A multiplier is a helpful but dangerous tool which may help traders increase the potential upside of their trades and control positions that highly exceed money they have by increasing the associated risk.
When you trade on the IQ Option platform, you are able to use a multiplier for specific asset types, particularly Forex, commodities, Stocks, ETFs. By reading this article you can learn how to use this feature in a right way and what you have to be careful with.
What is a multiplier?
When the trader uses a multiplier he is able to control a position which is much more bigger than the amount of funds he has. For instance, if you open a $100 deal and use an x5 multiplier , your potential profit (and loss accordingly) will be calculated as if you invested $500. So the payouts you get or losses that may arise will be 5 times greater. Therefore, multiplier can be useful in the case when you are sure about the direction of the price future movement but if your prediction was wrong, it can also harm your funds because bigger losses may arise.
Why use multiplier?
A multiplier was initially used in the Forex market. The reason for that is pretty clear: currency pairs do not usually show big price swings, their daily changes are nearly enough for traders to speculate on them. Traders use a multiplier so that they can speculate on small price differences and still receive significant outcomes. In our days, this tool may as well also be used with other assets, not only Forex. Thus, you choose what is more essential in every certain case, lower risk (no multiplier) or higher returns (with a multiplier).
How to apply in trading?
If you want to use a multiplier, select Forex or Stocks from the list of available trading instruments at the top of the screen. Then, before you open the trade, choose the multiplier you want to use. Its value will depend on the specific asset you choose. Remember that the higher the multiplier, the bigger the position you can manage (but also the potential loss).
Risk management for Multiplier on Iq Option
Multiplier can offer various opportunities to traders who are 100% sure what they are doing. Yet, multiplier have to be used carefully as not only the upside but also the potential loss will be multiplied accordingly. Most of the traders may be disappointed due to the loss of their money at a higher and that can lead to an even bigger loss. Make sure not to use a multiplier if you are not sure about the trade you are planning to open.
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