After a long time in hibernation the American binary options market finally seems to be heating up. Some of the biggest names in the international binary options industry, such as TechFinancials, SpotOption and TRADOLOGIC, took steps to establish their presence in the U.S. via the Cantor Exchange.
This has caused many of our American readers to ask which legal venues are available to trade binary options and the differences between them. We created the following chart to help choose a U.S. trading venue; keep in mind that this is a snapshot of the market as of this month and we will update from time to time as new developments occur.
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Making Sense of the Data
The first thing that a potential U.S. trader might notice in the chart is the difference in spreads. It is important to understand that the reason for this is that Cantor Exchange and Nadex have a very different business model. IG Group has two designated market makers in Nadex, providing pricing on all major assets, including IG’s MRM subsidiary.This is also the reason that Nadex should always have level volumes, pricing and immediate fills.
Cantor Exchange does not have dedicated market makers, and all participants, including API connected traders, have full access to trade all instruments. Cantor Exchange is dependent on traders making price, not dedicated market makers, so the volumes and pricing fluctuate as trading occurs. This is similar to how traditional Futures Exchanges work in the U.S.
The second thing to pop out of the comparison is that Nadex offers additional resources for a trader, such as videos, and attracts more visitors to its website as a result. The reason for this is that while Nadex is geared toward the individual retail trader with their own proprietary trading technology, Cantor Exchange is aimed at attracting a multitude of binary option platform providers, letting each of them bring in as many traders as they can. Cantor is also working on a separate educational website, but intends to keep its main site in the same professional fashion as it does not see it as a retail platform.
Armed with this information you should be able to decide which American binary options venue suits your needs.