What payout means
The payment, the break-even win rate, and why they are different numbers.
Work out the accuracy a given payout requires before opening a trade.
- You need to be right
- 55.6%
- Result at 50% correct
- -10.0%
- Margin over the threshold at 60%
- 4.4%
At 80% payout, half your decisions being right is a loss, not a break-even. The threshold is always above 50%.
Payout is the percentage of profit on a winning trade. A payout of 80% means a $10 trade in profit returns $18, and a $10 trade at a loss takes all $10.
From that asymmetry comes the central formula of the course: break-even win rate = 100 / (100 + payout).
- Payout 70%
- — needs ≈58.8% winners
- Payout 80%
- — ≈55.6%
- Payout 90%
- — ≈52.6%
- Payout 95%
- — ≈51.3%
Payout differs between instruments and changes through the day. Which means the accuracy you need changes too — and it has to be assessed before entering, not after a run of trades.
A payout of 80% does not mean a probability of 80%. They are two independent numbers: one describes the size of the payment, the other the frequency of correct decisions. Confusing them is a basic beginner error.
Key takeaways
- 01Payout is the size of the payment, not the probability of success.
- 02Break-even win rate = 100 / (100 + payout).
- 03The payout changes through the day, so the accuracy threshold changes too.
The usual mistake
Comparing instruments by payout alone. A higher percentage is only useful when you genuinely understand how the instrument behaves.
A practical example
Compare two instruments: one at 72% payout, the other at 88%. The break-even thresholds are 58.1% and 53.2%.
Almost five percentage points of accuracy between them. For a beginner that is a chasm: it is exactly the distance between systematic work and a slow bleed.
A note from Leon Mercer Academy
Before a session, write down the break-even win rate for the instrument you are on. That number should be in front of you when you feel like taking “one more trade”.
Lesson 13 of 15 in “BINODEX START”