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Let’s not confuse winning with making profits, but let’s address the 2 related points.

In a random coin flip, the chance of landing heads or tails is 50%. In a random Binary Option trade where a trader makes a Long or Short call, the chance of each event winning is also 50%.

Now if a trader gains an edge in the market, for example an indicator or strategy which helps to increase his probability of forecast accuracy, the chance of him being correct on a binary option trade will be more than 50%. Next question, how much more than 50% accuracy is required?

What Win Ratio is Required to Make a Profit in Binary Options?

Let’s consider 2 scenarios below where a trader does NOT employ Binary Option Martingale money management, but simply employs equal sized trades.

In scenario 1, a trader only trades binary options with a winning payout of 70%. If trader wins on 6 out of 10 trades, he can expect a profit of 2% on each trade.

Expectancy = Win Ratio * Win Payout + Loss Ratio * Loss Payout

(Note: Profit = Expectancy * Number of Trades)

In scenario 2, if a trader only trades binary options with a winning payout of 85%, he only needs to win 55 out of 100 trades to achieve the same 2% return expectancy per trade.

Critics Are Right, Do not Trade Blindly

In short, assuming equal sized trading, a binary options trader needs a win ratio of at least 55% – 60% to be profitable over the long term. In other words, you cannot expect a profit if you are trading randomly, or worse, trading a low win rate strategy.

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