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THE ULTIMATE BEGINNERS GUIDE TO TRADING DERIV SYNTHETIC INDICES (2023)

 * Get all the information you need to know about how to trade synthetic indices
   including volatility indices
 * Learn what moves these synthetic indices and how you can trade them
   profitably
 * Get tips on how you can make money from synthetic indices without even
   trading them

Open Synthetic Indices Account
See Synthetic Indices Strategies


INTRODUCTION TO SYNTHETIC INDICES


TABLE OF CONTENTS

 1. The Ultimate Beginners Guide To Trading Deriv Synthetic Indices (2023)
    1.  Introduction To Synthetic Indices
    2.  What Are Synthetic Indices
    3.  How Many Synthetic Indices Brokers Are There?
    4.  Why Is There Only One Synthetic Indices Broker (Deriv)?
    5.  What Moves Synthetic Indices?
    6.  Are Synthetic Indices Manipulated?
    7.  How To Trade Synthetic Indices On MT5
    8.  What Are The Types Of Synthetic Indices Offered By Deriv?
    9.  Lot Sizes in Synthetic Indices 
    10. Synthetic Indices Vs Forex
    11. Advantages & Disadvantages Of Trading Synthetic Indices
    12. Advantages Of Trading Synthetic Indices 
    13. Disadvantages Of Trading Synthetic Indices 
    14. Frequently Asked Questions On Synthetic Indices Trading
    15. Enjoyed this? Share with your friends

Deriv Synthetic Indices are the most popularly traded assets in Africa. This is
despite them being relatively new instruments and being offered by only one
broker in the financial market.

Deriv Synthetic indices have been traded for over 10 years with a proven track
record for reliability and continue to grow in popularity. Here we will let you
know all about the synthetic indices so you can see why they are popular.

We will also show you how you can get started with trading these various
synthetic indices.

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USE TABLE OF CONTENTS TO JUMP TO ANY SECTION

Table Of Contents (Click To Expand)

What Are Synthetic Indices?

Types Of Synthetic Indices

How To Calculate Lot Sizes In Synthetic Indices

Synthetic Indices Vs Forex

Pros & Cons Of Synthetic Indices

How To Trade Synthetic Indices on MT5

Frequently Asked Questions On Synthetic Indices Trading

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WHAT ARE SYNTHETIC INDICES

Synthetic Indices are a family of trading instruments that emulate or copy the
behaviour of the real-world financial markets but they are not affected by world
events or news. Synthetic indices are available 24/7, have constant volatility,
fixed generation intervals, and are free of market and liquidity risks.

In other words, Deriv synthetic indices move like real-world markets but their
movement is not caused by an underlying asset.

Stock markets, for example, move in response to the price movement of the stock.
The same happens in forex markets where the forex chart moves up and down in
response to the price of the forex pair.




HOW MANY SYNTHETIC INDICES BROKERS ARE THERE?

There is only one broker that offers synthetic indices trading in the world.
That broker is Deriv. The broker, which recently rebranded from Binary.com, has
been in existence since 2000. Deriv also offers crypto, forex & stock trading
and is the preferred choice of over 2 million traders worldwide.

In Africa, Deriv is the most popular broker and there are some traders that only
trade these volatility indices exclusively. In countries like Nigeria, South
Africa, Zimbabwe, Kenya, Tanzania, Botswana and Mozambique,

Deriv has seen incredible growth due to traders wanting to try out these
synthetic indices.


WHY IS THERE ONLY ONE SYNTHETIC INDICES BROKER (DERIV)?

Deriv is the only regulated synthetic indices broker in the world because it is
the broker that ‘created and owns' these synthetic indices.

No other broker can offer these trading instruments because they do not have
access to the random number generator and if they did, it would be illegal.

On the contrary, over 1000 brokers offer forex and stock trading instruments
because no one ‘owns' these markets.



Any broker that can get real-time quotes of the forex and stock markets can
easily provide them for trading to their clients.




WHAT MOVES SYNTHETIC INDICES?

Synthetic indices move due to randomly generated numbers that come from a 
cryptographically secure computer programme (algorithm) that has a high level of
transparency.

