Nadex Bonus – Offer Explained (and why it’s really good!)
Why the Nadex Fee Holiday is Better than Bonus Money
Compared to the bonus offers some binary brokers are shouting at the rooftops, the Nadex bonus might seem a bit underwhelming. No free trading money? No huge bonus to trade with? What gives?
When you look at the front page of just about any binary options online website, lines like these are quite often the first thing you will see, usually in a huge bold font. Binary options traders love bonuses, and that makes them a huge selling point for binary options online brokers. Who doesn’t want free money?
Lately I have been writing a lot of articles about Nadex. Nadex is a unique binary options online broker based in the US and regulated by the CFTC. Nadex offers a ton of advantages to traders that you are not going to find anywhere else: 200%+ payouts on High/Low trades, a richly-featured platform, and a lifetime demo account. I have become a huge fan, and I am not going to lie—I am blatantly promoting them at this point. If you want to know why, click here.
One thing Nadex does not offer is bonus money. Nowhere on the site will you see statements like, “We will give you up to $5,000 free when you make your first deposit!”
If bonus money is something you find exciting, you may wonder why you would want to trade with Nadex when other companies are just giving money away.
I want to talk about why Nadex’s promotion for traders—a “fee holiday”—is much better than any cash bonus promotion.
What Is The Nadex bonus?
Nadex’s “bonus” offer is a “fee holiday,” described on their website here.
Nadex charges commissions on all of your winning trades as well as on trades you decide to close out of early. This may sound like a pain, but it actually is not a big deal. In light of Nadex’s substantially higher payouts (200%+ on High/Low options), you probably will still come out making a lot more money on Nadex than you would on most sites.
Still, no one enjoys paying fees, so Nadex offers fee-free trading days to newcomers. The more money you deposit, the more fee-free days you get to enjoy.
- Deposit $250 and get 3 fee-free trading days.
- Deposit $500 and get 6 fee-free trading days.
- Deposit $1,000 and get 9 fee-free trading days.
- Deposit $3,000 and get 12 fee-free trading days.
- Deposit $10,000 and get 15 fee-free trading days.
There is currently no expiration on the fee holiday. You choose when you want to start your fee-free days. Nadex defines a trading day as the 23 hours between the open and close of the market. The fee-free “days” correspond with the market hours, not with the time you happen to initiate a trade. The clock starts running when the market opens.
So if you initiate a trade near the beginning of the market day, you will have fee-free trading all day. If you initiate a trade near the end of the market day, you only have the remainder of that trading day. You can see how many fee-free days you have left in your platform after you place your first order.
Nadex also has this to say in the Terms and Conditions:
“Any profits/losses incurred as a direct result of the trades during a “free day” will be realized by the client.”
In other words, the money you win on your fee-free days is yours, period.
That is right—there are no dodgy terms and conditions here, no tricks, no cheats, no loopholes. Nadex is not going to yank your winnings away because you traded on a fee holiday. And because all the money in your account belongs to you at all times, you will not be fooled into thinking you own more than you really do. That makes it easy to responsibly manage your money.
Other Binary Options Brokers Bonuses = Lots of Strings Attached
It is time to shed some illusions about bonuses on binary options online websites.
“Join today and get $100 free!”
“200% match bonus on your first deposit!”
The thing is, there is no such thing as free money. There is only the illusion of free money. Seriously, when was the last time someone just walked up to you and said, “Here, have $100?”
Most people will do just about anything to avoid handing over cold, hard cash. It can be challenging even to get someone to pay for services you perform or products you create. So why would you expect someone to pay you something for nothing?
Let’s talk about how bonuses really work.
The goal of a binary options online broker is the same as yours: to make money, and lots of it.
So you can bet that everything a broker does is ultimately in the service of that goal. If a broker offers you $100 “free,” it is because they expect that will result in more money in their pockets.
The appeal to traders is obvious. A bonus means more money to trade with. That means that you could in theory win a lot more. You could move more quickly toward your financial goals. That can be very enticing if you are starting out with a small bankroll. If you only have $250 to deposit, the idea of trading with $500 sounds great.
