Binary Options Payouts
Learn how to understand Binary Options Payouts
The payouts in Binary Options are normally based on a percentage of your trade stake. This means if you are correct in your trade prediction, then the broker has to pay out a percentage of your stake as well as returning your stake to you. For example, you trade $1000 on a trade with a payout of 75% and the trade is successful. You get your $1000 back, along with 75% of the original stake which equals $750. This means your total return is $1750 and a profit of $750.
The brokers make the payout percentage very clear at the point in which you decide to make a trade as shown in the example below which has a payout of 81%:
Differing Payout Rates – Why?
Brokers have differing payout rates for many reasons. Sometimes this is due to the fact that they can see patterns with certain assets and put restrictions on how much people can gain by taking advantage of the patterns. Other brokers offer lower payout rates so they can offer what is called a refund rate. A refund rate is an amount returned when you lose a trade which is normally around 10-15% of your initial stake. To cover this return, the brokers will tend to offer a lower payout on trades with a refund rate attached.
Trading on Boundary trades can often yield much higher returns, sometimes as much as 500%. This is a calculated risk by the brokers as the odds of winning a boundary trade are much less than a normal Call/Put trade.
Which Payout Rate is Right for me?
Deciding on a payout rate is generally based on personal preference. Some traders like the high-yield percentages, and trade only on trades with massive payouts. The downside to this, is that most of those trades are much harder to get right. If you a very advanced trader, then these may suit you, where the normal average joe trader is much better suited to normal returns of around 70-80%.
Which Brokers have the best Payouts?
Most brokers change their payouts periodically to control their profits/losses across their business. I only know of a few brokers who actually keep their payout percentages at a constantly high level. The best of these is Cherry Trade who have always kept their percentages at a fair and stable rate. Sign up with them today to get the best payouts for your binary trading.