The random number generator has been programmed in such a way that the numbers
it gives out will reflect the same up, down and sideways movement that you will
see on a forex or stock chart.


ARE SYNTHETIC INDICES MANIPULATED?

No, Deriv does not manipulate the movement of synthetic and volatility indices.
In fact, this would be illegal and unfair as they could turn the market against
traders.

The random number generator that moves the volatility indices charts is
continually audited for fairness by an independent third party to ensure
fairness and the broker cannot predict the numbers that will be generated.




HOW TO TRADE SYNTHETIC INDICES ON MT5

TO TRADE DERIV SYNTHETIC INDICES ON MT5 YOU NEED TO FOLLOW THESE EASY SEVEN
STEPS:

 1. Register a demo account on Deriv by clicking here and entering your email
    and verifying in your inbox
 2. Create a real account by clicking on the ‘Real‘ tab and choosing your
    default account currency
 3. Next, you should do Deriv real account registration mt5 by clicking on the
    ‘Real” tab again and choosing the synthetic indices option. You can verify
    your account later.
 4. Set your password and get the login ID that you will need to login to Deriv
    MT5
 5. Download the Deriv MT5 platform by clicking on the indices account you have
    just created under the ‘Real' tab
 6. Login to your Deriv MT5 account and move funds from your main account to the
    Deriv MT5 synthetic indices account.
 7. Choose the synthetic indices you want to trade on MT5 and start trading
    without verifying your account!

If you want detailed step-by-step instructions with pictures showing the various
steps you can check out this article.You can also visit the Deriv website by
clicking on the button below

Visit Deriv Website

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WHAT ARE THE TYPES OF SYNTHETIC INDICES OFFERED BY DERIV?

Deriv offers the following list of synthetic indices that have different
movements.

 * Volatility Indices
 * Crash & Boom Indices
 * The Step Index
 * Range Break Indices
 * Jump Index

1.)  Volatility Indices Volatility Indices on Deriv.com are real-time monetary
market indicators of expected uniform volatility over a certain period of time.
Monetary market volatility is measured on a scale from 1 to 100 with 100 being
maximum volatility. The constant volatilities of the indices offered by Deriv
are 10%, 25%, 50%, 75% and 100%. There are a number of volatility indices
including:
 * Volatility 10 Index (V10 Index) 
 * Volatility 25 Index (V25 Index)
 * Volatility 50 Index (V50 Index)
 * Volatility 75 Index (V75 Index) The most popular volatility index
 * Volatility 100 Index (V100 Index) the most volatile synthetic index

Volatility 10 index is the least volatile while volatility 100 index represents
the most volatile market conditions. There is also another type of volatility
indices that are called (1s). These also range from 10% to 100% volatility. The
key difference is that they update at the rate of one tick per second as
compared to the normal volatility indices which update at the rate of one tick
every two seconds. A tick is the minimum price movement of an index. 2.)  Crash
& Boom Indices The crash and boom indices simulate rising and falling real-world
monetary markets. In other words, they behave specifically like a booming or
crashing financial market.They are different from volatility indices or
currencies which have a more ‘normal' behaviour. There are four types of boom
and crash indices namely:
 * Boom 500 Index
 * Boom 1000 Index
 * Crash 500 Index
 * Crash 1000 Index

The  Boom 500 index has on average 1 spike in the price series every 500 ticks
while the Boom 1000 index has on average 1 spike in the price series every 1000
ticks. Similarly, the Crash 500 Index has on average 1 drop in the price series
every 500 ticks, while the Crash 1000 Index has on average one drop in the price
series every 1000 ticks. Crash 500 index from Deriv showing the red price drops
on the 1-minute chart. 3.)  The Step Index. The Step Index simulates a market
step by step. It has an equal probability of going up or down with a fixed step
of 0.1. 4.)  Range Break Indices The range break indices simulate a ranging
market that breaks out of the range after a number of attempts on average. There
are two types of Range Break indices: Range 100 index and Range 200 index. The
Range 100 index breaks out after an average of 100 attempts while the Range 200
index breaks out after 200 attempts on average. Range 500 Index From Deriv
showing breakouts on the 1-minute chart 6.)  Jump Indices The Jump indices
measure jumps of an index with assigned Volatility. There are 4 jump indices
namely;
 * Jump 10 Index,
 * Jump 25 Index,
 * Jump 50 Index
 * and Jump 100 index

The jump 10 index has an average of three jumps per hour with uniform volatility
of 10%. The Jump 100 index has an average 3 jumps per hour with uniform
volatility of 100%.


