Are binary options legal for U.S. traders?

Are binary options legal for U.S. traders?U.S. traders are legally forbidden from signing up with most binary options brokers. Nonetheless, binary options are legal for U.S. traders. There are only a few limitations you have to know. In this article, we detail every aspect of the legal situation that affects U.S. binary options traders.

In detail, we will answer these question:

  • Are binary options generally legal for U.S. traders?
  • What would happen if a U.S. binary options trader signs up with an overseas broker?
  • Which binary options brokers are legal for U.S. traders?
  • How good is Nadex, one of the few legal binary option exchanges for U.S. traders?

With the answers to these questions, U.S. trader will know everything about the legal status of binary options in the United States, and they will know how they can start their career with a legal U.S. broker without risking a single Cent.

Are binary options legal for U.S. traders in general?

Let’s start with the most important point: binary options are legal for U.S. traders. The issue is that most binary options brokers are not. To understand this relationship and how you can deal with it effectively, let’s take a look at the laws that cause it.

In the U.S., there are two government agencies that monitor the financial markets and make sure that every broker, bank, and other financial service abides by certain minimal standards. These two agencies are the SEC and the CFTC.

  • According to the A-Z Index of U.S. Government Departments and Agencies on, the U.S. Securities and Exchange Commission (SEC) is an agency of the United States federal government. It holds primary responsibility for enforcing the federal securities laws, proposing securities rules, and regulating the securities industry, the nation’s stock and options exchanges, and other activities and organizations, including the electronic securities markets in the United States.
  • The U.S. Commodity Futures Trading Commission (CFTC) is an independent agency of the US government regulates futures and option markets. Since binary options belong to the options market, they are regulated by the CFTC.

For a broker, to be allowed to offer binary options to U.S. traders, the broker has to register with the local authorities and accept regulation by the CFTC. As long as a broker accepts these two conditions, it is perfectly legal for U.S. traders to invest in binary options.

The reason why many people think that it would be illegal for U.S. traders to trade binary options is that, until recently, no broker accepted CFTC regulation. Consequently, there was no legal way to trade binary options for U.S. citizens, putting U.S. traders in the difficult position of having to decide whether they want to pass on binary options or want to trade with an overseas broker. Luckily, this dilemma has solved itself.

Now, there are a few U.S. based binary options exchanges who accepts regulation by the CFTC. One of them is Nadex. For U.S. binary options traders, Nadex is the only option to enter the binary options market, but this limited selection of available brokers is a small problem – Nadex is the best exchange for U.S. traders anyway. We will take a look at the reasons for this statement later, for now, let’s focus on the legal situation.

What would happen if a U.S. binary options trader signs up with an overseas broker?

Some U.S. binary options traders are disappointed by the limited selection of brokers from which they can choose. These traders wonder whether they might be able to make more money if they signed up with an overseas broker, even though these brokers are legally forbidden from offering their services to U.S. customers.

Often, this idea springs from the realization that many European brokers are regulated, too. The only difference is that these brokers are regulated by the European Union and not the United States, which is more of a technicality than a massive difference. Consequently, many traders feel that it is insignificant which country regulates their broker as long as some trustworthy country makes the regulation, and the European Union and the United States both fit that bill.

Nonetheless, U.S. traders should stay away from brokers that are not regulated by U.S. authorities. EU-regulated brokers refuse to accept U.S. customers because the European Union makes sure that their brokers abide by all the laws of their most important ally. Consequently, all brokers that are willing to accept U.S. customers are unregulated brokers or brokers that are regulated by a third world country.

We can only recommend that you stay away from unregulated brokers and brokers that are regulated by untrustworthy countries. These brokers are free from all regulations, which can have horrible consequences for their customers. When a broker has to file for bankruptcy, for example, you might lose all the money that you had deposited with this broker.

With regulated brokers, such catastrophic events are impossible. Since the only trustworthy regulation for U.S. brokers is in the form of the CFTC, we highly recommend sticking with brokers that are licensed by the CFTC.

Which binary options brokers are legal for U.S. traders?

