Imagine how good it will be to have all the benefits of leverage trading, without having multiplied losses. Imagine the peace of knowing you’ll never lose more than your stake. That’s exactly what happens when you trade multipliers on Deriv.
In this blog post, you will learn how to trade multipliers on Deriv, the benefits it provides, the risks attached, the best strategies commonly used, mistakes to avoid, and other things to note.
Without wasting more time, let’s get to it.
What is a Multiplier on Deriv and How Does it Work
Deriv’s Multiplier feature helps you make more money from trades while keeping your risk under control.
When you trade multiplier on Deriv, it acts like leverage trading. This is because it allows you to trade with a bigger amount than you actually put in.
Here’s an example:
- You invested $100 in a trade.
- You used a x500 multiplier.
- Your trade now behaves as if you invested $50,000.
- If the market moves in your favour and you win the trade, your profits will be multiplied by 500.
- If you lose the trade, your losses are limited to the $100 you stake. You can’t lose more than what you put in.
Benefits of Trading Multipliers on Deriv
Let’s consider 3 key benefits that are applicable to both beginners and experts on Deriv.
- Multiplied Profits: One of the biggest benefits of trading multiplier on Deriv is that you can make more money in the financial markets without necessarily having more capital.
- Controlled Risk: Unlike leverage trading, Deriv’s Multiplier feature is built to make sure you can’t lose more than your initial stake. If you lose a trade, Deriv will automatically close it to prevent you from losing more than what you invested.
- Flexible Trade Options: When you trade multipliers on Deriv, you will also have access to risk management tools. This includes Stop Loss, Take Profits and Cancel Deal.
How to Trade Multipliers on Deriv (Step-by-step guide with screenshots)
If this is your first time, here is a guide you can follow. The steps are self-explanatory.
Step 1: Access the tool
Go to the Deriv Trader. You can do this by logging into your account. If you don’t have one yet, you can register on Deriv.
Get a Deriv account in 2 minutes
Step 2: Pick assets and set up multipliers
- Pick the assets you want to trade. It can be Forex, synthetic indices or commodities trading. It can also be any asset that supports multiplier trading at the time.
- Click on “Multipliers” from the trade menu
- Input how much you want to stake
- Select a multiplier level. It can be x5, x10, x50, x100 or more depending on the options available at the time.
Step 3: Set risk management
This is optional but you can set risk management tools.
1. Take Profit automatically closes your trade when it reaches a profit level (that you set before opening the trade). This will lock in profits before the market reverses and starts losing.
2. Stop Loss automatically closes your trade if the market is against you and you have lost beyond a limit (that you set before opening the trade). This prevents you from losing more money than you’re willing to.
3. Deal Cancellation allows you to cancel a losing trade within a particular time frame. However, this feature may not be available on all assets that support trading of multipliers on Deriv. So make sure to check.
Step 4: Execute trade
Once you have applied all the settings you want, the next step is to execute the trade.
- Click “Up” If you think the price will go up
- Click “Down” if you think the price will go down
Your trade will stay open until:
- You manually close it
- It reaches your Take Profit or Stop Loss level
- Your account balance can not sustain more losses anymore
But know that no matter what happens, you cannot lose more than the amount you stake.
Best Strategies for Trading Multipliers on Deriv
Here are strategies that most traders use whenever they trade with the multiplier feature on Deriv.
1. Trend Following Strategy
This Deriv multiplier trading strategy is one of the most used. A trend is said to happen when prices keep moving in one direction for a while.
A trader is said to be following the trend if he/she:
- Buy when the market is going up
- Sell when the market is going down
If you want to identify a trend when trading multiplier on Deriv, look at price charts and also use tools like moving averages.
2. Support and Resistance Strategy
As we all know, markets don’t move in a straight line. Prices move up and down levels, called support and resistance.
- Support is the price level where the markets stop falling and go up
- Resistance is the price level where the markets stop rising and go down.
The support and resistance strategy is commonly used when trading multiplier on Deriv, especially with Forex and Synthetic Indices. Just find the best entry and exit points. Buy at the support level where the prices are low, and sell at resistance, where the prices will be a little or more higher.
Common Mistakes to Avoid When Trading Multipliers on Deriv
1. Investing 100% of your trading capital in a single trade
Experienced traders know that no matter how good your strategy is, can can still lose money. Now imagine if you put 100% of your trading capital into that one trade that loses.
How to avoid this mistake
What experienced traders usually do is that they do not invest more than 1% to 10% of their entire trading capital.
This amount can be more than 10% sometimes depending on their available trading capital and also the amount of confidence they have in that trade.
