Binary Options Payouts
When choosing a broker, among the aspects that should look into are the binary options payouts. These are the amount of money that you receive each time the trade closes in your favor. Most brokers offer payout percentage of 80%; some are lower than this. If you want similar payout percentage, you should look for a broker that offers this.
How much is your winning?
In binary options trading, you already know how much you will lose – your trade amount. You also know how much you will win – 80% or lower, depending on the broker or the option contract. Hence, you will see that everything is fixed already. It will be easy for you to control the amount of money that you want to lose and the amount of money that you want to receive.
Let’s take for instance that you trade an asset for $500. Because the trade closes in-the-money (meaning, you win),you get $900 back – your $500 and your $400 profit.
How do payout rates differ?
Payout rates are not fixed as these are founded on option contracts. It can be as low as 65% and as high as 90%. For instance, if one option contract gives 80% on your first trade, you should not expect to receive the same percentage after that. If you stumble upon a broker that gives lower payout rate, make an effort to look for another one. However, there is another aspect that you may want to check before you search for a broker that offers higher binary options payouts: refund percentage rate in case of loss. Initially, this will look interesting, right? You get a portion of your money back when you lose. Not all brokers are generous enough to provide this – or quite generous because the refund percentage is fairly low. But why are some traders not interested in getting their money back? It’s because when the broker offers refund, expect the full payout to be lower than the others.
So, how do you get the best binary options payouts?
Most new traders are already aggressive even before they start trading. With strategies they learned, they feel confident and excited with the thought of collecting, for example 90% of their trade amount. With so much enthusiasm going on in their minds, they aim to hit the jackpot right away that they want to do it in a single trade. However, this is not suggested even by experienced traders because this limits your chances of winning to one trade and empties your pocket in an instant.
For instance, Trader 1 has the thinking of an all-too-excited new trader thus he plans to trade a huge percentage of what’s in his account, leaving almost nothing, because he looks forward to collecting huge payout. On the other hand, Trader 2 follows a different approach. He wants to do small trades so he can execute more trades and grow his money gradually.
Both of them look forward to the same thing – winning. Both of them have the chance to be successful in their trade. However, they differ in strategy and in the number of times they plan to trade binary options: Trader 1 wants to take the easy route by making a single trade while Trader 2 intends to take it slowly by performing a series of small trades. Who has the better tactic? No one can tell because if Trader 1 succeeds in his goal, it is also possible that Trader 2 experiences the same success – after a few or several trades. The reason expert traders prefer the strategy of Trader 2 is because if Trader 1 fails, he no longer has a second chance (unless he puts in huge money again). As for the case of Trader 2, he still has a few or more trades to try if he does not succeed in his first.