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Thread: Return Rates

  1. #1
    Rookie Member

    Return Rates !!!

    I was browsing through reviews for various binary options platforms and there are huge differences regarding return rates. Any experience guys?

  2. #2
    Moderator Kolyo's Avatar
    Hi milboj,

    There really is a great difference between different BO brokers when it comes to Return Rates. The most often case is 65-75% return, but there are some brokers which offers as low as 60-75% and some others as high as 75-89%. It could not be said easily which ones are better and which ones are bad, because we have to take into consideration also the refund rates when your trades are not profitable. The refund rates are most often in the 0-10% range, but sometimes they are as big as 15%. If you have return 70% and refund 10% it is better for example than return 75% and refund 0%. So it could be said better which broker gives you better payoff only after more deep research and real trading.

  3. #3
    Specialist Member RCox's Avatar
    Quote Originally Posted by milboj View Post
    I was browsing through reviews for various binary options platforms and there are huge differences regarding return rates. Any experience guys?
    Kolyo makes some good points here. The spread does seem to average in the 60%-90% area and if your broker is not at least offering something in this range than you should approach things with skepticism and look for other trading options. There are also market factors involved which will affect the payouts that a broker is going to offer, so it does make sense to look at whether or not you have a partial refund structured into your trade. Some traders opt not to receive the payout altogether, so that is a factor that is going to depend on your trading style and the probability of the trade you are in at the moment. Another thing to think about would be the situations where High Yield options contracts are involved, as this can skew the averages and make some payouts look distorted with respect to what is commonly offered.

  4. #4
    Rookie Member
    Hi guys, thanks for explaining the situation here..Basically , I was considering this return rate topics as an indicator of competitive advantage / disadvantage of some of those brokers, but you are saying to pay attention to some other relevant factors..as for the return rates, this % frame we are talking about could be much higher than 90 % , perhaps this if is affected by type of trade..

  5. #5
    Junior Member Aravins's Avatar

    The most important factor !!!

    I also think this is an important factor if not the most important, but I think that it is important no only the return/refund rate in general, but also what are their values for specific instruments and in specific situations. For example if we have 80 return for a weekly call in EUR and we strongly believe that it will go up it is a bargain, but if the offer is only for 60% in this situation, is it a good offer or we should avoid this option?

  6. #6
    Rookie Member
    Hi I'm Peter from Beaned.com and wanted to make a contribution to this thread.

    In general standard binary option will have a payout / refund rate that depends on the provider. In general those with a refund % (10-15%) will have a lower payout rate. Most people prefer the higher payout rates and disregard the refund for losing positions. The payout will depend on the provider; those with a high payout may not be the best choice at times because they have stricter cash out conditions for bonuses etc.

    The payout rate for general binaries can vary according to the asset class, time to duration and present conditions. If the asset is of a lower liquidity (ie. in the case of some stocks) the payout is less. Also the shorter the duration the lower the payout as evidenced by the 60second options which have a payout in the 50-65% range. The reason is that the shorter to duration the longer more likely the current trend will continue.

    In some cases the payouts greatly exceed the 80-90%. In these cases it's likely not a standard binary but one touch which can have payouts ranging from 200% upwards and really they are not comparable to regular binaries. The payouts of those are concurrent with the likelihood of reaching the target strike price within the specified duration. These are similar to prop bets in a sportsbook and the likelihood is not high though the payouts are.

    My advice when researching which provider is not to go strictly to the payout %'s as that's not the only factor. A few % points difference doesn't make a big difference in the grand scheme of things. Try to value things such as payout conditions, bonuses, support and service etc before making a decision on which provider to use. In our case we provide things such as free market intelligence subscription, English support etc.

    Any questions please PM me.

    Quote Originally Posted by Aravins View Post
    I also think this is an important factor if not the most important, but I think that it is important no only the return/refund rate in general, but also what are their values for specific instruments and in specific situations. For example if we have 80 return for a weekly call in EUR and we strongly believe that it will go up it is a bargain, but if the offer is only for 60% in this situation, is it a good offer or we should avoid this option?

  7. #7
    M.J
    M.J is offline
    Veteran Member M.J's Avatar
    Quote Originally Posted by milboj View Post
    Hi guys, thanks for explaining the situation here..Basically , I was considering this return rate topics as an indicator of competitive advantage / disadvantage of some of those brokers, but you are saying to pay attention to some other relevant factors..as for the return rates, this % frame we are talking about could be much higher than 90 % , perhaps this if is affected by type of trade..
    Return rate is one thing and it is one indicator of competitive advantage. While choosing broker, u have to see other factors too. For example regulation, deposit/withdrawal methods, cost of deposit/withdrawal and types of options the broker offers.

