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How do Deriv multipliers work?

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How do Deriv multipliers work?

With Deriv multipliers, you can use a $100 stake to trade $50000 in the markets.

What this means is that, when trading with multipliers, you can potentially make a profit of $500 from $100. 

This is too good to be true, isn’t it? 

Why isn’t everyone applying the multipliers system if that’s the case? 

Do I stand to lose and burn my account if the market goes against my prediction?

All these are valid questions you may be asking yourself concerning the multipliers. The good news is that we seek to meticulously answer them all in here today. 

So how exactly can you trade a bigger stake than what you have in your Deriv DTrader account?   

Deriv multipliers facilitate leveraged trading

Your ability to control a bigger stake in the market and consequently make bigger profits is made possible because Deriv offers leveraged trading to its users.

But what is leverage?

In the general sense, leverage implies borrowing some of the money needed to make an investment. 

Where forex trading is involved, money is usually borrowed from a broker. Deriv is one such broker that allows clients to borrow money in order to increase market exposure in the forex market. 

Here is a breakdown of what your profits will look like if you take up leveraged trading using Deriv multipliers and if you don’t. In all the cases below, we’ve assumed a 1% increase in the market—in your predicted direction. 

Stake ($)Profit(no multipliers) Profit( ✖ 100 multiplier)Profit( ✖ 300 multiplier)Profit( ✖ 500 multiplier)Profit(✖700 multiplier) Profit( ✖ 1000 multiplier)
100.1010305070100
500.5050150250350500
10011003005007001000
50055001500250035005000
100010100030005000700010000
N.B All figures are in USD

Let’s take the middle row for example. 

Your stake for the trade stands at $100. If you predict that the market will go up and it actually does by 1%, then you will reach a profit level of $1. This is your profit if you decide to trade without using multipliers.

If you use the ✖100 multiplier, then you will gain access to ($100✖100= $10000) in your trade. In this case, your 1% profit will shoot up to $100. Using the  ✖300 multiplier gives you a profit of $300 while the biggest ✖1000 multiplier allows you to earn $1000 in profits.

As is expected, in a leveraged trade, you are prone to make bigger profits when you have a bigger stake size. Also, the higher the multiplier value the bigger your potential profit level.

You can limit your losses using Deriv multipliers

That sounds good, you say. But what happens in a bad trade?  What if the market goes down by 1% in the direction opposite my prediction? 

Taking the previous example of a $100 initial investment, does it mean that I lose $1000 if I used the ✖1000 multiplier? And will I be left owing the broker if the loss exceeds my entire stake?

Well, fortunately for you, that’s not how the system works. When it comes to losses, the Deriv broker has you covered through the stop out feature. By default, the stop out feature means that your position will automatically close when your loss equals your stake amount.

Simply put, you can never lose more than your initial stake using Deriv multipliers. So in the $100 stake scene, you can gain up to $1000 in profits. And the worst-case scenario can have you losing $100.

You can cancel a trade within an hour of starting it

Here’s another interesting feature of the multipliers method—the deal cancelation option. 

This one allows you an hour’s grace period to reclaim your full stake amount. All you need to do is cancel the contract within an hour of starting it if you sense that the market may not be friendly to you. 

Please note however that you cannot simultaneously use deal cancellation with stop loss or take profit

So you’ll need to make up your mind beforehand. Decide if you want to set a stop loss/take profit or leave room to cancel the trade within the hour.

If you pick the deal cancellation option, make sure you set its associated duration anywhere between 5 to 60 minutes. Within that chosen period, you’re free to cancel out your contract and reap the real-time profits or losses. 

If you go with stop loss and/or take profit, you predetermine the amount of profit or loss that you can take on the trade.

Random facts on Deriv multipliers

Now that you understand how the Deriv multipliers work, we bet you’ll be interested in these additional facts about them:

  • You can only use multipliers with these trade types: forex and synthetic indices.
  • Multiplier values range in value from ✖10  to ✖1000.
  • It’s possible to practice trading with multipliers using virtual funds on your demo account. 
  • Multipliers combine features of CFD trading and binary options trade.

In conclusion

It’s evident that multipliers can help you a great deal in the event that you make a profit. On the other hand, you risk losing your stake quicker if you employ them.

Like every other risk, you’re better off calculating it in advance. 

Thoroughly educating yourself on the markets is one sure way to boost your confidence and competence as a trader. 

You can also study one trading strategy after another. And find out what works for you.

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