3 min read 

A lot of traders choose to use a multiplier, as it helps to increase the potential upside and control a position that greatly exceeds the funds at your disposal.

When trading on the IQ Option platform, you have access to a multiplier for certain asset types, namely Forex, Stocks, commodities, ETFs and more.

What is a multiplier?

By using a multiplier, the trader can control a position that is greater than the amount of funds at his disposal. For example, when opening a $100 deal and using an x5 multiplier your potential profit (and loss) will be calculated as if you were investing $500. In other words, the payouts you receive (and the losses you incur) will be five times bigger. This option can turn out to be valuable, especially when the direction of the future price movement can be accurately predicted.

Why to use it?

A multiplier was originally applied to Forex trading, as it takes forever for a currency pair to demonstrate substantial movements. Traders turn to a multiplier in order to speculate on barely noticeable price fluctuations. This tool can also be applied to other assets. It is up to you to decide what is more important in each particular case, lower risk (no multiplier) or higher returns (with a multiplier). No matter what you choose, it is always beneficial to have more options at your disposal.

How to apply in trading?

In order to use a multiplier, choose Forex or Stocks from the list of available trading instruments at the top of the screen. Then, before opening the deal, choose the multiplier you want to apply. Its value will depend on the particular asset you choose. It comes without saying that the higher the multiplier, the bigger the position you can control (but also the potential loss).

Risk management

The use of multiplier is offering different opportunities to people who know exactly what they are doing. However, it should be applied with caution as not only the upside but also the potential loss will be multiplied respectively. Losing your money at an accelerated rate will disappoint the majority of traders and lead to an even greater loss. Avoid using this tool when uncertain about the deal you are about to open.

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NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.


GENERAL RISK WARNING


CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
76% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.