Nadex / Heding / FCM etc

T

traderjo

Now that Nadex is established I am trying to find few things
1) Are there any FCMs or Introductory brokers who offer Nadex and regular futures in one account
2) Hedging Futures with Nadex spreads 2 hr/ 8 hrs etc)
Some vendors promote this idea but dont talk about delta risk
If you hedge a futures with Nadex spread and if things start going against you does the Nadex spread move at 1 delta? before expiry?
has anybody tried this?
 
Stay away from Nadex unless the bid/ask spread on your favourite market is only a few ticks.
Otherwise you are just easy money to the market makers, who are just waiting for suckers to hit their underpriced bids and lift their way overpriced offers.
 
southall said:
Stay away from Nadex unless the bid/ask spread on your favourite market is only a few ticks.
Otherwise you are just easy money to the market makers, who are just waiting for suckers to hit their underpriced bids and lift their way overpriced offers.
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maybe some people are going for dollars in the s&p and not cents?
 
After all this time, Nadex spreads should far tighter. The fact that they're not tells you they have no interest in providing a competitive market. It's exactly as Southall described. IMO, they're in the tank with the market makers. Stay away.

The hedging of futures with Nadex spreads is what I looked into too. I read enough on ET and played enough with their demo to be convinced it's not the way to go.
 
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traderjo said:
Now that Nadex is established I am trying to find few things
1) Are there any FCMs or Introductory brokers who offer Nadex and regular futures in one account
2) Hedging Futures with Nadex spreads 2 hr/ 8 hrs etc)
Some vendors promote this idea but dont talk about delta risk
If you hedge a futures with Nadex spread and if things start going against you does the Nadex spread move at 1 delta? before expiry?
has anybody tried this?
More...
So to actually answer your first question, no, there are no FCMs or IBs. I for one would love to see this, but apparently it's low on their priority list since the last FCM they had was PFGBest.

As to the "stay away from Nadex" crowd, they can't have it both ways. If the spreads are wider than conditions merit, then there's free money to be made acting as a market maker, which anyone can do. They should be making money hand over fist if that was truly the case. The fact that anyone can take any position on Nadex makes any complaints about it being "rigged" a reflection on the mental limitations of the complainer rather than on Nadex itself.
 
Sig said:
As to the "stay away from Nadex" crowd, they can't have it both ways. If the spreads are wider than conditions merit, then there's free money to be made acting as a market maker, which anyone can do.
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Retail cant compete against the market makers they spend 100s of thousands of dollars a year just on the fastest data feeds and co location.
 
southall said:
Retail cant compete against the market makers they spend 100s of thousands of dollars a year just on the fastest data feeds and co location.
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You're maintaining that the spreads are absurdly high. Fast data feeds and co-location aren't what allow spreads to remain absurdly high, if that was the case then every stock and option that's traded by HFT would have absurdly high bid/ask spreads and of course the opposite is true. Lack of anyone entering a bid/ask inside the spread is what allows spreads to remain high. And anyone can enter a bid/ask inside the spread, even you. If it's as egregious as you maintain, it's free money for you. And the other two market makers who participate in at least the instruments I trade in.

Don't get confused here, HFT and access to low latency feeds is pernicious in it's own right but not because it leads to big spreads!
 
cole_ said:
the market makers obviously are in it to bucket trades as well not just make the market. they have access to a special order type that can only get filled by traders not by other market makers

just yesterday on the nikkei 225 there was a huge 3000 contract buy order on the book like 30 seconds before a contract expired, obviously no retail traders have money like that. and the market makers couldn't have seriously expected to be able to flip it back to the ask for a small profit. it was a directional bet by one or more market makers.
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I personally place orders that size and am definitely retail, that's $300,000 notional and depending where the contract was it could be only a few thousand dollar investment (i.e. if a contract is at 95 and you could at most lose 5, the contract value would be only $15,000). So your fundamental assumption that "no retail traders have money like that" is faulty.

Second, your really not making any sense as to what kind of special advantage market makers have. You've got your compatriot haters here complaining that the market makers are milking the spreads, and you're complaining exactly the opposite, that they're making directional bets. If a market maker wants to make a directional bet, which is idiotic if you know anything about market making, then who the fuck cares? They can only buy from a willing seller and any other willing buyer or seller can enter the market as well so they have no advantage over anyone else unless you're paranoid enough to think they have some magical ability to forecast the nikkei 225 market direction? If a market maker or you or Bill or a unicorn want to make a directional bet on the market on any exchange, how does that make it somehow unfair? How does their ability to place orders that won't be filled by other market makers impact your ability to trade in any way. It's actually an advantage from my perspective because there are 3 market makers and I'm able to trade with the lowest priced one as well as any retail order while they can only interact with the other retail orders, how is that a disadvantage to me as a retail trader again? Who exactly was going to fill that 3,000 contract order in the last few seconds of the contract if it couldn't be another market maker and according to you no retail trader trades at that volume? WTF was your point again?
 
My 2nd question was not really abut how wide the spreads are or not ( although it is important and it is also important to know if this is a really a true "exchange" or just OTC venue with name "Exchange " in it)
Main question was "does hedging futures position with Nadex spread work?
 
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