Synthetic indicesUpdated 3 min readBy the FXNOD team
What are synthetic indices?
Synthetic indices are simulated markets created by a broker. Their prices are produced by a random number generator built to behave in a chosen way, such as a fixed level of volatility, and are not set by buyers and sellers. Deriv's synthetic indices trade around the clock and, Deriv says, are not affected by news.
How they differ from a real market
| Real market | Synthetic index | |
|---|---|---|
| Price comes from | Trades between buyers and sellers | A random number generator |
| Order book | Yes | None |
| Reacts to news | Yes | No, according to Deriv |
| Hours | Set by the market | Round the clock, including weekends |
| Available at | Many brokers | Only the broker that created it |
The families Deriv describes
| Family | Built to do this |
|---|---|
| Volatility | Hold a constant volatility, from 10% to 250%, ticking every two seconds or every second |
| Crash and Boom | Move steadily, with a sudden drop or surge on average once per set number of ticks |
| Step | Move up or down by a fixed amount on every tick |
| Jump | Jump on average every 20 minutes, with an equal chance of up or down |
| Range Break | Stay between two boundaries, then break out to form a new range |
| DEX | Produce large spikes or drops on average every 10, 15 or 25 minutes |
| Drift Switching | Shift between rising, falling and sideways phases |
What can be traded on them
Deriv's page lists options on synthetic indices through Deriv Trader and Deriv Bot, and CFDs through Deriv MT5, Deriv cTrader and TradingView. Which products you see depends on your country and the Deriv entity your account is with.
What random means for a trader
- Deriv states there is no order book and describes historical patterns on these indices as coincidental.
- The size of moves is designed and predictable. The direction of the next move is not.
- Indicators and chart patterns draw correctly and carry no information about the next tick.
- Results depend on the payout, the stake and your limits, not on forecasting.
Why people trade them
- They are always open, so a strategy or bot can run at any hour.
- Behaviour is consistent: no earnings, no central banks, no weekend gaps.
- Small stakes and very short contracts are available.
The same features make it easy to place many high-risk trades quickly on a product priced by the company on the other side of the trade.
In FXNOD
FXNOD's tools trade the markets your Deriv account offers. Auto Hub bots suggest volatility indices, and the market picker in Trade Pilot and Bot Forge lists what is available to you. Try any index on the demo account first.
Questions people ask
- Are synthetic indices real?
- They are real products you can trade and lose money on. They do not represent any real asset: the price is generated by an algorithm.
- Who invented synthetic indices?
- The synthetic indices described here are Deriv's own products. Other brokers offer their own simulated markets under different names.
- Can you predict synthetic indices?
- Not the direction. Deriv describes them as generated by a cryptographically secure random number generator and says historical patterns are coincidental.
- Are synthetic indices forex?
- No. Forex is the exchange of real currencies. Synthetic indices are simulations that have no link to any currency.
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.
Get started