LOT SIZES IN SYNTHETIC INDICES 

Lot sizes determine the smallest trade amount you can place. Let's see how lot
sizes work with volatility indices.


WHAT ARE THE MINIMUM LOT SIZES IN TRADING SYNTHETIC INDICES?

VOLATILITY INDEX

SMALLEST LOT SIZE

Volatility 10 Index 0.3 Volatility 25 Index 0.50 Volatility 50 Index 3
Volatility 75 Index 0.001 Volatility 100 Index 0.2 Volatility 10 (1s) Index 0.5
Volatility 25 (1s) Index  0.50 Volatility 50 (1s) Index 0.005 Volatility 75 (1s)
Index 0.005 Volatility 100 (1s) Index & Step Index 0.1 Boom 1000 Index 0.2
Crash1000 Index 0.2 Boom 500 Index 0.2 Crash 500 Index 0.2





HOW DO YOU CALCULATE SYNTHETIC INDICES LOT SIZES?

Calculating the lot sizes in synthetic indices trading can be a bit tricky. This
is because each synthetic index has its own different lot size as opposed to
forex where all pairs use the same lot size with the minimum being 0.01.

MT5 works with a system called points which is the smallest value that an
instrument can change by. This changes from symbol to symbol depending on the
accuracy of the price.

If, for example, the price has 2 digits after the comma (e.g. 1014.76) then 1
point = 0.01. So then, 500 points on this symbol would equal 5.00. Examples of
synthetic indices with two digits after the comma include the Jump Indices, V10
(1s) & V25 (1s).

If a symbol has 4 digits after the comma (e.g. 1.1213) then 1 point = 0.0001. So
then, 500 points on this symbol would equal 0.0050. This applies to synthetic
indices like Boom & Crash 1000.




HOW TO CALCULATE MINIMUM SYNTHETIC INDICES STOP-LOSS & TAKE PROFIT LEVELS

With the above in mind, we have a concept called stops levels which is the
minimum distance from the current price that you can place any pending orders
(including stop loss and take profit).

This is also defined in points.

So if for example, the client wants to set a stop-loss on a 2 digit symbol with
stops level = 5000 points, where this would be equivalent to $50.00 for this
symbol. This means that if the current price is $1000.00, then the closest the
client can place a stop-loss order is at $950 (or $50 away from the current
price).

The same logic applies for TP, but this would be above the current price, at
$1050.
This is how you calculate points in MT5. You don't need a synthetic indices pip
calculator.



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SYNTHETIC INDICES VS FOREX

Now we are going to compare synthetic indices vs forex to see their similarities
& differences.


SIMILARITIES BETWEEN SYNTHETIC INDICES & FOREX

 * both markets can be traded on the MT5 platform and you can place pending
   orders
 * both markets can be traded using price action
 * candlestick formation is the same in synthetic indices and forex markets
 * you can demo trade synthetic indices and forex
 * you can trade both using leverage
 * both can be traded as binary options
 * both can be traded as contract for differences (CFD's)


DIFFERENCES BETWEEN SYNTHETIC INDICES & FOREX

 * synthetic indices can be traded 24/7/365 while forex trading in only
   available 24/5
 * only one broker (Deriv) offers synthetic indices while there are thousands of
   forex brokers.
 * synthetic indices have uniform volatility while the volatility of forex pairs
   fluctuates
 * forex pairs are affected by news & other world events but synthetic indices
   are not
 * there are more forex pairs than synthetic indices
 * synthetic indices move due to the numbers generated by a computer program
   while forex pairs move due to the economic indicators of the respective
   countries.
 * all forex pairs can be traded using 0.01 lot size while the lot sizes for
   synthetic indices vary from index to index




ADVANTAGES & DISADVANTAGES OF TRADING SYNTHETIC INDICES

Now let's look at the advantages and disadvantages of trading these popular
synthetic indices.


