Where profit and loss come from
The asymmetry of the payout, in actual numbers.
See on a calculation why a mistake costs more than a win pays.
- If you are right
- +$16.00
- If you are wrong
- −$20.00
- The gap on a single trade
- $4.00
A win and a loss are not symmetrical: at 80% payout a mistake takes more than a winning trade brings.
The mechanics look simple: a winning trade returns the amount plus the payout, a losing one takes the amount in full. But hidden in that simplicity is the arithmetic that decides everything else in this course.
- Trade amount
- — $10
- Payout
- — 80%
- A winning trade
- — +$8 (you get back $18)
- A losing trade
- — −$10
Now count a run. Ten trades of $10 at 80% payout, five wins and five losses — exactly 50% accuracy. Profit: 5 × $8 = $40. Loss: 5 × $10 = $50. The total: −$10.
Half your decisions being right leaves you down. To simply break even at 80% payout you need roughly 55.6% winners. The formula is short: 100 / (100 + payout).
From which follows the single most practical conclusion in the whole course: a doubtful trade you skip costs nothing, and an unnecessary trade costs real money. That is why skipping is a full decision, not a weakness.
Payout differs between instruments and changes through the day. The difference between 70% and 90% is six percentage points of required accuracy, and for a beginner that is a long distance.
Key takeaways
- 01A mistake costs 100% of the amount; a win returns only the payout.
- 02Break-even win rate = 100 / (100 + payout).
- 03A skipped trade costs nothing, which makes skipping a decision in its own right.
The usual mistake
Treating 50% accuracy as neutral. At any payout below 100% it is a loss, and no run of luck changes the shape of that.
A practical example
Open BinoDex and look at the payout on two different instruments at the same time. The gap is often 10–15 percentage points.
Work out the break-even win rate for each: 100 / (100 + payout). That number is your real threshold, not an abstract 50%.
In LEVEL 12 we come back to this formula with the risk calculator and work out what a run of losses does to a balance.
A note from Leon Mercer Academy
Before a session, write down the break-even win rate for the instrument you are on. It is a different number for every payout, and it is the only threshold that matters.
Lesson 6 of 10 in “WELCOME TO MERCER”