WHAT ARE SYNTHETIC INDICES

Synthetic trading is gaining more ground in the financial market; as forex traders are looking for an alternative to currency trading.

In this article, I am going to give a quick summary of what are Synthetic indices, and the brokers that offer them, and am going to provide links to my previous work where you can read up to understand more on the subject.

SYNTHETIC INDICES VS FOREX

It will not be proper to discuss synthetic indices without mentioning Forex trading. I have been asked this question a lot, Are synthetic indices the same as forex?

Let’s see the table below that clearly shows the difference between synthetic indices vs forex;

Synthetic IndicesForex
Constant VolatilityBest volatility at trading sessions
Not affected by global eventsAffected by global events
Can be traded 24/7 weekends and Holidays includedCan be traded Mondays-Fridays
Technical analysis onlyFundamental and technical analysis

WHAT ARE SYNTHETIC INDICES

what are synthetic indices

So, what are synthetic indices? Synthetic indices are one-of-a-kind indexes that imitate real-world market movement with one exception: they are unaffected by real-world occurrences.

These indexes are based on a cryptographically secure random number generator, have constant volatility, and are not subject to market or liquidity issues.

LIST OF SYNTHETIC INDICES

Volatility Indicesvolatility 10(1s) index, volatility 25 (1s) index, volatility 50 (1s) index, volatility 75 (1s) index, volatility 100 (1s) index,  volatility 200 (1s) index, volatility 300 (1s) index, volatility 10 index, volatility 25 index, volatility 50 index, volatility 75 index, volatility 100 index.
Boom/CrashBoom 1000 index, Boom 500 index, Boom 300 index, Crash 1000 index, Crash 500 index, Crash 300 index
Jump indicesJump 10 index, Jump 25 index, Jump 50 index, Jump 75 index, Jump 100 index.
Step indexStep index
Range Break IndicesRange break 100 index, Range break 200 index

The above are the types of synthetic indices that Deriv offers.

SYNTHETIC INDICES ALGORITHM

Synthetic indices are artificial markets whose price movement is determined by computer programs and whose behavior is produced by using randomly generated numbers.

These indices exhibit behavior similar to actual financial markets; they can be traded on MT5 and options.

According to Deriv brokers, an impartial third party continuously audits the algorithm that controls the synthetic indices charts for fairness to maintain.

EXAMPLES OF SYNTHETIC INDICES

These are some examples of synthetic indices

  1. Boom 1000
  2. Crash 300
  3. Step index 
  4. Volatility 75
  5. Jump 75

WHAT IS TRADED IN SYNTHETIC INDICES

In synthetic indices indexes like Boom and Crash, step index Volatility 75 are traded.

WHICH BROKER HAS SYNTHETIC INDICES?

Deriv broker has Synthetic indices.

HOW MANY SYNTHETIC INDICES ARE THERE?

At the time of writing this article, there are twenty-six synthetic indices on Deriv.

DERIV MULTIPLIERS

Deriv multipliers

Deriv multipliers combine the gains from trading with leverage with the low risk of options.

This translates to the fact that your prospective profits will increase when the market moves in your favor.

Your losses are strictly capped at your initial investment if the market swings against your prediction.

WHY TRADE MULTIPLIERS ON DERIV

  1. Better risk management

Utilize cutting-edge features like stop loss, take profit, and deal cancellation to tailor your contracts to your preferences and level of risk tolerance.

  • Increase market exposure

Increase your market exposure while keeping risk to a minimum.

  • Secure responsive platform

Trade safely and easily on Deriv platforms designed for both novice and experienced traders.

HOW MULTIPLIERS CONTRACTS WORK

  1. Define your position

In addition to choosing the market you wish to trade on, you should also specify the transaction type, stake size, and multiplier value.

  • Set optional parameter

Define optional parameters, such as stop loss, take profit, and deal cancellation, to give you additional control over your trading.

  • Purchase your contract

If you are confident with the position you have defined, buy the contract.

WHAT ARE OPTIONS

what are options

Options are financial instruments that enable market prediction payments without requiring the purchase of the underlying asset.

You only need to open a position if you can forecast the asset’s movement over the course of some time.

People can now take part in the financial markets with little to no cash outlay thanks to this.

OPTION AVAILABLE ON DERIV

On Deriv, you can trade the following options:

Digital options let you choose between two probable outcomes and make a prediction; if it is correct, you will receive a fixed payoff.

Lookbacks that let you get paid based on whether the market reached its best high or lowest low during the course of a contract.

Depending on where the exit spot is in relation to the two defined barriers, call/put spreads allow you to profit up to the stipulated payout.

WHY TRADE OPTIONS ON DERIV

  • Fixed predictable payout

Before you even buy a contract, be aware of your prospective profit or loss.

  • All favorite markets and more

Trade on all well-known markets and our 24/7 accessible, customized synthetic indices.

