Tip 2 – Do Not Be Fooled By The Headline “Make 80% In 5 Minutes” Of Binary Options
There is a truth that with a winning Binary Option bet you can make up to 80% within 5 minutes or 1 hour, a day or even a week. This merely relies on two things…
- Your choice of time frame
- Your winning bet offered by the return of your Binary Options Broker – 80% is quite standard, some offer more, or some less.
Well, let’s see what they don’t bring up…
You just make 80% of the amount that you bet. It means in case of loosing you lose 100% of the amount you bet.
Let’s suppose that with £5,000 account and you risk 2% (£100) each time of betting. It shows that you will lose £100, or 2%, if you lose in the bet, you will win £80, or 1.6%, if your bet wins.
Give some more viewpoints on this…
Each time of your lose (it means the broker wins), the broker makes 25% more than you. We can see £100 is 25% more than £80.
Every bet that you win, as the truth, you make 1.6% and every bet you lose, you really lose 2%
The Call/Put is the most common Binary Options bet. As you can see, this fundamentally means you bet at the closing price of the market will be Higher/Lower (Call/Put) than the current price at the end of the term you are trading. This is similar to calling heads or tails on a coin flip. The main difference is of course, as already shown out…
Every time of the broker’s winning; he makes 25% more than you
You’ve probably already worked it out, it means in the attempt of making a profit; you have to win the coin flip much more often than the broker does! So, exactly, how many time?
By example, it is done well, so let’s follow our £5,000 account and 2% (£100) risk on each bet. Let’s make use of 100 bets…
Winning 55 of your bets, you would make a return of +£4,400. Factually, 45 losing bets mean you would be responsible for a loss of -£4,500. This is a net loss of -£100 or, -2%.
At least, you have to win 56 of every 100 bets you place for making a profit. You would make a return of +£4,480 if 56 of your bets win. In a comparison of this with the 44 bets you lose (-£4,400) and it is equivalent to a net profit of +£80 or, +1.6%.
For making a profit, you must win at least 56% of all Binary Options bets that you place
And, a reminder of why this is the case…
Every time of your winning, you make a return of 80% of your bet amount. You lose 100% of it if each time you lose. Compared to what you make when you win the broker makes 25% more every time you lose.
Note: Although Forex Binary Options traders may be acceptable to this, traditional traders of Forex typically aim at a scenario where they make 200% of their risk every time they win, not 80%. It means they target for a 1:2 Risk: Reward not 1:0.8. It is most uncommon for any Forex trader to consider carry out a strategy with a Risk: Reward less than 1:1.
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