Synthetic indices

Synthetic indices are artificial markets whose price movement is determined by computers and whose behavior is produced by using randomly generated numbers. Some of them exhibit behavior similar to actual financial markets, while others are blatantly computer created. On MT5 and Options, you can trade these indexes. There is also an automated trading option that you may use to trade options given by the broker that you can customize to fit your approach.

 

Top 3 Synthetic Indices Brokers

deriv

up to 100%
no Deposit Bonus

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Markets.com

up to 100%
no Deposit Bonus

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Legacyfx

up to 100%
no Deposit Bonus

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Synthetic Indices Brokers

Broker
Rating
Regulated
Bonus
Min. Deposit
Avg. Returns
1.
Markets.com

FSCA

up to 100%

R 3500

70% - 95%

2.
Black Bull Markets

EU, AU, USA,UK,ZA

up to 100%

R 3800

90% - 100%

3.
Eagle Fx

Globally

up to 100%

$200

90% - 100%

4.
Exness

ASIC

up to 100%

R1200

70% - 90%

5.
Olymptrade

FSC

up to 100%

R1500

70% - 90%

6.
Deriv

CySEC

up to 100%

R1500

70% - 98%

7.
Legacyfx

CySEC

up to 100%

R 3500

70% - 90%

However, they assert that because of “transparency difficulties,” the broker is unable to influence or foresee which numbers would be generated and is therefore impossible to defraud the market. It seems very simple for the broker to just change the numbers being generated for their own profit.Synthetic indices.

Volatility Index and Synthetic indices

Although it could appear to be a typical, though not particularly volatile market, trading it is a quite different experience. On the 1-hour chart, note how long the wicks of the candles are; on the 1-minute chart, you cannot tell how many points those candles are. Trading on this market may be incredibly risky because you typically move up to 20 or 30 points per “tick.”

Trading it over a long period of time is obviously preferable because losing money quickly on shorter timescales is extremely common. Even on the longer periods, you must exercise extreme patience because it takes a very long time for prices to move noticeably in one direction, as can be seen on the 1-hour chart.

The Volatility Index is a “contrarian attitude indicator that helps to identify when there is too much optimism or fear in the market,” according to one definition. The concept is that the market can change trend very quickly, with little warning, and it can be difficult to predict in the same way that one would with a normal monetary market. When sentiment hits one extreme or the other, the market often reverses direction.

It is nevertheless important to keep in mind that technical analysis combined with technical tools can be used to trade volatility indices and analyze price movement.

The devil is always in the details, and in these markets it sort of shouts in your face. Similar to the Volatility Index, these markets appear to be quite normal over bigger time periods. Observe how similar they are despite Boom being designed for travelling short and Crash being constructed for going long. Markets called the Crash and Boom Indices get their ticks from simulating stock prices. In the Crash 500 Index, for instance, a price decline (crash) occurs approximately every 500 ticks in the price series. In contrast, the price of the Crash 1000 Index decreases on average every 1000 ticks in the price series, and the Boom 500 Index and Boom 1000 Index do the same.