But here is the reality:
1. You do not own the bonus money in the beginning.
This means that you are trading on leverage. You are effectively borrowing from the broker. As a result, you may be staking more on your trades, but all the losses will all come out of your bankroll.
So imagine you deposit $200 into your account and the broker gives you a $200 match bonus. You have $400 to trade with.
“Great,” you think, “I was planning to invest 5% on my trades. Now I can invest 5% of $400 instead of 5% of $200.”
That means you risk $20 on your trades instead of $10.
The problem is, you are looking at it wrong. You are thinking, “I am wagering $20 of my own $400.” But you are not. The broker still owns half the money in your trading account.
So if you lose that $20, that means that it is all going to come out of the portion of your account that you own.
So that $20 you lost came out of the $200 portion of your account which belongs to you. That means you actually risked 10% of your de facto account!
That also means that it would take only 10 losses to blow your account entirely (assuming no out-of-money refund)—not 20 losses like you might be thinking.
This confusing reality tricks a lot of traders into wagering more money than they ever intended to risk. Taking the example above, they think, “Oh, I am doing fine. My account still has a $220 balance.” In reality, though, that is your last $20.” Once you are down to the amount the broker owns, that is that.
In theory, if you keep trading (which you could), you could eventually claim the bonus as your own—more on that in just a moment. But by the time you manage it, you will already likely have lost way more money than you ever intended to.
A lot of traders never make it that far. After they burn through their own money, they burn through the broker’s money, and that is that. Their accounts are empty and they never get back to profiting. They simply lose their initial stake and wash out.
2. You have to meet an extremely high rollover requirement to claim the bonus.
Now, you can eventually claim the bonus money as your own cash. But to do this, you have to meet what is known as a “rollover” or “turnover” requirement.
Usually the rollover requirement is set to something like 20-40x. 30x is pretty typical.
Depending on the broker’s terms, this may mean either:
You need to turn over the volume of the bonus 30 times (ugh!).
You need to turn over the volume of the bonus + your initial deposit 30 times (even worse!).
So coming back to our example of depositing $200 with a 100% match bonus, imagine that you have to turn over the volume of the bonus + the deposit 30 times.
That would mean you have to trade $400 x 30 = $12,000!
Yes, you would have to conduct $12,000 worth of transactions just to claim a paltry $200 as your own!
That is pretty crazy. How many new traders will survive long enough to do that, especially if they keep screwing up their money management as describe before? Now you can see why most traders wash out long before they ever own the bonus money.
This concept of rollover is common in sports betting and online casino bonuses. Some of the brokers have taken this to the extreme.
3. Until you meet the rollover requirement, your money may be held hostage.
Now here is the biggest sticking point of all. What if you decide you want to withdraw your money before you meet the high turnover requirement?
Some brokers will not stand in your way. You will be able to withdraw your initial deposit with no problem, and maybe even some percentage of your winnings.
But many brokers will set up roadblocks (usually described in the Terms and Conditions, which they hope you will not read…. and you won’t – well many of you that is).
You go to withdraw your money and you are told you cannot withdraw anything until you meet the rollover requirement. Or they might let you withdraw your initial deposit, but you forfeit all your winnings until you own the bonus.
Fairer brokers usually will let you withdraw your deposit and the percentage of your winnings which correlates with the percentage of your initial balance that actually belongs to you.
So imagine that you deposited $200 and the broker “gave” you $200 to trade with. You never met the rollover requirement, but want to withdraw. Your account balance is $4,000.
You get to withdraw $200 (your initial deposit) + $1800 (50% of the winnings) since 50% of the initial balance belonged to you.
The broker reckons the other $1800 belongs to them along with the $200 they contributed.
Yep. That is pretty dismal. You may as well have never accepted a bonus at all.
So now you know why the Nadex fee holiday is a much better promotion than the match bonuses you see advertised on other trading sites! It may not seem as exciting on the surface, but in the long run, it will contribute far more to your trading experience and your bottom line.
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