Broker’s Edge Calculator
Binary trading is advertised as commission-free trading. Indeed, there is no spread to pay, like there is in Forex, and there is no fee per trade, like there is in stocks. Binary options commission or house advantage resides in the difference between option’s potential return (payout) and option’s out-of-money reward (if any).
You can use the calculator below to find out your broker’s edge on a particular binary trade given the payout amount and the out-of-money reward. It is similar to house edge in a roulette. This edge (commission) calculator assumes that the chance of winning is 50%. Of course, a skillful trader chooses proper entry direction and timing to skew the chances in own favor, but the goal of this free calculator is to allow some estimation and comparison of broker’s commission.
The broker's edge is %. It means that, given equal chance of winning or losing each binary bet, you will be down by % on every trade. You can also say that this binary option's commission is %.
Using $100 trade size, you will end up with a loss of about after 10 such trades. Of course, it is considering the same probability for trade to result in profit or in loss.