A multiplier is a tool that allows you to multiply your trading capital. It is also called leverage. That is, it is a credit amount of money (margin) that you can take when opening a position on the stock exchange.
This credit amount is labeled from 2x to 100x. That is, you can multiply your balance by 2x or 100x. A small commission is charged for the use of this multiplier, but you keep all the profit from such a deal.
The main advantage of trading with the multiplier is that you will earn many times more with it than without it.
Example of Trading With a Multiplier
Now we have a general idea of what a multiplier in trading is. But to understand how it works, let’s look at some examples.
Let’s say a trader wants to open a 30 USD position with a multiplier of 40x. He makes a deposit of 30 USD, then selects a multiplier of 40x and opens a position. So the total amount he is trading has increased to 1200 USD from the original 30 USD.
30 USD x 40 = 1200 USD
If the market is analyzed correctly and a position is opened according to the trend: Long or Short, the trader will take all the profit. To fully understand how to leverage a multiplier for maximum profit, you can check out our high multiplier trading tips that will teach you how to manage risks and optimize your trades.
Spot Trading VS. Margin Trading
Spot and margin trading are one of the main types of trading in the cryptocurrency market.
Spot is only suitable for long-term trading and investing. Margin trading, on the other hand, is ideal for short-term traders who are not willing to wait for years for profits.
When buying cryptocurrencies on the spot, such as BTC, a trader can easily withdraw the coins to third-party wallets. In margin trading, there is no such possibility. Since the multiplier increases the size of the position, you cannot withdraw assets from the exchange, which are used in the position, until the same position is not partially or completely closed. Only after the position is closed – your assets, including the profit from the deal, will be available for withdrawal.
The main disadvantage of spot trading is the inability to open a Short position. When trading using a multiplier, a trader can trade flexibly and adjust to market cycles much more effectively. If a trader knows that the market will fall, thanks to technical and fundamental analysis, he can capitalize on the price drop. It is enough to open a Short position and watch the fall. In spot trading, it is impossible to make money on the price drop.
The main difference between spot and margin is that you can make money on the market fall only with margin trading. There is no such possibility on the spot.
Why Margin Trading with Multiplier?
Many traders lack the necessary capital for spot trading, limiting their potential profits. Here the multiplication function comes in handy. By using a multiplier, traders can significantly increase their balance and earn faster returns. Unlike spot trading, margin trading offers the opportunity to achieve substantial profits in a shorter time, such as reaching +100% profit without a long wait.
Risks of Margin Trading
Despite its advantages, margin trading comes with increased risks:
- Position Liquidation: There’s always the chance of losing your entire position if the market moves against you.
- Greed and Overconfidence: It’s crucial to manage greed and take profits as they come. Waiting for a bigger sum can lead to losses. Similarly, if the trend doesn’t favor your position, exiting with a small loss is often wiser than hoping for a reversal.
Disadvantages of Margin Trading
One downside of margin trading is the financing commission, which can reduce your overall profits. However, we at MOVO stand out by frequently hosting our interactive events and giveaways to help you save significantly. For example, during these events, the financing commission is often removed or reduced by as much as 90%.
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To take full advantage of these exclusive benefits, make sure to follow our social media channels and participate in our events.
So, to make quick money on trading and on any trend (up and down) you will need margin trading (trading with a multiplier)!
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