2. Choosing a multiplier that’s too high
This mistake is usually made by beginners who just started trading with multipliers. They choose the highest multiplier available with the mentality that it will give them huge profits.
Potentially, they are correct. But it also increases their risk of losing money quickly.
How to avoid this mistake
- Start with low or medium multipliers like 5x or 10x. You can use 50x or 100x later.
- Only use high multipliers when you have high confidence in winning that trade.
3. Not using Stop Loss and Take Profits Settings
A Stop Loss stops the trade automatically when you lose trading capital up to a set amount. A Take Profit setting automatically locks in profits before the market reverses.
If you don’t make use of these settings, you’re at a higher risk of losing money when trading multiplier on Deriv.
How to avoid this mistake
- Always set a Stop Loss
- Make use of Take Profit
4. Trading Without a Clear Strategy
When you trade multipliers on Deriv, you can win big or lose very big. This alone, is enough reason to trade with a strategy and not on guesswork.
And never, on any occasion, trade using emotions.
Before you start trading with multipliers on Deriv, there are some things you should be aware of, that haven’t been explained much so far in this post.
These factors affect how trades work, the risks and also the potential profits.
1. You pay a small commission on every trade
Each trade attracts a commission fee that is automatically calculated based on your multiplier level.
- The higher the multiplier of your choice, the higher the commission.
- The commission is deducted upfront before the trade starts
- This fee is kind of similar to how spreads work in Forex. The trade will start in a slight negative position due to this fee.
- For example, if you stake $10 with a 400x multiplier, the commission might be $0.04. This means that your trade starts at -0.04 USD.
2. Your trade automatically closes when you reach a particular loss level
Deriv will automatically close your trade if your losses reach a specific percentage of your stake. This is referred to as “Stop-out Protection”.
- Lower multipliers have a higher Stop-out level. This means your trade stays open for longer when encountering losses.
- Higher multipliers have a lower Stop-out level. This means your trade closes faster during losses.
Here is an example:
- With a 200x multiplier, your trade can close if losses reach 80% of your stake
- With a 400x multiplier, your trade can close if losses reach 50% of your stake
3. Trading multipliers on Deriv is restricted to some markets
Not all assets on Deriv support multiplier trading. You can trade multipliers on:
- Forex
- Commodities
- Synthetic indices
If you want to know if an asset allows multiplier trading:
- On the main page of Deriv
- Under market categories, click on “Multipliers”
- You will see the list of assets that support multipliers
FAQs on How to Trade Multipliers on Deriv
Question: What is the trade multiplier on Deriv?
Answer: This is a tool on Deriv that lets you trade with more money than you actually have. It works like leverage trading. The only difference is that your losses cannot exceed the amount you stake.
Question: How does multiplier work in trading on Deriv?
Answer: A multiplier in Deriv works like leverage. Except that the maximum amount of money you can lose is the amount you stake. Here is a short illustration:
- Your stake amount is $20.
- You select a multiplier of x100.
- Your trade acts as if you stake $2,000.
- If your trade makes a 10% profit it will be $200.
- If your trade has a loss, the maximum amount you will lose is your stake amount, which is $20.
Question: Which strategy is best for Deriv multiplier trading?
Answer: The best strategy depends on market conditions and you trading style. But here are two common strategies used to trade multipliers on Deriv:
- Trend Following Strategy. This works best for Forex and Synthetic Indices.
- Support and Resistance Strategy. This works well for commodities and even for more controlled risk management.
Question: What does a 5x Multiplier mean?
Answer: A x5 or 5x multiplier means that your trade will execute at a trading capital that’s 5 times bigger than what you actually put in.
5x multiplier has a low risk is is usually recommended to beginners or anyone trading with multipliers for the first time on Deriv.
- If you stake $10 with x5 multiplier, your trade size is $50.
- If you make a 2% profit, it will be multiplied by 5.
- If you make a 2% loss, your loss will be multiplied by 5. But the maximum amount you can lose is your stake ($10).
Question: Is trading multiplier good? What are the risks?
Answer: Yes, trading multiplier is good.
The risks are:
- Loses happen faster. So you can quickly burn out your stake.
- Higher multipliers like x50 and above have lower Stop-out levels. This means you trade can quickly close if it’s not in profit.
Conclusion
Now that you know how to trade multipliers on Deriv, you can put your knowledge into action. You can test it first on a demo account before using real trading capital.
But remember, risk management is very important, even though it’s not compulsory. It is recommended that you use Take Profit, Stop Loss and Deal Cancellation features where applicable.
