Daweda.com is one of the binary option trading destinations that I just have to review. It is quite possibly the first attempt to transfer the US exchange-based trading model to the EU market. Daweda is licensed by CySEC and it is fully MiFID compliant. Its business model probably makes it a favorite of regulators, after all, it does away with the long-decried conflict of interest that is inherent with the “traditional,” single market-maker business model. The way contract-based trading works at Daweda is extremely simple, quite a bit simpler than the way the US-based model works. The return is 100% on every one of the options purchased by the trader, and every contract is priced at exactly $10. This way, one’s winning potential on a single contract is capped at $10. The way around this minor impediment is to purchase several options, obviously.
With the Daweda business model, traders do not trade against the broker. They trade against each-other. Thus, it’s clear that every contract needs a buyer as well as a seller. The setup is a zero-sum one. What one trader wins, another trader loses. How does the exchange make its money then? Daweda charges a fee of $0.5 on every contract. The cost is fixed and traders know exactly what they can expect from a trade before it’s actually launched. For unmatched orders, no fees are charged.
While the advantages of exchange-based trading are obvious, there are a few drawbacks to this business model too. Due to the way the pricing is done, the tradable asset selection of an exchange usually suffers. It has to be a massively popular operation to be able to offer pricing on as wide a range of assets as most of the brokers do. This issue is present with Daweda too. Despite that though, there are enough currency pairs and indices (and even a couple of commodities) to make things work.
Another issue is the fact that sometimes, when launched, trades go into pending status. This happens because the system needs to find a match for the other side of the purchased contracts, and that’s not always easy.
To access the Daweda withdrawal page, all one has to do is to hit the Withdraw option in the main menu. The withdrawal page is where one’s withdrawal-related activity is displayed in full. The pending withdrawals are there as well. These can be cancelled at the click of a button. A new withdrawal can be requested on the same page. Withdrawals take 24 hours to process. Every trader is entitled to make a free withdrawal once a month. For additional withdrawals there’s a $25 fee.
Daweda have a Know Your Customer and Anti Money Laundering policy in place. According to these rules, a number of documents have to be submitted by traders. These documents include photo ID card scans, utility bill scans, and a credit card copy.
Payouts and Features
The payouts are 100% on all purchased contracts (minus the commission of course).
The Daweda Auto Trading System
When it comes to features, the Daweda ATS is obviously at the top of the pops. ATS stands for Auto Trading System, and it is indeed Daweda’s own, in-house auto trader and the first EU-regulated auto trader.
The ATS allows traders to set certain parameters, according to which, trades will be taken on their behalf automatically. In this regard, the settings are surprisingly simple. Traders can set the number of trades the ATS is allowed to take per day, as well as the number of contracts it can purchase per trade. In addition to that, the assets which it’s allowed the trade, can obviously be selected as well. There are two strategies available: the Trend strategy – which is about following the trend – and the Reversal strategy – which is looking to take advantage of trend-reversals.
The algorithms on which the two strategies are based are rather simple though, as they make no use of advanced technical indicators. Daweda are upfront about this and they provide the actual formulae at their site. The Stop Loss and Take Profit features allow traders to set limits on the losses they’re willing to accept and on the profits they’re willing to take (although the latter doesn’t really make much sense).
While I only recommend using an auto trader if you’re an experienced trader, the Daweda Exchange ATS is quite simple to use.
- Choose the number of contracts you would like the ATS to execute.
- How many daily trades?
- Select the strategy – Trend or Reversal.
- Take profit – choose how much you want to earn per day as an amount of percentage of your account.
- Stop loss – how much money or percentage of your account will you lose before the ATS stops?
- Choose your currency pairs and expiries.
The bottom line is that unlike the scam auto-traders out there, the Daweda ATS will not trade away your entire balance while you’re sleeping.
The Order Book
Another outstanding Daweda feature is the Order Book. It lets traders take a sweeping look at the markets and the activities of other traders, for every chosen asset. The Order Book displays the information in real time, and it consists of two sections: one for the Call orders and another for the Put orders. In an environment where one is trading against and competing with other traders, such a tool is indeed very valuable.
Minimum Deposit and Incentives
The minimum required deposit at Daweda is $100, which I personally consider very reasonable indeed. Every contract costs $10 as said above, so that’s the minimum on investments. As far as incentives go, Daweda have a unique cash-back program, which rewards account longevity and activity (measured in the number of contracts bought). To take advantage of this loyalty deal, traders are obviously required to have a live real money account. It is recommended that one stick to a single account to maximize his/her cash-back potential.
The Daweda customer support can be reached via email and phone. Their support email is firstname.lastname@example.org. The phone number is +357 22777313. There’s an email form available at the site as well.
The Daweda Hedging Feature
Daweda make it possible for their traders to hedge the positions they open, automatically. Placing a counter-trade in the opposite direction is as easy as clicking a button. The hedging options need to be covered by other traders as well. Hedging has to be done with care, as it’s a sort of delicate balancing act, which is very easy to get wrong. Bear in mind that straight-up hedging makes no mathematical sense whatsoever (buying an option and then buying a similar one in the opposite direction).
Daweda Exchange Review Conclusion
Everything accounted for, Daweda.com is a rather superb binary option trading destination. It is regulated, it features a great trading platform and a rather interesting little toy in the shape of the Daweda ATS. Always bear in mind that exchange-based trading is a zero-sum game. In order to make money at the Daweda Exchange, you will have to outsmart other traders.
Daweda Exchange is not available in the USA, Australia, New Zealand and Japan.
US traders should only trade binary options with Nadex.
Traders from Australia, New Zealand and Japan should consider using HighLow.
Read about my recommended binary options brokers.