Synthetic indicesUpdated 3 min readBy the FXNOD team
Are synthetic indices manipulated?
Deriv states that its synthetic indices are generated by a cryptographically secure random number generator and that there is no order book. A trader cannot verify that independently, and neither can FXNOD. What can be said is that a broker has no need to manipulate individual prices: the cost built into every payout and spread already works in its favour.
What Deriv says
- The indices are generated by a cryptographically secure random number generator.
- There is no order book, and historical patterns are coincidental.
- External news does not affect the price.
- Its trading terms say its pricing calculations include a bias in its favour.
What nobody outside can check
A synthetic index exists only at the broker that runs it. There is no second venue to compare the price with and no public record of how each tick was produced. You are trusting the operator. That is a real difference from a currency pair, which thousands of institutions quote at once.
Why it feels rigged
| What happens | The ordinary explanation |
|---|---|
| The price reverses just after you enter | Half of all entries on a random series are followed by a move against them |
| Your barrier is touched by one tick | You remember near misses and forget the trades that cleared easily |
| A long losing streak arrives after you raise the stake | Streaks are frequent, and you raised the stake after one had started |
| It won on demo and lost on real | A short demo test did not include a bad stretch |
| The spike came right after you closed | Spike timing is random, so some will always follow your exit |
Where the real disadvantage is
You do not need manipulation to lose steadily. An even-chance contract that pays a profit of 95 on a stake of 100 costs about 2.5 per 100 staked on average, on every trade. A thousand trades at a stake of 1 is an expected cost of about 25. That cost is in plain view in the payout, and it is what empties accounts.
How to test fairness yourself
Record a large sample
For example, the last digit of 5,000 ticks on a demo account.
Compare with chance
Each digit should appear about 500 times, typically between 460 and 540.
Check your own trades
Over several hundred Even/Odd trades the win rate should be close to 50%.
A test like this can reveal a crude bias. It cannot prove fairness, and it says nothing about whether the payouts are generous.
The sensible conclusion
- Treat the index as random and the payout as priced against you.
- Do not look for the trick that beats it. Control the stake and the limits.
- If trust in a single operator bothers you, trade a real market at a strongly regulated broker.
Questions people ask
- Does Deriv trade against its clients?
- On synthetic indices there is no external market, so the broker is the other side of the trade. Its terms say the pricing includes a bias in its favour.
- Can Deriv see my trades and move the price?
- Deriv states the indices come from a random number generator. That cannot be verified from outside, and the built-in cost means it has no need to.
- Are synthetic indices audited?
- Deriv's synthetic indices page made no mention of an audit when it was read for this guide. Ask Deriv directly if this matters to you.
Trade a synthetic index on demo
Pick any index your Deriv account offers in Trade Pilot, or let a bot trade it at a flat stake with a required stop loss. Virtual funds first.
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