Binary Options Calculating Breakeven Win-Rate for a Given Payout

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Тема в разделе “Индикаторы”, создана пользователем Alex, 28 мар 2020 .

Is It Possible To Make Money Trading Binary Options?

Trading binary options online has become possible in 2008. It was a new way to make fast profits online for financial speculators. Trading binary option is open and available to anybody over 18 (one should check local government regulation before trading BO).

Binary options allows the user to speculate and place trades, which are essentially bets, on the direction of financial assets from a basket of currencies, stocks, commodities and indices. In binary options your losses can never exceed your deposits and your return is clearly defined at entry.

It is no secret that trading on the world’s financial markets by buying and selling positions has made many millionaires. It is also a fact that the markets bankrupted many more. The line between winning and losing can be very subtle. While trading may not be for everyone, the unprecedented ease of access to financial trading online has certainly made a lot of people happy about new possibilities.

Is it really possible to make money? If so, how much?

The big question is can you really make money trading binary options? Short answer is yes, but it’s not that simple. Whether you make money or lose money really depends on a number of factors including your risk management, trading strategy, the options that you choose when you enter the trades, your broker fees, your trading psychology, etc. There are simply too many factors to consider but of course it is possible to win and make money, but it’s not as easy as binary options advertising has us believe.

Brokers will often entice people with all types of bonuses and ads that suggest making money trading binary options is very easy. Although the actual act of trading binary options is easier than Forex it is not easier to win and make money consistently in binary options.

Here is a mathematical formula to calculate break even ratio in binary options:

  • B – Break even ratio – (shows how many times you need to win to break even)
  • I – In the money ratio – (shows broker payout for winning trades)
  • Ot – Out of the money ratio – (shows your losses for losing trades)

Using the above formula you can calculate the break even ratio assuming a set of fixed parameters. Assume your broker pays you 90% for wins and takes 100% for losses.

B = 100% / 90% (in the money) + 100% (out of money)
B = 100 / 190
B = 0.5263

What this means is that in the case of a payout rate of 90% and 0% rebates on losses you will have to accurately predict 52.63% of your investments in order not to break even. This break even calculation can change quite significantly with different options. A 90% payout is very generous and rarely seen in binary options.

Let’s look at the numbers and for the purpose of further illustration let’s assume that we are dealing with a trader who has a trading strategy with 75% of wins. (There are numerous signal providers that achieve those levels.) 75% of wins is quite high for most standards. He also uses a binary options broker who offers only 70% of profit on each winning trade.

In one month he takes 52 trades and on each trade he puts $100. His total investment will be $5200. It averages out to about 2 trades per trading day. Let’s also assume that each trade has a payout of 70% and a return of 0%, as is the case with many binary brokers.

When we divide the total sum of his investment of $5200 between the 75% of winning and 25% of losing trades we split the working capital between $3900 which was spent on the winning trades and $1300 spent on the losing trades. Now let’s take the $3900, the 75% of his total trading capital, and add 70% of return payout on the winning trades which will produce $2730 of profit. His losing trades, the 25% of total trading capital, cost him $1300.

*The end result is wrong, it is $6630 which makes it 27.5% increase

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So now that we know how much profit was made, let’s take those numbers and put them into the mentioned breakeven ratio formula to see how many times he actually needed to win in order not to lose any money at all.

This financial calculation is quite modest because it assumes a return of only 70% on wins where many brokers offer payouts over 80% and some brokers also offer returns on losses, only about 5-10%, but this will change the numbers significantly.

In addition, there are a few binary options signal providers who consistently achieve higher percentage of wins than 75%, which would also drastically improve profits as well.

So, only for the purpose of further illustration of what would happen if the overall wins were 80% and the return payout also 80% we’ll continue with our calculation. In this case $4160 is our winning capital, namely the 80%, and the remaining $1040, the 20%, is the losing capital. The winning capital of $4160 generates $3328 of profit (80% of payout for wining trades) and the losing capital of $1040 is simply lost, we’ll also use 0 return for losses in this calculation. So, out of 52 trades for $100 each the profit is $3328 and loss of $1040. Remember, that’s only in one month of trading.

