When it comes to trading in the forex market, a contract is a basic unit of trade that is used by various exchange platforms. One of the popular exchange platforms that traders use is the North American Derivatives Exchange (Nadex). Nadex is a CFTC-regulated exchange that offers traders the opportunity to trade various financial instruments, including forex contracts.
Forex contracts on Nadex are based on the underlying currency pairs, such as EUR/USD, GBP/USD, and USD/JPY. The size of a forex contract on Nadex is determined by the exchange and is fixed for all traders. Currently, the size of a forex contract on Nadex is 10,000 units of the base currency.
For example, if you are trading the EUR/USD currency pair and the current exchange rate is 1.1200, one forex contract on Nadex will be worth $11,200 (10,000 x 1.1200). This means that if you buy one forex contract at the current exchange rate and the price increases to 1.1300, you will make a profit of $100 (10,000 x 0.0100).
The cost of trading forex contracts on Nadex is quite low compared to other exchange platforms. The exchange charges a flat fee of $1 per contract for opening and closing a trade, with a maximum fee of $50 per trade. This means that if you trade one forex contract, your total cost of trading will be $2 ($1 for opening and $1 for closing).
It is important to note that forex contracts on Nadex are not traded on margin. This means that traders do not need to have a large amount of capital to open a trade. Instead, traders only need to have enough funds in their account to cover the cost of the trade and the exchange fees.
One of the benefits of trading forex contracts on Nadex is the flexibility it offers traders. Traders can choose from a range of expiration times, from 5-minute contracts to daily contracts. This allows traders to adjust their trading strategy based on their desired risk and reward.
In addition to forex contracts, Nadex also offers binary options, which are similar to forex contracts but have a fixed payout and a fixed risk. Binary options on Nadex are also based on the underlying currency pairs and offer traders the opportunity to profit from short-term price movements in the market.
In conclusion, one forex contract on Nadex is worth 10,000 units of the base currency and the cost of trading is $1 per contract for opening and closing a trade. Nadex offers traders flexibility in terms of expiration times and a low cost of trading, making it a popular choice for forex traders.