Currently, there are only a few binary option exchanges who are legal for U.S. traders, and one of them is Nadex. Nadex is short for North American Derivatives Exchange, Inc., and as the name indicates the Chicago-based exchange is based in the United States and is regulated by the CFTC.

For U.S. binary options traders, Nadex is the only legal source of binary options contracts. Nadex accepts full regulation by the CFTC and fulfills all the criteria that this status requires.

Most brokers or exchanges other than Nadex and a few more, are legally forbidden from offering binary options to U.S. traders. Any broker who does so anyway ignores existing U.S. laws or is at least unaware of them. Unfortunately, it is almost impossible for the CFTC to crack down on these brokers. While the European Union makes sure that all brokers that are regulated by their authorities refuse U.S. traders, it is almost impossible for the CFTC to influence brokers that are based on the other end of the world, outside their authority.

To solve this problem, the CFTC has published a RED list (short for Registration Deficient List). This list contains the names of binary options brokers that offer their services to U.S. traders but refuse CFTC legislation. The CFTC updates the RED list regularly, and the list is available online. If you are unsure whether you can trust a broker that is willing to accept you as a customer, we suggest you check the CFTC’s RED list and see if the broker is mentioned there.

If you want to play it safe, you can sign up with Nadex straight away. Nadex is one of the best exchanges that you can get anyway, which is why the limited selection for U.S. traders is a small problem. To help you understand whether Nadex is the right exchange for you, we will now take a look at the features of Nadex.

How good is Nadex, a binary options exchange for U.S. traders?

Nadex is an exchange like no other. Due to the regulations imposed by the CFTC, every aspect of Nadex’ service is different from the service other exchanges or brokers offer.

This difference begins at the most fundamental level. Nadex works as an exchange, much like a regular broker. Other binary options brokers trade directly with the customers. They offer binary options with certain payouts, and when you accept them, you and your broker make a deal.

In this deal, only one party can win. Everything that you win is your broker’s loss, and when your broker wants to make money with you, you have to lose money. This system does not mean that it is impossible to make money with binary options, but it has led some brokers to employ questionable practices- These brokers have distorted market price, used manipulated software, or tricked their customers in some other way.

The easiest way to prevent these practices is to take the broker out of the picture. When you are trading against other traders, your broker has no incentive to rig the system against you. Nadex has followed exactly this approach, which guarantees you more fairness on a fundamental level.

In addition to this fairer business model, Nadex offers more unique advantages that make trading easier for you. These advantages are:

1. Unmatched flexibility for strike prices
Because Nadex has no interest in reducing your profits to increase theirs, they offer you a number of trading options that no other broker does. The most significant of these options is the number of strike prices that Nadex allows you to trade.

Periodically Nadex offers not one strike price, like most other brokers, but 30 strike prices. With this large selection, you can make better, more accurate, and more profitable predictions than with any other broker. The result is more money in your pocket.

This system works because it allows you to make predictions based on more than the current market price. When you the market is currently trading at $100, and you predict that it will trade over a $101 when your option expires, you get a higher payout than if you have to relate your prediction to the current market price.

Similarly, when you predict that the market will close below $101, you will have a higher chance to win a trade than if you have to predict that the market will close below the current market price of $100.

In this way, you can use Nadex’ variety of strike prices to trade strategies that would be impossible to trade with any other broker. You can make money in market environments where you would be unable to find a trading opportunity with other brokers, and you can trade your predictions more profitably. Combined, both aspects increase your overall profit.

2. Your money is safe, regardless of what happens
Nadex holds all member funds in separate accounts in top-tier U.S. banks. This system guarantees that the safety of your money is untied from the fate of your broker, which is a great security feature.

When an unregulated broker has to file for bankruptcy, you could lose all the money that you had deposited with this broker. With Nadex, such a catastrophe is impossible. All your money is stored in separate accounts, and if Nadex should ever have to file for bankruptcy, this money will still be there. You can get all your money back, and you have lost nothing. Compared to unregulated brokers, where a bankruptcy could wipe out all your savings, this system’s advantages are obvious.