  • Instant Access

Create an account and begin trading right away.

  • User-friendly platforms with powerful chart widgets

Trade on systems with robust chart technologies that are secure, simple to use, and intuitive.

  • Flexible trade types with minimal capital requirements

You can start trading with as little as a $5 deposit and tailor your transactions to fit your strategy.

DERIV-BOOM AND CRASH BEST STRATEGIES

There is no doubt that among Deriv synthetic indices, Boom and Crash are unique due to their price spikes (Boom) and drops (crash) that occur in a series of 1000, 500, or 300.

They are completely different in design from Deriv volatility indices and, as a result, should be traded differently. There have never been indices like Boom and Crash before, which is why there is so much interest in Boom and Crash trading.

There is also a sizable community of synthetic traders looking for the best Deriv-Boom and crash best strategies.

You will know the best Boom and crash strategy that works by the end of this article.

Xm no deposit bonus

DERIV-BOOM AND CRASH BEST STRATEGIES

deriv-boom and crash best strategies

To have a Deriv-Boom and crash best strategy you need to:

  • Follow the dominant trend
  • Trade on support and resistance zones

FOCUS ON MARKET STRUCTURE AND PATTERNS

Since Boom and crash are not influenced by market hours and global events, market structure and patterns are the first steps to successful Boom and crash trading.

After identifying a market structure, wait for a breakout in structure.

See the image below:

market structure and patterns

FOLLOW THE DOMINANT TREND

Follow the trend, the trend is your friend; we hear it all the time. This rule is often ignored by traders. Following the trend is synonymous with following the order flow.

To follow the trend, you must examine the market from a higher timeframe (H1 and above)

Following the trend would allow you to distinguish between the market’s dominant trend and a minor pullback.

See the image below:

Follow the dominant trend

TRADE ON SUPPORT AND RESISTANCE ZONES

Support and resistance zones are important indicators to look for when trading financial instruments, especially at higher timeframes.

In terms of best strategies for Deriv-boom and crash, Boom spikes and crash drops easily break through support and resistance in lower time frames, which is why they work best in higher time frames.

You place your entry at the break of support and resistance, as well as a retest of the broken zone. All of this will be applied in the direction of the dominant trend until the market reverses.

See the image below:

support and resistance zones

BOOM AND CRASH SPIKE STRATEGY

Is there a boom and bust spike strategy that ensures consistent profit? In the financial trading world, there is a saying known as the Holy Grail, which means that there are no perfect trading strategies.

One thing is certain in trading: the market will always react to price action and market structure, especially for the Boom and Crash spike strategy.

That being said, rather than looking for a Boom and Crash strategy, focus on understanding the fundamentals of technical analysis trading, as Boom and Crash are unaffected by global news.

This would allow you to determine the best time to place a trade for a Boom and crash.

At the top of this article, you will find image examples of Boom and Crash spike strategy.

BEST STRATEGY FOR BOOM AND CRASH

When it comes to trading boom and crash, it is important to trade from a higher timeframe paying attention to support and resistance zone for possible market entry.

Having a good strategy for boom and crash is beyond using a bunch of indicators because they lag. There are certain rules that govern financial trading and boom and crash respect those rules. These rules require MT5 free default tools.

So here are the tools and rules you need if you want the best strategy for boom and crash.

  1. Market structure knowledge
  2. Learn how to use The Fibonacci tool.
  3. Top down analysis handling multiple timeframes.

Note that in market structure you will find support and resistance, chart pattern, and more.

BOOM AND CRASH 1 MINUTE STRATEGY

If you want to see consistent returns on Boom and crash then you have to focus on trading on higher timeframes.

Like I said before, support and resistance are easily broken on lower timeframes so I will not recommend you trade Boom and crash on 1 minute.

IS BOOM AND CRASH MANIPULATED?

Many synthetic traders believe that boom and crash is manipulated; however, it is difficult to say that boom and crash is manipulated because there are many participants involved, both winning and losing traders.

In my years of trading Boom and Crash indices, I’ve discovered that the index responds very well to price action technical analysis on higher timeframes.

That being said, if you pay attention to price action trading, you will also be on the winning side.

BEST INDICATOR FOR BOOM AND CRASH

If there was a best indicator for boom and crash then every synthetic Boom and Crash would be making money.

There is no Holy Grail in trading. The best boom and crash trading system is price action.

WHAT MOVES BOOM AND CRASH INDEX

Boom and Crash is highly influenced by pure price action, if you want to trade Boom and Crash successfully naked trading is the way. I don’t recommend indicators for Boom and Crash trading because they lag.

With price action, you get to see the price real-time and catch early market entry and tighter stop loss.

WHICH INDICATOR IS BEST FOR BOOM AND CRASH?

The best indicator for Boom and Crash is no Indicator. Naked trading is the way to trade Boom and crash.

