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
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Volatility Indices on 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 10%, 25%, 50%, 75% and 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.

1. 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.




open Deriv account

Enter your email in the box provided and click on β€œCreate Demo Accountβ€œ.

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.

2. Open A Deriv Real Account

After verifying your email address, you will have a demo account on Deriv with $10 000 in virtual funds.

The next step is to do Deriv Real Account registration.

Deriv real account registration

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 β€˜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 convinient for you.

You will need to supply some details to finalise 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.

3. Open A DMT5 Synthetic Indices Trading Account 

Next, you need to create a dedicated synthetic indices account to trade volatility indices on DMT5.

Deriv DMT5 account

Click on the β€˜Real’ tab and then click on the Add button next to the synthetic account. Next, 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.

4. Download the DMT5 Platform

Next you need to download the DMT5 platform.

To do this you must click on the synthetic account as shown below.

Downlaod DMT5 platform

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.

5. Login To The DMT5 Platform

After downloading and installing your DMT5 you will then need to login to your trading account.

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 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

Deriv also offers another type of volatility indices calles 1(s). The following 1(s) volatility indices are available for trading:
  • 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.

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 v 100 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 v 50

Frequently Asked Questions On Trading Volatility Indices

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