3. The CFTC’s oversight guarantees that you are trading with a trustworthy broker
With the CFTC’s supervision, you can be sure that you are trading with a broker that abides by all regulations, and that fulfills the same criteria as the big banks. Compared to an unregulated broker, this system has led to many advantages:

  • Nadex uses security features such as the SSL encryption protocol that protect your transmissions and every other aspect of your trading. Many unregulated exchanges or brokers ignore these features to cut costs, which puts the security of your money in question.
  • Nadex publishes detailed account of their past trades. If you want to make sure that the broker holds all its promises, go to the Nadex website and check their history. Nadex lists all the contracts they have offered over the past week with their payouts. Compared to many other brokers that make only vague promises about the payouts that you can expect, Nadex complete transparency guarantees that the broker has to offer a trustworthy service.

4. A wide selection of assets allows you to profit from trends in all markets
Nadex offers binary options based on four types of assets: stocks, indices, currencies, and commodities. With this selection, you can profit from trends in all fields. Whether the U.S. Dollar has an obvious trend compared to the Euro or the stock market is moving strongly in a direction, with Nadex you can profit from any event, regardless of where they happen.

With conventional assets, this flexibility was difficult to achieve. Stocks, currencies, and commodities were traded on different markets, and traders often needed accounts with multiple brokers to be able to trade all the assets they wanted to trade.

With Nadex, things are much easier. Traders get all the assets they want conveniently in one place.

5. Higher payouts than anywhere else
Because Nadex works as an exchange and does not trade with you directly, their payouts are much higher than what you can get with any other broker. In fact, Nadex allows you to get payouts of 100 percent on every trade.

When Nadex connects two parties that invest in a binary option, it takes a small fee from both parties. This fee is $0.90 for every lot that you trade, and a lot is $100. Other than this fee, the winning party in a trade gets all the money of the losing party, which is a payout of 100 percent. Factoring in the $0.90 fee, we arrive at a guaranteed average payout of 91 percent, which is much higher than what most other brokers offer as their maximum payouts.

This higher profitability allows you to improve your profits significantly. With other brokers, you would be lucky to get an average payout of 85 percent. Still, even this difference of 6 percent can make all the difference when we look at your returns. Over 100 winning trades, which equals two months of trading for an average trader with four to five trades a day and 20 trading days a month, the additional 6 percent payout would net you an extra profit of 33,930.20 percent your original investment.

Such numbers are too good to pass up. Make sure that you profit from Nadex’ high payouts and trade your way to binary options success with the broker that makes trading as easy as possible for you.

6. A deposit-free demo allows you to develop a money-making strategy without risking a Cent

If you are still undecided whether Nadex is the right exchange for you, there is the perfect tool to help you with your decision: the Nadex demo account. The Nadex demo account allows you to test all of Nadex features with a fully functioning account but to use play money instead of real money.

With this system, you can test every aspect of Nadex and develop a winning strategy in a completely risk-free environment. This is the ideal way for any trader to start their trading career, and there is no better way to start it than with the Nadex demo.

While some other exchanges or brokers offer demos, too, these demos have one major disadvantage compared to Nadex: they require you to deposit money with the broker in order to get the demo, most commonly around $250. Such a system makes little sense for newcomers who just want to test the waters. These newcomers are much better off with the Nadex demo.

With the Nadex demo, you can only win. You start completely risk-free, and if you find that you have a talent for trading binary options, you might have found your way to financial independence. If you find that binary options are not for you, you have learned something about yourself, had some fun, and have not lost anything. You can gain everything; you can lose nothing. Can you think of a single reason to refuse this offer?


Binary options are legal for U.S. traders, but there are a few legal regulations that you have to understand. These regulations are a great advantage for all traders because they have created the best exchange in the binary options world – Nadex.

Nadex offers a completely new binary options trading experience that combines unmatched security with the highest payouts you can get anywhere. The result is a trading environment with an unmatched potential that can make earning money with binary options easier for you than any other broker.

With the Nadex demo, you can get a completely risk-free start to your trading career. For new U.S. traders, there is no better place to get started than with the Nadex demo. To get the Nadex demo now, follow one of our links to the Nadex sign-up form and complete the sign-up process.

Enjoy your career!

Default Broker – US – NADEX