A payout percentage is not the same as expected return. The simple break-even calculation shows how an asymmetric win and loss changes the probability needed to avoid losing money before additional costs.
Follow the evidence
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If a contract returns part of the stake on a loss, charges a fee, changes the payout or uses a different stake convention, the formula must change. Read the terms for every outcome rather than assuming the advertised percentage is net. A break-even rate says what the average would need to be under the simplified assumptions. It does not say whether the market probability is above or below that level, and it does not describe the sequence or size of losses along the way.
If a contract returns part of the stake on a loss, charges a fee, changes the payout or uses a different stake convention, the formula must change. Read the terms for every outcome rather than assuming the advertised percentage is net. A break-even rate says what the average would need to be under the simplified assumptions. It does not say whether the market probability is above or below that level, and it does not describe the sequence or size of losses along the way.
Ask how the reference event is defined, how prices are sourced and whether historical outcomes include the same fees and settlement rules. A backtest based on a different platform or timestamp may not represent the offered contract. Even an accurate probability estimate can be wrong on an individual outcome. Binary contracts can lose the full stake, and platform, counterparty and jurisdiction risks remain outside this simple calculation.
A net payout of 80% needs more than a 50% win rate
Assume a stake of 1 unit: a win earns r units net, while a loss costs the full 1 unit. Expected value before fees is p×r − (1−p), where p is the probability of winning.
Setting that expression to zero gives a break-even probability of 1/(1+r). With an 80% net winning payout, p must be about 55.6% before fees or other effects. The percentage is an arithmetic threshold, not a forecast.
Refunds, fees and variable payouts change the threshold
If a contract returns part of the stake on a loss, charges a fee, changes the payout or uses a different stake convention, the formula must change. Read the terms for every outcome rather than assuming the advertised percentage is net.
A break-even rate says what the average would need to be under the simplified assumptions. It does not say whether the market probability is above or below that level, and it does not describe the sequence or size of losses along the way.
Do not confuse a platform quote with independent probability evidence
Ask how the reference event is defined, how prices are sourced and whether historical outcomes include the same fees and settlement rules. A backtest based on a different platform or timestamp may not represent the offered contract.
Even an accurate probability estimate can be wrong on an individual outcome. Binary contracts can lose the full stake, and platform, counterparty and jurisdiction risks remain outside this simple calculation.