FXTM information and reviews
OctaFX information and reviews
XM information and reviews
FXCC information and reviews
Libertex information and reviews
FxPro information and reviews

Leverage: How It Works on Olymp Trade

26 July 2021

Almost every trader who has worked with Forex has faced leverage trading with Olymp Trade. This is a type of trading that depends on a multiplier to make more profit for the trader. This article explains in detail what leverage trading is, how it works, and what benefits it brings to our traders.

What Is a Leverage

Let’s start with the question of what leverage is in Forex trading. Leverage is a tool that allows traders to make larger investments than they could do otherwise by multiplying their funds. It is also known as a multiplier, with brokers like Olymp Trade adding their own money to the trade volume.

With this added value, traders can open more deals and increase the trade volume, allowing them to earn more money. That’s what makes leverage stock trading so popular among Forex traders, as the opportunity of making higher profits while investing less money is always welcome. Opening more deals is also welcome, as it allows traders to diversify their investment portfolio for the same amount of funds.

How Leverage Works

The principle behind the leverage, often called a multiplier, is fairly simple: the Olymp Trade broker lends you a certain amount of money for every dollar (or euro/real) you invest. For example, if you want to do some Bitcoin trading and decide to use the x10 leverage option, you’ll get $10 for every dollar you invest.

You can easily calculate the profit from using multipliers by using a simple formula: (Difference between the opening and closing of the trade / Current price) * Investment’s volume *Multiplier – Commission = Profit.

So, if you opened a trade for USD/JPY with the opening price of 105, the closing price of 105.5, investment of $100, and x500 multiplier, you will get a ((105.5 – 105) / 105.5) * 100 * 500 – 4 = $232.9 in profit.

While you are doing so, some of your own funds are saved on your trading account as security. You can’t use them to open new trades until the existing one is completed. If the trade ends in a loss, that total will be subtracted from the secured funds.

It should also be noted that different assets have different available leverages. The multiplier’s size depends on the asset’s characteristics such as the trading mode, volatility. That’s why multipliers vary for different assets.

You can always find out what multipliers are available for the asset in the Trading Conditions section of the Assets menu.

How to Trade Leveraged Assets

You can easily open a trade with leverage by following this simple instruction:

As you can see, it is relatively easy to do, and you can open a new leveraged trade any time you want, as long as there are enough funds in your account. Be mindful of the reserved security sum, as you can’t open a new trade with this money.

If you forgot what multiplier you’ve used for any particular trade, you can always check the “Trades” bar, which shows what multiplier was used for any trade.

Why Should I Use Them

There are quite a few reasons why Forex traders can and should use leverages in their trading. The main one, of course, would be the increase in profit. After all, you can make larger profits with bigger investments, and leverage is the right tool for the job here.

The second reason is that the usage of a multiplier allows you to open more trades each day as you supplement your own funds with what the Olymp Trade platform lends you. So, instead of making ten trades of $10 each, you can make both more trades and more profit by using an x100 or x500 multiplier.

Risks & Profit

Of course, as is with almost everything in business, higher profit opportunities also offer higher risks. Leverages are no exception here, as there are a number of risks associated with leverage trading. Usually, the more substantial the investment, the more varied the financial outcome that comes with it. For example, a trade with a volume of $100 can bring 30% of profit and make you $130, but the same trade with a leverage of x200 bringing you a 30% profit will make you $6,000. However, the same could be said about the loss.

If you trade with a smaller volume, your losses will also be smaller, and you need to account for that magnification in your risk assessment whenever you open a leverage-assisted trade. Make sure that you use the right multiplier at the right time.

How do you choose one? Well, here is a hint, the higher the leverage, the more trades you can open during a day with your initial funds. So, if you are aiming to do some active short-term trading, then choosing assets with higher leverages will be a smart move.

If you are more partial to the long-term investments, with a smaller amount of trades involved, then lower leverages are for you. Lower leverage will decrease possible losses by reducing the trade volume, but it will still increase potential returns and allow you to open more trades. We’ve covered the most common questions about leverage stock trading and its mechanics. You can always learn more from various articles on our regularly updated blog. Be sure to take a look.




Step up your investments in the blockchain market with MaxiWyse
Step up your investments in the blockchain market with MaxiWyse

Enter the blockchain markets without owning any digital currency. Invest in Bitcoin, Ethereum, Cardano, FTT, Solana, and many more...

18 May 2022

Get access to 2000+ trading instruments with Demaxis
Get access to 2000+ trading instruments with Demaxis

Demaxis results-driven team of experts goes the extra mile to create more trading opportunities and build distinctive value for our clients. We’re committed to putting our clients first...

18 May 2022

Olymp Trade's New Trading Signals
Olymp Trade's New Trading Signals

Trading Signals are instrument-specific real-time trading advice available on Fixed Time Trades (FTT) and Forex trades (FX) trading modes of the Olymp Trade platform. Read the article to see how Olymp Trade...

17 May 2022

Just2Trade and delta.theta announce strategic partnership
Just2Trade and delta.theta announce strategic partnership

Just2Trade and DeltaTheta announce a strategic partnership, launching the new "regulated DEX" service. This product lets Just2Trade's clients trade options on cryptocurrency...

17 May 2022

Cross-asset trading in global markets with Finaguide
Cross-asset trading in global markets with Finaguide

Diversify your market exposure with currencies, commodities, futures, and digital assets safely and securely through our cross-asset trading terminal. Our competitive trading conditions...

17 May 2022

Navigating the new normal with Libertex
Navigating the new normal with Libertex

If the post-pandemic age has been defined by anything, it has to be the massive surge in activity across the financial markets. The numbers of ordinary people getting...

16 May 2022

Editors' Picks

HFM information and reviews
IronFX information and reviews
FXCM information and reviews
LegacyFX information and reviews
NordFX information and reviews
FP Markets information and reviews
FP Markets

© 2006-2022 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.