# Break even point and required win rate

When you settle on a particular type of binary option and asset to trade on you should work out what % of your trades you need to win to break even. This is called your required win rate. This will give you a benchmark to track your performance against and tell you whether long term profit is possible.

The required win rate all comes down to the payout % on the option you have decided to trade. The calculation is

```Stake ÷ (Stake + profit) * 100 = required win % to break even.
```

For example let’s say you want to stake 100 m฿ per option with a 70% payout. 70% of 100 m฿ is 70 m฿ profit.

`100 ÷ (100 + 70) * 100 = 58.28%`

So for 70% payout options you need to win 58.28% of your trades to break even. Let’s see how much this changes if we get a nice high payout % of 85%. In this example we will invest 500 m฿ per option.

`500 ÷ (500 + 425) * 100 = 54.05%`

With the higher payout rate we only need to win 54.05% of our options to break even.

## What ABC do you need to win XYZ

Let’s say you have a profit target and you want to work out, to reach that target you need

• To trade how many options.
• What required win rate.
• How much to invest per option.

To work out 1 of those 3 things you need to know the other 2. In all examples let’s say you want to make 1000 m฿ trading an option that has an 80% payout.

### Example 1

You decide to invest 100 m฿ per option and you have a 60% win rate. You want to know how many options you have to trade to win 1000 m฿.

For every 100 options you trade, you win 60 and lose 40.

```60 * 80 m฿ = 4800 m฿
40 * 100 m฿ = 4000 m฿```

So overall in 100 trades you are winning

```4800 m฿  - 4000 m฿ = 800 m฿

You want to win 1000 m฿.

`1000 m฿ ÷ 8 m฿ = 125`

therefore you need to trade 125 options to win 1000 m฿ .

### Example 2

You decide to trade 500 options for 50 m฿ each. You want to know what win rate you need to make 1000 m฿ .

`1000 m฿ ÷ 500 = 2`

therefore you need to win 2 m฿ per trade.

```289 winning trades * 40 m฿ = 11560 m฿
211 losing trades * -50 m฿ = -10550 m฿
11560 m฿ - 10550 m฿ = 1010 m฿
289 ÷ 500 * 100 = 57.8% win rate.```

Therefore you need a win rate of 57.8% to win 1000 m฿.

### Example 3

You decide to trade 300 options and you know you have a 63% win rate. You want to know how much you have to invest per option to win 1000 m฿.

`1000 m฿ ÷ 300 + 3.33`

therefor you need to win 3.33 m฿ per trade.

With a 63% win rate you know you will win 189 trades and lose 111. That is 78 more wins than loses. Making trades of 25 m฿ will win 20 m฿ if you win and lose 25 m฿ if you lose.

```you win
189 * 20 m฿ = 3780 m฿
you lose
111 * -25 m฿ = 2775 m฿
3780 m฿ - 2775 m฿ = 1005 m฿```

Therefore you need invest 25 m฿ per option to win 1000 m฿.

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