As you can see the difference in earnings is huge between the first and the second example. A 24 percent per month as opposed to 2.5 percent per month is a world of difference. This is why it is so important to understand your risk exposure in binary options. Let’s see how many times he needed to win to break even:

Professional traders understand that and seek options and ways to keep the odds in their favor. For example trading with brokers that offer 85%-95% on wins and some return on losses. In addition there are ways to trade binary options to receive even higher payouts, as high as 200%.

Of course were profits can be made in a such a quick way there is inevitably going to be more risks involved. You can make money trading binary options online, there is no doubt about that, but you can also lose money. Following a reliable binary options signals or strategy or a professional trader in live sessions can really help you succeed in trading binary options online. It could be the difference between winning and losing.

Break-Even Analysis: How to Calculate Break-Even Point for a Restaurant

By: Casey Woo

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You might be an expert in management, staff training, and menu engineering. But do you know how to calculate break-even point for your restaurant?

Not all restaurateurs are business experts right out of the gate, and that’s okay. What matters is the willingness to learn. Once you have a reliable system in place for calculating your break-even point, getting back to your true passion will be all the easier.

Break-even point is a key figure in operating your restaurant, referring to the amount of revenue necessary to cover the total fixed and variable expenses incurred within a specified time period.

Some methods of calculating break-even point can be quite subjective. Our hope with this article is to help define some standard restaurant accounting metrics, shine a light on why they matter to you, and help you figure out how to start tracking them today.

How to Calculate Break-Even Point for Your Restaurant

Break-even analysis can be challenging for restaurants: You’re measuring today’s business performance with tools and information based on historical accounting data from the past.

Your break-even point helps you understand how many people — based on a determined average price point per guest — your restaurant needs to serve in order for the business to make money. To do this, it’s important to conduct accurate cost accounting; it’s also important for your restaurant POS system’s sales reporting to deliver accurate data on guest averages.

Break-even analysis also focuses on making sense of your fixed and variable costs. Here’s a breakdown of the two.

Fixed Costs

Your fixed costs include expenses that must be paid regardless of production or sales volume. A great way to distinguish between fixed and variable costs is to ask yourself, “What expenses do I still have to pay, even if I don’t get a single customer?”

A few common fixed costs include:

Heating the ovens and powering the walk-ins

Occupancy expenses like rent, insurance, and property tax

Communication tools like a phone system and internet

Variable Costs

Variable costs vary in proportion to production. Your variable costs also take into consideration anything that gets more expensive as a result of more business. Variable costs may include:

Food and drink costs

Disposables and garbage bags

Credit card processing fees

Mixed Costs

It’s worth mentioning mixed costs, which are costs that waiver between being fixed and being influenced to a degree by factors like sales volume.

For the purpose of calculating break-even point, mixed costs are often grouped with fixed costs. An example of a mixed cost is power and water, which may vary month-to-month but typically doesn’t drift too far from the norm.

Free Resource: How to Measure and Increase Restaurant Sales

Break-Even Point Formulas and Calculations

Here is the textbook formula for calculating break-even point in units of number of guests for a given period of time:

Break-Even Point = Total Fixed Costs ÷ (Average Revenue Per Guest – Variable Cost Per Guest

In the restaurant industry, the units are the guest counts (or number of “covers”) themselves. Our unit price is essentially the dollar amount of our “guest average.” This isn’t always the easiest way to look at things, and that’s mostly because of the difficulty in obtaining the “variable cost per guest” component.

Some restaurants will have worked out their estimated margins on food and drinks based on an expanded analysis of recipes and cost of ingredients. But most restaurants don’t have an entire chart of accounts neatly categorized into fixed and variable costs in order to accurately conduct complete break-even analysis.

As an alternative, this variation of the formula works well. You only need three values: total sales, total fixed costs, and total variable costs:

Break-Even Point = Total Fixed Costs ÷ (Total Sales – Total Variable Costs ÷ Total Sales)

Once you’ve categorized your fixed and variable costs for a given period of time, this formula allows you to quickly calculate your restaurant’s break-even point in sales dollars. All you have to do is gather basic accounting reports from a high level, without yet factoring in guest counts or the dollar averages per guest.

Let’s break this down a bit to see how we got to this.

You can think of break-even point in dollar amounts like this: For a given period of time, at what sales volume did my total contribution margin break-even my bottom line, offsetting my total fixed costs, after which point each additional dollar earned went straight to contributing to my net income?

