How to research and trade Nadex Knock-Outs

Learn how to research opportunities and trade Nadex Knock-Outs in this simple tutorial.

In this video you’ll learn:

  • How to research knock-outs based on indices, forex, and commodities markets

  • How to go long or short using Nadex Knock-Outs

  • How to make your prediction using the Nadex platform

Watch this simple tutorial and you’ll be trading knock-outs in no time.

How to research and trade Nadex Knock-Outs: video summary

In this video, we’ll show you how to research and trade knock-outs using the Nadex trading platform.

Step 1: log in to your Nadex account

Then click ‘knock-outs’ in the upper left-hand corner.

Step 2: pick your market        

We list knock-outs for three market classes:

  • Stock indices

  • Forex

  • Commodities

Picking a market will show you the current indicative price and the knock-out ranges available. There are generally four knock-out contracts available on each market; they always have a weekly expiration.

Step 3: choose your contract

This will populate a price chart and bring up an order ticket. The order ticket displays the specifics for this knock-out, including:

  • Range of the contract

  • Current indicative price

  • When the contract expires

Knock-outs have a set range, with the lower price called the floor and the higher price called the ceiling. These range levels create a natural profit target or stop-loss for your trade, so you’ll know your maximum potential profit or loss upfront. If one of these levels is hit before expiration, you’ll be knocked out of the trade.

Let’s look at an example

In this example we selected a knock-out under ‘US Tech 100’.

If you predict the price is going to rise, you’d buy. The ceiling indicates maximum potential profit and the floor indicates maximum potential loss.

If you predict the price is going to decline, you’d sell. The floor indicates maximum potential profit and the ceiling indicates maximum potential loss.

The price levels you trade will typically track the underlying. For example, if the indicative underlying price of the Nasdaq 100 Index was 12,142, you might see a bid-ask spread for the knock-out of 12,141 to 12,143.

Using Nadex charts, you can see the different knock-out ranges and switch between them by clicking on the vertical blue lines. At the bottom of the order ticket, your potential maximum profit or loss (excluding fees) is clearly calculated before you enter a trade.

Stay in the trade or close out early

When trading knock-outs, you can exit early. To close a long position, sell it at the current market price. To close a short position, buy it back at the current market price.

To quickly exit a position, click on it in the ‘positions’ window to bring up an order ticket pre-populated with the opposite side of the trade.

If you stay in the trade and don’t get knocked out, the contract will settle at expiration.

Profit or loss = the difference between the price level where you bought or sold, and the settlement price (excluding exchange fees).

And there you have it. You can now leverage Nadex Knock-Outs to trade indices, forex, and commodities markets.

Try trading knock-outs for free

Sign up for a Nadex demo account. You’ll get $10,000 in virtual funds, so you can explore the platform and practice trading knock-outs.

Learn more:

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