A naked Boom and Crash chart will enable you easily spot the market dominant trend and all the support and resistance zones.

With a naked chart, you can see the swing highs and lows and apply your trend line properly to touch the swing levels.

HOW DO YOU PREDICT SPIKES IN BOOM AND CRASH?

A reliable method exists for predicting Boom and Crash spikes.

  1. Look for spikes in zones of multiple price rejection on Higher timeframe (H1)
  2. Price breakout of chart pattern.
  3. spikes can be detected with trend lines on swing lows and highs

HOW DO YOU TRADE BOOM AND CRASH WITHOUT FEAR?

To trade Boom and crash without fear you need to:

  1. Use lot sizes that matches your trading capital (risk management)
  2. Do your market analysis on higher timeframes
  3. Enter trades on breakout and exit on support and resistance (on the trend)
  4. Sell on swing highs and buy on swing lows
  5. Follow the Dominant trend.

WHAT IS THE HARDEST MISTAKE TO AVOID WHILE TRADING?

There are many mistakes traders make while trading, I will list a few:

  1. Most traders mistake a pullback for the dominant trend
  2. False breakout from actual breakout
  3. Focusing on too many pairs
  4. Buying at a swing high and selling at a swing low

WHAT IS THE BEST TIME TO TRADE BOOM AND CRASH IN SOUTH AFRICA?

Because Boom and Crash are standalone indices and are not affected by market trading hours; therefore Boom and crash do not have a best time for trading rather the best time to trade Boom and crash is the break of market structure, especially on a higher timeframe.

To understand more about the best time to trade boom and crash in South Africa go read my previous articles regarding Boom and crash trading.

CONCLUSION

As a synthetic trader who wants to be successful in trading Boom and crash; the best first step to take is to learn that Boom and Crash is influenced by price action and market structure.

Indicators such as moving average are not the best bet for trading Boom and Crash because they lag.

VOLATILITY 75 INDEX STRATEGY

Every synthetic trader wants a volatility 75 index strategy that works. It is possible that while you are busy looking for a V75 index strategy you can lose focus on the most important part of trading.

In my previous article, I mentioned that for technical analysis trading the market moves in structure and patterns. That being said whatever strategy you come up with should be from an understanding of the fundamental principles of trading.

In this article, you are going to understand the volatility 75 index strategy that works.

VOLATILITY 75 INDEX STRATEGY

Volatility 75 index strategy 2

For a successful volatility 75 index strategy, focus on the following:

  • Identify the dominant trend.
  • Wait for pullback.
  • On a lower time frame identify a market pattern breakout.
  • Join in the trend continuation from the lower timeframe.

VOLATILITY 75 INDEX TRADING STRATEGIES

In my years of trading synthetic indices, I have come to see that volatility 75 index moves in structures, when you zoom out your chart, you will be able to easily see them.

This is what you have to do:

  • Use timeframe between 5-30 minutes
  • Zoom out your chart to see market structures
  • Use trend line and horizontal lines to map out trigger zones
  • Enter market on breakout of market structure

See the image below:

volatility 75 index trading strategies

VOLATILITY 75 INDEX KILLER STRATEGY USING MT5 INDICATORS

I have seen many synthetic traders talk about a killer trading strategy for volatility 75; the sad news is that most searches are centered on indicators that lag.

The truth is that no lagging indicator will give you that killer strategy you are looking for.

If you want a volatility 75 index killer strategy you should start seeing the market in structures, with that you can easily identify when a breakout happens.

In my previous article, you will find detailed information regarding Volatility 75 index strategy.

VOLATILITY 100 INDEX STRATEGY

volatility 100 index strategy

There are many volatile Deriv synthetic indices and the volatility 100 index is one of them, as a synthetic trader if you have ever traded volatility 100 index and you are on profit, it is very fulfilling.

You do not want to be on the losing side with volatility 100 index. To have volatility 100 index strategy with the consistent profit you would need to have the right basic knowledge of how volatility indices work.

To make it simple your strategy is built on the knowledge of market structure.

I am not going to show you a bunch of lagging indicators that don’t work. What I am telling you is for you to focus on naked trading and pure price action so that you can catch trends early.

To fully understand what am saying go read up on the best time to trade Synthetic indices.

V75 SCALPING STRATEGY

I have mentioned in my previous articles that scalping is best when there is no expected global news to disrupt the market price since scalping is done on lower timeframes.

In this case, v75 will do well for scalping since it is not affected by global news.

To properly scalp v75:

  • Identify the dominant trend on a higher timeframe like 30 minutes and H1.
  • Wait for pull back to a resistance or support zone.
  • Look for a breakout of structure in the lower timeframe you want to scalp from.
  • Another way is a reversal pattern on the lower timeframe.

See the below image example:

v75 scalping H1 dominant trend
v75 scalping strategy

What moves the volatility 75 index?