Let’s see how you calculate the percentage of each sales dollar that is available to cover your fixed costs and profits using this formula: Break-Even Point = Total Fixed Costs ÷ Contribution Margin Ratio. We can get to this using a series of calculations:

Contribution Margin = Total Sales – Total Variable Costs

Contribution Margin Ratio = Contribution Margin ÷ Total Sales

Contribution Margin Ratio = (Total Sales – Total Variable Costs ÷ Total Sales)

Break-Even Point = Total Fixed Costs ÷ (Total Sales – Total Variable Costs ÷ Total Sales)

With this formula, we simply remove the guest count component to answer the question, “At what point did I break even and start adding profit to my bottom line?”

Let’s look at an example. Last quarter, let’s say you…

Introduced a new menu and slightly raised prices

Printed new menus, which only happens a few times a year

Started using new vendors that you negotiated into contract pricing

Brought on a new restaurant management team

Invested in a new kiosk system, costing you a fixed monthly amount but saving you money on labor

Knowing this information, we should use the last three months of accounting data to reset our way of measuring break-even point. It’s a good idea to use a moving average of these expenses and sales figures. Using moving averages allows you to account for the quirks of all the miscellaneous expenses that still impact your bottom line, while still updating your historical numbers with the most recent month’s closing figures.

Let’s look at these example statistics from a restaurant’s last quarter:

The restaurant had $450,000 in sales.

Their total variable costs amounted to $180,000.

Their total fixed costs amounted to $200,000.

Now, let’s turn these costs into one-month averages:

On average, the restaurant had $150,000 in sales per month.

On average, the restaurant had $60,000 in variable costs per month.

On average, the restaurant had $66,666 in fixed costs per month.

With these numbers, we’ll first subtract the number of total variable costs ($60,000) from total sales ($150,000). Next, we divide that difference ($90,000) by the total sales number ($150,000). Then, we take one minus that quotient (0.4), which equals 0.6. Finally, we divide the total fixed costs ($66,666) by 0.6.

Ready to see it all made clear? Using this example, let’s crunch some numbers to see how to calculate break-even point in dollars:

Break-Even Point = Total Fixed Costs ÷ (Total Sales – Total Variable Costs ÷ Total Sales)

Break-Even Point = $66,666 ÷ ($150,000 – $60,000 ÷ $150,000)

Break-Even Point = $66,666 ÷ ($90,000 ÷ $150,000)

Break-Even Point = $66,666 ÷ 0.6

Break-Even Point (in Dollars) = $111,110

In this example, we calculated that the restaurant’s break-even point was when it reached an average of $111,110 in sales per month.

Let’s say you discovered from your sales records that the average dollar amount per guest for the same previous three months is $45. You can use that number to determine your break-even amount when it comes to the number of guests you need per month. All you need to do is divide your monthly break-even amount by the average amount spent per guest.

Break-even point (in guests) = $111,111 ÷ $45

Break-even point = 2,469 guests

Comes out to an average of 83 guests per day

There you have it. We hope these formulas and breakdowns help you better understand how to calculate break-even point for your restaurant.

Crunching the Numbers for Your Restaurant

While it’s crucial to understand the fundamentals of break-even analysis for your restaurant, there are still plenty of other metrics you should be thinking about on a regular basis, including food cost percentage and cost of goods sold. Download a free copy of our restaurant metrics calculator — including an interactive template — for easily calculating your restaurant’s metrics.

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  1. Почему – Итак это последний месяц конкурса, и все ринулись писать статьи. К сожалению компания решила прикрыть много кункурсов, согласен. Мы не оправдали их надежд. В Бинарах все лупят нахаляву, порой у победителей смотришь стайтмент а там. -1000% профита ))) а то и более, просто человек на удачу изо дня в день, пытался разогнать свой счет. то есть даблил-удваивал удачу. Если посмотреть то всего для победы нужна серия из 6 побед 1-2-4-8-12-16. Я все мечтал победить но увы. Теперь на реальные деньги страшнее. Конкурс статей в массе писатей пишут ни о чем. Технический анализ просто нужна удача и по возможности максимальное количество прогнозов. Тоже лотерея.

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Робот не законченный, а где трейлинг-стоп ? А так работа в безубыток ?!

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