Binary Options Strategy Pdf

is definitely starting to heat up. Trading activity on Nadex has increased dramatically and for the past year or so the Cantor has been trying to enter the space. Because both Nadex and Cantor are offering binary option contracts, we thought it would be the right time to provide a no-nonsense comparison of the two exchanges and their offerings.There are several factors to consider when looking at binary option providers and we have broken it down into these categories which we feel would be most important to professional Binary options affiliates or IBs, and to traders: Regulation, Product Range, Liquidity, Liquidity Providers, Trading Costs (Fees and Bid/Offer spread), Resources amp Education, Overall Size and Partnership Opportunities.Both Nadex and Cantor are regulated by the Commodity Futures Trading Commission (CFTC). This is great news for the trading community as a whole as it provides rules and oversight yielding additional protection for the participants in the binary options space. It also provides US traders with clear regulated alternatives to other binary sites that are not regulated by the CFTC.Nadexs more extensive offering includes binary options contracts available on 4 US Stock Index Futures, 4 International Stock Index Futures, 7 commodities, 10 currency pairs, Bitcoin and economic events such as the Fed Funds Rate and Jobless Claims.On Cantor 5-minute FX markets, the typical size available on the bid or offer ranges between 0 and 1000 contracts at a value of 1 each for total contract value available of 1,000 at the high end, and the size available is not consistent between the bid and offer. This may be fine for someone trading in very small size however, anyone trading medium to large position sizes may find it difficult to not only get into a trade, but more importantly, difficult to get out of a trade.On Nadex, the 5-minute FX markets feature 100 contracts and have a typical size available on the bid and offer of between 100 and 125 contracts, for a total contract value available of up to 12,500. This will allow the serious trader much more flexibility with both entries and exits, and at the same time provides high flexibility to entry level traders.Both Cantor and Nadex utilize liquidity providers to price binary options and provide depth to the markets. One very important distinction between the two firms though is that Cantor does not recognize market makers as different from any other members. At Nadex, designated market makers are obligated to work within the rules of the exchange to provide quotes of at least a required minimum size and within the maximum bid/offer spread. Because market makers at Nadex are obligated to work within these clearly defined rules, individual traders enjoy a fair and balanced trading arena, whether they are looking to buy or sell or enter or exit a position.At Cantor, because market makers are not designated as such and are under no obligations, they may effectively act as institutions trading against the little guy. For example, at any time on any whim Cantors market makers may pull pricing or increase the bid/offer spread to the width of the contract, leaving individual traders stuck in their positions with no means of escape.Nadex currently has two designated market makers providing binary option pricing in their stock index, commodity and currency markets. Also, Nadex is actively pursuing additional market makers to meet the demand in an effort to provide even tighter bid/offer spreads and offer deeper markets to meet the rapidly rising demand for liquidity.Cantor also suggests it has two non-obligated liquidity providers operating in their market. It is not clear whether they are pursuing additional institutions to trade however, with a daily volume average from June 1 to June 8 being equivalent to only about 25 Nadex contracts, they probably have sufficient coverage for some time to come.Before discussing total trading costs, it should be noted that the binary options listed on Cantor have a total value of 1 per contract whereas the binary options listed on Nadex have a total value of 100 per contract. As such, to make an apples to apples comparison, we have equalized the values at 100 Cantor contracts 1 Nadex contract.From a bid/offer perspective, the typical spreads witnessed on Cantor are around 12 to 18 points versus the average of 6 to 9 points witnessed at Nadex. This means Cantor trading spreads may be twice as expensive as Nadex, even before the trading fees. This is a very important cost to the trader and one that needs to be considered carefully as it adds roughly 6 to 9 a contract per round turn to the cost of trading on Cantor versus Nadex.Given the sizeable cost reflected in the wide spreads on Cantor, Cantors additional fees are limited with respect to orders that execute at the market, which incur no fee. At Nadex, there is a fee per contract of 0.90 but that is capped at 10 contracts per order no matter how large the order is.When entering or exiting a position using a resting limit order, traders at Cantor incur a 0.01 per contract fee, which multiplied by 100 to equal 1 Nadex contract would be 1.00, obviously slightly higher than Nadexs 0.90 fee. One very important note, particularly for a trader doing any type of size, because the fees at Nadex are capped on a per order basis whereas there is no fee cap at Cantor, it can quickly provide the trader an edge to execute their trades at Nadex. For example, a trader successfully working a 20-lot position at Nadex would incur an exchange fee of just 9.00. A trader doing the equivalent size at Cantor would incur an exchange fee of 20.00,(2000 x 0.01), more than double Nadex. And, as the size goes up from there, the gap grows wider.At settlement, neither Nadex nor Cantor charge fees for contracts that settle out of the money for the trader. For in the money settlements, Cantor charges 1.00 for the equivalent of 1 Nadex contract, whereas Nadex charges 0.90. Again though, Nadex fees, even at settlement are capped at 9.00 whereas the settlement fees at Cantor can literally go on into infinity.In scouring the Cantor website, one can find virtually no education on the platforms available, how the contracts trade or strategies.