Lesson 3. What Is Multiplier?
Multiplier is a major Libertex tool used by most traders.
How does it work? It’s very simple.
Let's assume you buy EUR/USD, your investment amount is $50, and your multiplier is 1. If the price goes up 10%, your profit will be $5
However, if instead of 1 you select 20 as your multiplier, and the asset price goes up 10%, your investment amount will increase to $1000, and you will earn $100
As you can see, your profit has been multiplied by 20.
However, multiplier does have a downside: if the market goes against you, your potential loss will increase accordingly.
Multiplier works like your car speed: the higher it is, the faster you can reach your destination. However, driving at a high speed is more risky. This is why every driver selects a speed based on experience, road condition, and the traffic rules.
For novice traders, we recommend using a minimal multiplier of 1, in order to avoid risks if the asset’s price moves against your expectations.
As your trading experience grows, you can start using greater multiplier values.
In the next lesson you will learn to effectively manage your risks using Stop Loss.