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Comprehensive Guide To Volatility Indices Trading (2024)
Learn how to trade volatility indices from Deriv which are popular worldwide
Get to know the best synthetic indices brokers
Learn about profitable strategies that you can use in volatility indices trading
Sign Up To Trade Volatility Indices
VISIT SITE | SIGN UP | OPEN DMT5
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What Are Volatility Indices From Deriv?
Volatility Indices on Deriv.com are a type of synthetic indices which reflect real-world monetary markets with constant volatility. This is a major difference of synthetic indices and forex since forex pairs have various levels of volatility over time.
Financial market volatility refers to changes in asset prices over time. A very volatile market will have big changes in the asset prices in a short time. A market with low volatility will have small price movements even after a relatively long time.
The reflected monetary market volatility on Deriv is measured on a scale from 1 to 100. 1 represents a market with minimum volatility while 100 represents a market the maximum possible volatility.
The constant volatilities of the indices offered by Deriv are as follows:
| Volatility Indices | Constant Volatility |
|---|---|
| Volatility 10 Index (V10) | 10% |
| Volatility 25 Index (V25) | 25% |
| Volatility 50 Index (V50) | 50% |
| Volatility 75 Index (V75) | 75% |
| Volatility 100 Index (V100) | 100% |
Deriv is the only volatility indices broker.
How Do You Trade Volatility Indices On DMT5?
To trade volatility indices in DMT5 you need to open a synthetic indices account in Deriv. Below are the steps that you follow to open the account.
- Open Your Deriv Main Account
Start by opening your main Deriv account. This account will allow you to trade various markets like binary options, forex, and synthetic indices. You can open the Deriv main account here.
| Steps | Actions |
|---|---|
| 1. | Enter your email in the box provided and click on “Create Demo Account”. |
Deriv will send you an email to verify your email address. Open that email and click on the link to verify your email address and finish setting up your account. If you do not see the email try checking your spam folder.
Choose your preferred password & country of residence.
- Open A Deriv Real Account
After verifying your email address, you will have a demo account on Deriv with $10,000 in virtual funds.
| Steps | Actions |
|---|---|
| 1. | Log into the demo account that you created in the first step. Click the dropdown arrow beside the $10,000 demo balance and click on the ‘Real’ tab. |
Next, click on the Add button and choose the default account currency. You will use this default currency to deposit, trade & withdraw and you can’t change it after your first deposit. It is important to make sure you choose a currency that is convenient for you.
You will need to supply some details to finalize your Deriv real account registration. Enter the following details such as your real name, address & phone number.
Ensure that you use details that you can later verify. This is because as part of its Know Your Customer (KYC) policy, Deriv will ask you to upload your proof of residence and ID or passport.
These documents should have the same details as the ones you supplied during the registration.
| Steps | Actions |
|---|---|
| 2. | Finalize registration by providing real name, address & phone number. |
Open A DMT5 Synthetic Indices Trading Account
Next, you need to create a dedicated synthetic indices account to trade volatility indices on DMT5.
| Steps | Actions |
|---|---|
| 1. | Click on the ‘Real’ tab and then click on the Add button next to the synthetic account. |
| 2. | Set the password for the synthetic indices account. It’s not the main account password, you will only use it to access the synthetic indices trading account. |
After creating the account you will now see the account listed with your login ID. You will also get an email with your login ID that you will use to log in to the mt5 synthetic indices account.
Download the DMT5 Platform
Next, you need to download the DMT5 platform.
| Steps | Actions |
|---|---|
| 1. | Click on the synthetic account as shown below. |
You will then be taken to a page with links to Metatrader 5 application for various systems like Android, Windows, iOS etc at the bottom of the page.
Download the one you want to use.
| Steps | Actions |
|---|---|
| 2. | Download the DMT5 application for your preferred system. |
Login To The DMT5 Platform
After downloading and installing your DMT5 you will then need to login to your trading account.
| Steps | Actions |
|---|---|
| 1. | Click on Settings > Log in to new account. |
You will need to enter the following details:
- Broker: Deriv Limited
- Server: Deriv-Server
- Account ID: These are the numbers that you see next to your Synthetic indices account. You will also get this login id in the email that you get after opening the account
- Password: Enter the password that you chose when you opened the synthetic account in step 3 above
Make sure you type these correctly because if you make mistakes you will not be able to connect to your trading account.
After logging in you can start trading.
What Are The Types Of Volatility Indices Offered By Deriv?
The following volatility indices are available for trading:
| Volatility Indices | Update Frequency |
|---|---|
| Volatility 10 Index (V10 Index) | 1 tick every two seconds |
| Volatility 25 Index (V25 Index) | 1 tick every two seconds |
| Volatility 50 Index (V50 Index) | 1 tick every two seconds |
| Volatility 75 Index (V75 Index) | 1 tick every two seconds |
| Volatility 100 Index (V100 Index) | 1 tick every two seconds |
Deriv also offers another type of volatility indices called 1(s). The following 1(s) volatility indices are available for trading:
| Volatility Indices | Update Frequency |
|---|---|
| Volatility 10 Index (1s) | 1 tick per second |
| Volatility 25 Index (1s) | 1 tick per second |
| Volatility 50 Index (1s) | 1 tick per second |
| Volatility 75 Index (1s) | 1 tick per second |
| Volatility 100 Index (1s) | 1 tick per second |
| Volatility 200 Index (1s) | 1 tick per second |
| Volatility 300 Index (1s) | 1 tick per second |
Which One Is The Most Volatile Volatility Index?
The Volatility 100 index (V100 index) has the highest volatility of all the indices that update at the rate of one tick every two seconds.
On the other hand, the Volatility 300 (1s) index has the most volatility of all the indices that update at the rate of one tick per second.
The volatility 10 index (v10) has the least volatility. It has only 10% of the volatility of V100 index.
On the (1s) volatility indices V10 (1s) is the least volatile index with the slowest price changes over time.
Volatility Indices Minimum Lot Sizes
Lot sizes determine the trade size you can place. Different volatility indices have different minimum lot sizes that you can trade. Below are the minimum volatility lot sizes.
| 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 | 0.1 |
| Volatility 200 (1s) Index | 0.01 |
| Volatility 300 (1s) Index | 0.6 |
How do you calculate volatility indices lot sizes?
Calculating the lot sizes in volatility 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 V10 (1s), V200 (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 volatility indices like V50.
Frequently Asked Questions On Trading Volatility Indices
What Are The Types Of Volatility Indices Offered By Deriv?
- Volatility 10 Index (V10 Index)
- Volatility 25 Index (V25 Index)
- Volatility 50 Index (V50 Index)
- Volatility 75 Index (V75 Index)
- Volatility 100 Index (V100 Index)
These indices update at the rate of one tick every two seconds. A tick is the minimum price movement of an index.
1s Volatility Indices
- Volatility 10 Index (1s)
- Volatility 25 Index (1s)
- Volatility 50 Index (1s)
- Volatility 75 Index (1s)
- Volatility 100 Index (1s)
- Volatility 200 Index (1s)
- Volatility 300 Index (1s)
These indices update faster at the rate of one tick per second.
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