Why payout matters
How a few percentage points of payment change the whole arithmetic.
Take payout into account when choosing an instrument and when judging your own statistics.
- 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 decides how many winning trades you need simply to break even. That is not an abstraction but a number you work with daily.
- Payout 70%
- — break-even ≈58.8%
- Payout 75%
- — ≈57.1%
- Payout 80%
- — ≈55.6%
- Payout 85%
- — ≈54.1%
- Payout 90%
- — ≈52.6%
Now a practical example. Imagine your real win rate is a steady 56%. At 80% payout you break even, at 85% you are up, at 75% you are down. The same skill, a different result.
From which two conclusions follow. First: look at the payout before entering, not after. Second: not every instrument suits your current level of accuracy.
But do not turn payout into the only criterion. An instrument paying 90% whose behaviour you do not understand will eat the edge faster than the percentage adds to it.
Key takeaways
- 01Payout sets the accuracy you need directly.
- 02The same win rate gives different results on different instruments.
- 03Payout is an important criterion but not the only one.
The usual mistake
Being pleased with a 54% win rate without looking at the payout of the instrument. At 75% that is a loss: the threshold there is ≈57.1%.
A practical example
Work out your own win rate over the last 30 trades in the journal. Compare it with the break-even thresholds of the instruments you work on.
If your accuracy is below the threshold, the problem is not the strategy but the choice of instrument or the number of unnecessary trades.
A note from Leon Mercer Academy
Write the break-even threshold of your main instrument somewhere visible. It is the cheapest way not to take unnecessary trades.
Lesson 12 of 15 in “YOUR FIRST TRADE”