Volatility 75 index is moved by market structural patterns. These patterns follow the fundamental rules of technical analysis trading. (Chart pattern, support, and resistance).

These indices are available for trading 24/7 and are unaffected by regular market hours because they are supported by a cryptographically secure random number generator.

CONCLUSION

As a trader, it is important you ask the right question. Asking the right question will lead you on a path towards success.

There is a lot of information on the internet; hence not all will be beneficial to your trading.

If you have been trading for a while, you would agree with me that certain information you discovered and applied made a whole lot of difference in your trading.

Asking the right question is a start to successful trading.

HOW TO TRADE VOLATILITY 100 INDEX

Volatility 100 index is one of the most volatile indices designed by Deriv, its volatility and liquidity give synthetic traders the opportunity across all the time frames to profit from its movement.

Just like every other trading instrument, to know how to trade volatility 100 index you must understand how it moves across all the timeframes paying attention to high trigger zones especially swing highs and lows.

HOW TO TRADE VOLATILITY 100 INDEX

how to trade volatility 100 index

This is how to trade volatility 100 index:

  • Identify the dominant trend
  • Wait for pullback or retracement
  • Join in the trend when see a chart pattern example bullish flag
  • You can join in trend continuation on a lower timeframe.

VOLATILITY 100 INDEX SIGNALS

Many synthetic traders keep looking for the best volatility 100 signals and they forget to pay attention to what is before them.

In the MT4/MT5 platform, you will find all the needed tools you would need for trading. These tools include trend lines, horizontal lines, Fibonacci, and more.

For the record, before you go to find a volatility 100 index signal group you should first learn market structure.

VOLATILITY 100 INDEX LIVE CHART

volatility index live chart

Volatility 100 index live chart shows the price movement of V100 indices, it also comes with all the tools on MT5. It comes with multiple timeframes from 1 minute to Monthly.

VOLATILITY 100 INDEX STRATEGY

If you have been trading synthetic indices on Deriv, you would know that volatility 100 index is one volatile instrument.

Because of its volatility, I will recommend that it should be traded on a lower time frame to reduce risk and maximize profit.

Volatility 100 index strategy entails following the market’s dominant trend and chart patterns.

This is how to trade volatility 100 index

  1. Identify the dominant trend
  2. Wait for pullback
  3. Join the dominant trend from a lower timeframe.

See the image below:

volatility 100 index strategy

BEST TIME TO TRADE VOLATILITY 100 INDEX

The best time to trade volatility 100 index is after a break in market structure on the lower timeframe. The reason is that the V100 index is volatile and fast. Trading on a higher time frame will require a large capital but with a lower timeframe, you can manage the risk.

Note that you will have to zoom out your chart to see a good formed structure before you can make any trading decision.

Here are some MT5 tools you would need to trade Volatility 100 index

  1. Trend line
  2. Horizontal line
  3. Fibonacci tool
  4. The above tools will help you map out trigger zones for potential entry.

Below is an image example that shows a break in structure:

best time to trade volatility 100 index

WHAT IS THE VOLATILITY 100 (1S) INDEX

Volatility 100(1s) index is a synthetic index designed by Deriv to simulate real-world market movement.

These indices, which are powered by a cryptographically secure random number generator, are open for trading 24 hours a day, seven days a week, and are unaffected by traditional market hours, global events, or market and liquidity difficulties.

For the volatility 100, one tick is generated per second (1s).

VOLATILITY INDEX TRADING STRATEGIES

What is important in trading volatility index is to stay with a strategy that works. Your success in trading is not tied to multiple strategies.

Because volatility indices are synthetic and not bound to market hours and global events, it perfect for technical trading.

That being said to have a good and consistent volatility index you should focus on identifying structures when they are formed and broken.

These market structures and patterns can be seen across all the timeframes. In the MT5 platform, you will find all the tools needed to help you map out the structures easily.

Some of these tools are trend lines, horizontal lines, Fibonacci tools, and more.

These tools help you pinpoint support and resistance zones and to identify chart patterns as well.

You can read up more regarding volatility index trading.

HOW TO TRADE VOLATILITY INDEX 75

To effortlessly trade volatility index 75 you should pay attention to market structure, theses market structures don’t appear every day but when they do, the accuracy is high.

These structures can appear as a reversal pattern or a continuation pattern.

To understand this properly you should read my previous article on price action and market structure.

See the visual example below and frequently asked question regarding how to trade volatility 100 index:

how to trade volatility 75 index

What is volatility 100 index in Forex?

Volatility 100 index is a synthetic instrument designed and offered by Deriv broker, it is not a forex instrument.

How Do You Trade a Volatility Index?

You can trade volatility index with market structure.

CONCLUSION

When it comes to volatility 100 index, market structure will always play a major role irrespective of what trading strategy you employ.