Increase the "Multiplier" or "Depositing" more funds? Same net affect?
Oct 27, 2014 at 09:05
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3 Replies
Oct 27, 2014 at 09:05
Hello everyone!
I have what is probably a newbie question.
When you copy a system and you want to earn more money (hopefully you make money), does increasing the 'multiplier' or depositing more funds have the same net effect? Or am I missing something? For example:
Scenario 1 - $1000 in my account and a 'Multiplier' of 2x
Scenario 2 - $2000 in my account and a 'Multiplier' of 1x
Thanks!
I have what is probably a newbie question.
When you copy a system and you want to earn more money (hopefully you make money), does increasing the 'multiplier' or depositing more funds have the same net effect? Or am I missing something? For example:
Scenario 1 - $1000 in my account and a 'Multiplier' of 2x
Scenario 2 - $2000 in my account and a 'Multiplier' of 1x
Thanks!
Member Since Jul 31, 2009
1444 posts
Oct 27, 2014 at 09:07
In terms of money, you will risk the same amount in both accounts, however in terms of gain, the 2k account will risk half of the smaller account.
This can be explained with the following example:
If both accounts copy a position of 1 lot, in the small account it will be 2 lots (as multiplier is twice) and in the second account it will be 2 lots as well (as balance is x2), however if both risk $500 for the trade, then both lose the same amount of money however for the first account it will be a loss of 50% while for the second account it will be only 25%
This can be explained with the following example:
If both accounts copy a position of 1 lot, in the small account it will be 2 lots (as multiplier is twice) and in the second account it will be 2 lots as well (as balance is x2), however if both risk $500 for the trade, then both lose the same amount of money however for the first account it will be a loss of 50% while for the second account it will be only 25%
Member Since Oct 27, 2012
35 posts
Oct 27, 2014 at 13:37
custodiof posted:
Hello everyone!
I have what is probably a newbie question.
When you copy a system and you want to earn more money (hopefully you make money), does increasing the 'multiplier' or depositing more funds have the same net effect?
Yep, that's actually how leverage works. But don't forget, that with every increase of 'multiplier' you proportionally decrease the distance, which price might move against your positions before you get margin call and then lose your money.
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