Synthetic Indices

“Synthetic Indices” refers to financial instruments that are created to track the performance of a specific financial market or asset, such as a stock index, currency, or commodity. Synthetic indices are often used for trading and investment purposes, as they provide exposure to a broad range of assets with a single trade.

Synthetic indices are constructed using derivatives, such as options or futures contracts, which are designed to mimic the performance of the underlying asset or market. The value of a synthetic index is derived from the performance of its underlying assets, and it is often used to provide a benchmark for the performance of a particular market or sector.

 

Overall, synthetic indices are a popular tool for investors and traders seeking exposure to specific financial markets or assets. However, it is important to understand the underlying mechanics of synthetic indices and the risks involved before investing in them.

Why Trade Synthetic Indices

Trading synthetic indices is similar to trading other financial instruments, such as stocks or commodities. Investors can buy or sell synthetic indices through financial intermediaries, such as brokers, and trade them on financial markets, such as exchanges or over-the-counter (OTC) markets.

Synthetic indices offer several benefits, including reduced risk and greater flexibility, as investors can trade exposure to a specific market or asset without actually owning the underlying assets. Additionally, these can be used to hedge against market risk, or to speculate on market movements.

Who Offer Synthetic Indices Trading?

Deriv Broker offer Synthetic Indices Trading. They are Deriv’s own instruments, which is why the list of brokers offering them is so short — see our full synthetic indices brokers guide for what to check before opening an account.

How to trade Synthetic indices automatically?

VantageX Automatically trades Synthetic indices including Crash 100, Crash 500 , Volatility 75 and Volatility 100. With 

Synthetic Indices lot sizes

Volatility 10 Index =>0.30 Min
Volatility 25 Index =>0.50 Min
Volatility 50 Index =>0.50 Min
Volatility 75 Index =>0.001 Min
Volatility 100 Index =>0.01 Min
Crash 500 =>0.20 Min
Boom 500 =>0.20 Min
Step Index =>0.10 Min

Benefits of VantageX trading.

• Fully Automated Trading
• 24/7 execution of trades without Human interaction
• Three algortithmic Strategies
• Artificial Intelligence empowered.

100% gain in three weeks

Synthetic Indices Automated Trading

VantageX is a fully automatic trading robot developed to Why Trade Synthetic Indices with Vantage X EA, such as those offered by Deriv and other brokers who operate in a similar manner. When entering trades, the Vantage PointX makes use of an algorithm that recognises when a trend is about to reverse Using Artificial Intelligence. The following indices are the primary focus of the EA’s design.

What is Traded in Synthetic Indices

• Step index
• Boom 1000 Index
• Crash 1000 Index
• Boom 500 Index
• Crash 500 Index
• Volatility 10 Index
• Volatility 25 Index
• Volatility 50 Index
• Volatility 75 Index
• Volatility 100 Index
• Volatility 10 Index

Supported Pairs by VantageX

VantageX supports all pairs mentioned above

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Taking a deeper dive into Synthetic Indices, these financial mirrors reflect asset performance trends without direct ownership. Formed through modern techniques ranging from algorithms to intensive data analysis, these indices are multifaceted:

Basket Synthetic Indices: Envision these as digital asset compilations, with value derived from asset performance. Sector Synthetic Indices: Each sector, be it tech, health, or energy, gets its spotlight through these Synthetic Indices. Commodity Synthetic Indices: Capturing the essence of materials, these indices tune into commodities like gold, silver, and oil. Volatility Synthetic Indices: Gauge market sentiments using these, with the VIX index being a notable mention. Currency Synthetic Indices: Acting as benchmarks, they measure currency health against major global currencies. Style Synthetic Indices: Focusing on investment styles, they merge both fundamental and technical analysis.

Learn more about Trade Synthetic Indices Automatically with VantageX

Trade Crash 500, Crash 1000, Boom and Volatility 75 and Volatility 100 index with First AI empowered VantageX trading Robot.

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Advantages of Synthetic Indices:

Synthetic indices offer a smart shortcut for traders. Wondering how? Let’s simplify. Imagine wanting to taste an entire pie without baking it yourself. Synthetic indices let you do just that but for trading! Instead of diving deep and purchasing every ingredient (or asset), you can enjoy the whole flavor with just one slice (or financial instrument). It’s a cost-saver as you skip multiple fees and the hustle of handling many assets.

Another cool thing about synthetic indices? They’re like protective bubbles. While the real-world market can shake due to company news or other events, synthetic indices, especially those built using algorithms, might remain steady. They often don’t get ruffled by the ups and downs of individual companies. So, for those aiming to bet on the bigger picture of a market or index rather than a single company, synthetic indices might be your go-to choice.

