The breakeven formula
A binary option pays a fixed profit when you win and costs your stake when you lose. If the payout is p (as a decimal, so 80% = 0.80), you break even when the money won on winning trades equals the money lost on losing trades:
Breakeven win rate = 1 / (1 + p)
If the broker refunds a fraction r of the stake on losing trades, each loss costs only (1 − r):
Breakeven win rate = (1 − r) / (p + 1 − r)
Expected value per trade, as a fraction of the stake, for a win rate w:
EV = w × p − (1 − w) × (1 − r)
Worked examples
- 80% payout: 1 / 1.80 = 55.56%. At exactly 55.56% wins you neither gain nor lose over time.
- 85% payout: 1 / 1.85 = 54.05%.
- 70% payout: 1 / 1.70 = 58.82%. Lower payouts quickly raise the bar.
- 80% payout with a 10% refund: 0.90 / 1.70 = 52.94%. A small refund lowers the hurdle noticeably.
With an 80% payout and a 58% win rate, each $100 trade is worth 0.58 × $80 − 0.42 × $100 = +$4.40. At 54% wins the same trade is worth 0.54 × $80 − 0.46 × $100 = −$2.80, a loss even though you win more than half the time.
Why the bar is above 50%
Binary options pay less than you risk. Winning $80 against a possible loss of $100 is a risk-reward ratio of 1 : 0.8, so you need to be right more than half the time just to stay level. It is the same maths as any trade: the breakeven win rate for a risk-reward ratio of 1 : k is 1 / (1 + k). Our required win rate calculator handles any stop-loss and target, not just fixed payouts.
The gap between the payout and 100% is the broker's margin. At an 80% payout, a trader with no skill (50% wins) loses about 10% of the stake per trade on average: 0.5 × 80 − 0.5 × 100 = −10.
How many trades before your win rate means anything?
Win rates measured over a few dozen trades are mostly noise. With 50 trades, a true 55% win rate will show up anywhere from about 41% to 69% in 95% of cases; with 400 trades the range narrows to about 50% to 60%. Before concluding you beat a 55.56% breakeven you typically need several hundred trades. The standard error of a win rate is √(w(1 − w) / n).
Risk warning. Binary options are high-risk products. EU regulators (ESMA) prohibited their sale to retail clients in 2018 and the UK FCA banned them for retail consumers in 2019, citing consistent losses for most clients. This calculator is an educational tool, not a recommendation to trade. See our disclaimer.
Frequently asked questions
What win rate do I need with an 80% payout?
55.56%. Below that you lose money over time; above it you profit, before any other costs.
What win rate do I need with an 85% payout?
54.05%. Every 5 points of payout lowers the breakeven by roughly 1.5 points.
Is a 60% win rate profitable in binary options?
Yes at any payout above 66.7%. At an 80% payout, 60% wins gives +$8 per $100 traded on average.
Does the refund on losses matter?
Yes. A 10% refund cuts the breakeven at an 80% payout from 55.56% to 52.94%, which is often the difference between a losing and a winning strategy.