ADVANTAGES OF TRADING SYNTHETIC INDICES 

 * you can trade them anytime, any day throughout the year including holidays.
   This makes them very convenient
 * Synthetic indices are not affected by news and other fundamentals. These can
   really cause wild price movements e.g non-farm payroll's (NFP) effect on USD
   pairs
 * there are no negative balances when you trade synthetic indices
 * you can start trading synthetic indices with low capital
 * They’re not subject to manipulation or fixing.
 * They’re ideal for automated trading with continuous quotes and no gaps.
 * they have uniform volatility
 * you can trade them using price action
 * they have tight spreads and high leverage (margin trading)
 * you can deposit to your synthetic indices account using local payment methods
 * Deriv is the most popular broker in Zimbabwe and as such there are a lot of
   local traders that you can share trading tips and strategies with


DISADVANTAGES OF TRADING SYNTHETIC INDICES 

 * there are fewer synthetic indices to choose from as compared to forex pairs
 * they are very volatile. While this can give opportunities for getting profit,
   it can also amplify losses
 * some synthetic indices have large stop-loss levels. For example, Volatility
   50 has a stop-loss level of 40 000 points or about US$12 using the smallest
   lot size of 3. This can be a challenge if you want to scalp and have tight
   stop losses. V 100 also has a large stop-loss level.
 * the fact that you can trade synthetics round the clock means that there is a
   real danger of overtrading. Overtrading can lead to blown accounts.

Open A Synthetic Account Here






FREQUENTLY ASKED QUESTIONS ON SYNTHETIC INDICES TRADING

What is the best time to trade synthetic indices?

Synthetic indices have uniform volatility around the clock. This means that you
can trade them at any time of the day. This is different from forex where there
are some periods with low volatility

What is the minimum deposit need to trade Deriv synthetic indices?

There is no set minimum deposit amount needed to trade synthetic indices. You
can transfer as little as $1 from your main account to your DMT5 synthetic
indices account. However, the challenge with such a low deposit is that you will
probably blow the account in seconds due to the volatility. We would suggest
funding your trading account with at least $50 to be able to ride out any
short-term reversals that may go against you.

How can I fund my DMT5 synthetic indices trading account?

You can fund your DMT5 account using payment agents, or via Dp2p if you want to
use your local payment methods. You can even use many of the deposit methods
accepted by Deriv including Skrill, Neteller, AirTm, PerfectMoney, WebMoney etc.

Are synthetic indices manipulated?

No, synthetic indices are not manipulated by Deriv. They move due to an
algorithm that has a high level of transparency. The random number generator
that moves the volatility indices charts is continually audited for fairness by
an independent third party to ensure fairness and Deriv cannot predict the
numbers that will be generated.

Which ones are the best synthetic indices to trade?

This depends on personal preference. There are a variety of synthetic indices
that have different levels of volatility and market character. If you prefer
high volatility you can choose assets like v75 and v100. For slower volatility,
you can choose indices like v210 or v25. It is best to demo trade a variety of
volatility indices so you can choose which ones you prefer.

Which broker has boom and crash?

Deriv is the only broker that offers boom and crash indices. You can open an
account to trade boom and crash here.




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What is the best time to trade synthetic indices?

Synthetic indices have uniform volatility around the clock. This means that you
can trade them at any time of the day. This is different from forex where there
are some periods with low volatility

What is the minimum deposit needed to trade Deriv synthetic indices?

There is no set minimum deposit amount needed to trade synthetic indices. You
can transfer as little as $1 from your main account to your DMT5 synthetic
indices account.

However, the challenge with such a low deposit is that you will probably blow
the account in seconds due to the volatility. We would suggest funding your
trading account with at least $50 to be able to ride out any short-term
reversals that may go against you.

How can I fund my DMT5 synthetic indices trading account?

You can fund your DMT5 account using payment agents, or via Dp2p if you want to
use your local payment methods. You can even use many of the deposit methods
accepted by Deriv including Skrill, Neteller, AirTm, PerfectMoney, WebMoney etc.




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