  8. #8
    Junior Member
    As I said countless times here, pricing is important.

    Return rate is a component of the pricing (which is actually hidden with the regular binaries). The components are:
    - the cost, which is defined by you (how much you pay)
    - the return, which is defined by them.

    If you trade ladder or One Touch, you will also have:
    - the distance to the strike.

    Of course, if you trade up/down options, there is no distance involved. The price is resultant from the cost and the return, and getting just 70% or 80% for a 50-50 trade, in the end, indicates a big ripoff.

    The ripoff becomes even more evident if you trade Ladders (or "Expires Higher/Lower than...") or One Touch.

    For instance, let's say that:
    - Broker X gives you 50% if DAX makes 10 points up in one hour.
    - Broker Y gives you 70% if DAX makes 20 points up in one hour.
    - Broker Z gives you 85% if DAX makes 40 points up in one hour.

    Which broker would be more fair? Well, 10 points for the DAX in one hour happens often. At least it happens. But 40 points in an hour? Would anyone give a damn on the 85% yield if the chance for that is, say less than 1% ? You want more?

    - Broker T gives you 500% if DAX makes 150 points up in one hour!

    So what? The distance will always be far enough so that the option is a ripoff!

    Now you understand how deep is the deception used by these "brokers" to lure the traders with ?

    The sign that something's bigtime wrong with current BO providers is that each one picks the return it wants.There is nobody to control that, and I don't see anyone taking an attitude. I understand that most brokerages are unregulated. It's pretty normal to be doublecrossed by an unregulated brokerage. But the worst thing is that regulation tends to legitimize this behaviour. It's like a band of gangsters inviting you to play a shell game on the street, while the police (CYSEC) says:"Well, they don't have any criminal record, and they're financially solid."

    In these conditions, would withdrawal have any meaning?. They will take your money, some sooner, others later. To keep the appearence of normality they will wire you the funds in time, to keep you rolling the ball and recommending them. In the meanwhile they screw you bigtime, until you realise your chance of winning, and the more aware you become, the less willing to push the button. You will tell yourself "hmm, this is a nice signal, but damn, the yield is too small". That's the voice of experience telling you that the option yield is too small ; yet you dismiss it, because you say, "Hey, all the brokers have the same yield, some a bit more, but generally the same game. It must be written in the stars that's 70%-85%. If everywhere the game works same way, then it means it's fair!" WELL IT'S NOT! ... I don't have any problem to be the forum's maniac, but I won't finance their women, cars, parties and villas!
    Last edited by fxeconomist; 01-14-2013 at 10:08 AM.

  9. #9
    Rookie Member
    The rates of return on a high/low binary determine the breakeven % success rate.

    Example 1
    If the in-the-money return is 85% (with no out-of-the money refund), the breakeven % success rate is 54.05%. The calculation in this case is 100/(100 + 85). This is the same as saying that out of 17 binary options of the same size you need to win on 10 of them to break even.

    Example 2
    If the in-the-money return is 80% (with no out-of-the money refund), the breakeven % success rate is 55.56%. The calculation in this case is 100/(100 + 80).

    Example 3
    If the in-the-money return is 70%, but with 15% out-of-the money refund, the breakeven % success rate is 54.84%. The calculation in this case is (100-15)/(155-15) = 85/155. (You start the calculation by deducting the out-of-the-money refund percentage from both the numerator and the denominator).

    Example 4
    If the in-the-money return is 70% (with no out-of-the money refund), the breakeven % success rate is 58.82%. The calculation in this case is 100/(100 + 70).


    It is possible for a good trader to achieve a 58% success rate, making a small profit as long as s/he only trades binaries with low breakeven % success rates. In the first example a trader with a 58% success rate would make $73 profit on $1000 of binary options purchased. In the second example a trader with a 58% success rate would make $44 profit on $1000 of binary options purchased. In the third example a trader with a 58% success rate would make $49 profit on $1000 of binary options purchased. In the fourth example a trader with a 58% success rate would make a loss of $14 on $1000 of binary options purchased.

    'fxeconomist' you have described 70% or 80% return as a 'big rip-off'. Does this mean you know of binary options companies with better returns than in my first 3 examples, and which types of binary options do you recommend trading?

  10. #10
    Solid Member Peter Green's Avatar
    I think 55% success ratio, which is necessary to have a positive track is absolutely achievable if you are very selective in your trades and don’t start to gamble on every possible opportunity. In my demo trading I achieved over 60% success rate and think could improve it a bit further.

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