Nadex Spreads Overview

Learn Nadex Spreads

Trend-follower, reversal or breakout trader—whatever your style, Nadex spreads may be right for you. Spread contracts have a lower and upper price level, known as the floor and ceiling, which create a trading range. Whether you're bullish or bearish, your risk stays within the limits of that range.

Because you have limited risk, without the use of stops, you don’t have to time your entry perfectly. Imagine total risk control without ever being stopped out again.

Every trader has had the experience of being right, but entering too early, getting stopped out, then watching the market turn back in their direction while they sit on the sidelines. With spreads, you are effectively buying time for the market to prove you right.

Within the floor-to-ceiling range, spreads move in close correlation with the underlying market. When the market moves up or down, so does the value of the spread. Because of this correlation, spreads make an excellent hedging tool. You can exit your trade anytime up to expiration, to lock in profits or limit losses. 

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What are Spreads

A Nadex spread lets your trade movements between two price levels. They let you trade your preferred strategy with absolute risk protection and natural profit targets.

The built-in floor and ceiling of a Nadex spread give you better loss protection than a stop-loss, without ever getting stopped out. The range also gives you a natural profit target. If the market moves against you, you remain in the trade without ever losing money than the maximum allowed by the floor and ceiling. 

How to Trade Spreads

Trading spreads is a 4-step process:

  • Choose a market
  • Pick your position and price range
  • Place your order to buy or sell
  • Manage and close your spread trade

That process contains all of the challenge of trading, with the security of limited risk. Spreads are simply a new tool to trade the markets you know, using the same strategies you already trust. 

Benefits of Spreads

You can buy time to be right and protection against being wrong

You get the risk protection of a stop loss, without the risk of being taken out before you want

Spreads move in close correlation to the underlying markets you know

You can use the same strategies you currently implement, with precise protection against adverse, potentially oversize market moves.