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A synthetic indices trading robot is an expert advisor (EA) that opens and closes positions on Deriv’s synthetic instruments — Boom, Crash, Step, Range Break and the Volatility indices — without a person watching the chart. Because these markets never close and their movement comes from a published random-number model rather than from economic news, an indices trading robot is a far more natural fit here than it is on conventional currency pairs.

What a synthetic indices trading robot actually does

An EA is a program that runs inside MetaTrader. It reads incoming ticks, applies a fixed set of rules, and sends orders through your broker. Everything it can do, a disciplined human could do — the robot’s advantage is that it does it identically at 3 a.m. on a Sunday, which matters when the instrument you are trading prices 24/7.

On synthetic indices the typical logic falls into three families:

• Spike anticipation — on Boom and Crash, spikes arrive on a known average frequency (roughly one spike per 500 ticks on a 500-series index). A robot counts ticks since the last spike and positions for the next one.
• Range and mean reversion — the Volatility indices oscillate around a drift with a stated volatility, which suits systematic fade entries far better than trend-following.
• Breakout continuation — Step and Range Break indices move in defined increments, so a robot can trade the break of a level with a measurable stop.

Why synthetic indices suit an indices robot

Three properties make this pairing unusual. First, continuous pricing: there are no weekend gaps, no rollover halts and no session dead zones, so an automated system is never flat because the market shut. Second, no news risk in the ordinary sense — there is no central bank, no payroll print and no earnings release to blow through a stop. Third, published statistical properties: Deriv states the volatility and spike frequency of each index, which means a strategy can be specified against known parameters instead of being fitted blind to history.

That last point is the honest reason many traders reach for automation here. A market with stated statistical behaviour rewards consistent rule-following and punishes improvisation.

Choosing the best EA for synthetic indices

Most of what is marketed as the best EA for synthetic indices deserves scepticism. Use these checks:

• Does it define its risk per trade? A robot with no stop loss and no maximum position size is a martingale in disguise, and it will eventually meet the drawdown that ends the account.
• Is the back test tick-accurate? Synthetic indices are tick-driven. A back test at anything less than real-tick modelling quality tells you almost nothing.
• Was it tested across a full range of conditions? A curve produced from a few favourable months is a sales asset, not evidence.
• Does the vendor show losing periods? Every real system has them. A results page without drawdown is incomplete by definition.
• Can you run it on demo first? Any robot worth buying survives a demo period on your own broker feed.

You can see how we document this for our own instruments in the Crash 500 back-test results and the Boom 500 index guide.

Running an indices trading robot on a VPS

An EA only works while MetaTrader is running and connected. A home computer that sleeps, updates or drops its connection will miss entries and, worse, leave positions unmanaged. A VPS keeps the terminal running continuously next to the broker’s servers, which also cuts execution latency — a real consideration on instruments where a spike resolves in seconds. We cover the specification we recommend on the VPS page.

Risks you should understand first

Automation removes emotional error. It does not remove market risk, and it introduces two risks of its own: the robot can be wrong systematically, and it can keep being wrong faster than you would have been by hand. Synthetic indices are leveraged products; a spike that runs against an unprotected position can take a large part of an account very quickly.

Treat any robot as a tool that expresses a strategy, and size it accordingly — on a balance you can afford to lose, with a stop, and after a demo period long enough to include a losing stretch. If you are new to the instruments themselves, start with the sections above and our trading education section before automating anything.

Frequently asked questions

Which broker do I need for a synthetic indices robot?
Synthetic indices are created and listed by Deriv. You need a Deriv account with MT5 access; these instruments are not available at brokers that carry only forex and share CFDs.

Can an indices robot run on MT4?
Deriv’s synthetic indices are served on MT5. Some older EAs are MT4-only and cannot be used on these instruments without being rewritten.

Does an indices trading robot need to be optimised?
Periodically, yes — but heavy re-optimisation on recent data is usually curve fitting. Prefer a system with few parameters and a documented rationale for each.

See VantageX pricing or read more about our automated trading robot.

Trading the spike indices specifically? Boom and Crash behave differently from the Volatility indices — the spike is asymmetric, so risk on the two sides is not a mirror. We cover that in the Boom and Crash expert advisor guide.

Working out how many lots to trade for a given risk? Use the position size calculator — it takes the value per point from your own terminal and warns when the minimum lot is larger than your risk budget allows.