferred assets should be known.
Better information helps you win.
vii. Taking Loses in Good Stride
There’s always a temptation to seek revenge after a loss. This feeling ends up messing with your trades with most losing their entire accounts.
Rather than throwing good money after a losing trade by opening another position, simply wait for the trade’s expiry while also waiting for the next signal.
viii. Paying Attention to Spread
Spread is often influenced by market pressure.
You’ll need to pay close attention to spending less while entering into a trade. The best time for entering a market is when it’s volatile as spreads tend to be tighter during such times.
The opposite applies to slow-moving markets.
ix. Avoid Using Limit Orders
Improper use of limit orders can prove detrimental to the trader. Limit orders are meant to automatically trigger entries when the market reaches a certain point.
While such may have its benefits, it’s best to avoid using these at the beginning of your journey. Manual trade entries will serve your immediate needs.
x. Make Good Judgment Calls when in Profit
One thing you need to understand is the market moves in real-time. In other words, what you see is what you get. So when in profits, consider taking what you’ve earned.
Tiny profits eventually make a huge impact on your account in the long term. Hoping for more profits doesn’t always work. Your winning trade might eventually turn into a big loss.
Making money on Nadex requires having the right knowledge and knowing what you’re doing. We’ve discussed the different tips for earning money and how much can work to your advantage.