Synthetic indicesUpdated 2 min readBy the FXNOD team
What is payout in trading?
The payout is the total amount a winning contract returns, usually your stake plus the profit. If you stake 10 and the payout is 19.50, the profit is 9.50. The payout tells you the win rate you need to break even: divide the stake by the payout. Here that is 10 divided by 19.50, or 51.3%.
Payout, profit and return
| Term | Meaning | Example on a stake of 10 |
|---|---|---|
| Stake | What you pay for the contract | 10 |
| Payout | What you receive if it wins | 19.50 |
| Profit | Payout minus stake | 9.50 |
| Return | Profit as a share of the stake | 95% |
Platforms differ in which of these they show. Check whether a quoted figure includes your stake before comparing two contracts.
From payout to break-even
| Payout on a stake of 10 | Return | Win rate needed to break even |
|---|---|---|
| 11.00 | 10% | 90.9% |
| 12.50 | 25% | 80.0% |
| 15.00 | 50% | 66.7% |
| 19.50 | 95% | 51.3% |
| 30.00 | 200% | 33.3% |
| 100.00 | 900% | 10.0% |
Break-even win rate equals stake divided by payout. Compare it with the true chance of winning. The difference between them is the cost of the contract.
Where the cost hides
A contract with a true 50% chance would be fair at a payout of 20 on a stake of 10. At 19.50 it costs 0.25 per trade on average. A contract with a true 90% chance would be fair at 11.11, and at 11.00 it costs 0.10 per trade. Neither figure appears on the screen. You find it by working out the fair payout and comparing.
Payout per point
On turbos and vanillas the payout is not fixed. Deriv quotes a payout per point, and the payout is that figure multiplied by how far the final price is from the barrier or strike. You profit only when the payout exceeds the stake.
Other meanings
- With prop firms, a payout is a withdrawal of the trader's share of profits.
- With brokers, a payout sometimes means a withdrawal to your bank.
- A payoff ratio is the average win divided by the average loss.
In FXNOD
Trade Pilot's order panel shows what Deriv will pay for exactly the settings you chose, and the quote changes when you change anything. Read it before every purchase.
Questions people ask
- Does payout include my stake?
- On Deriv-style options, the payout is the total returned on a win, including the stake. Other platforms may quote profit only.
- What is a good payout?
- One whose break-even win rate is below the win rate you can really achieve. On random markets the payout is set so that it is not.
- Why does the payout change?
- It depends on the contract's settings and the market at that moment: duration, barrier, volatility and the broker's pricing.
Trade a synthetic index on demo
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