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.
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.
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.
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 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.
Click on the ‘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.
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> Login 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.
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.
Smallest lot size
Volatility 10 Index
Volatility 25 Index
Volatility 50 Index
Volatility 75 Index
Volatility 100 Index
Volatility 10 (1s) Index
Volatility 25 (1s) Index
Volatility 50 (1s) Index
Volatility 75 (1s) Index
Volatility 100 (1s) Index
Volatility 200 (1s) Index
Volatility 300 (1s) Index
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
Can I trade volatility indices on MT4?
No, you can't. You can only trade volatility indices on DMT5. Deriv, the only broker with volatility indices, only uses MT5 servers.
What is the minimum deposit I need to trade volatility indices on Deriv?
There is no set minimum deposit amount needed to trade volatility indices. You can transfer as little as $1 from your main account to your DMT5 synthetic indices account.
However, the challenge with such a low deposit is that you will probably blow the account in seconds due to the volatility. You will also not be able to trade some of the volatility indices due to margin and minimum lot size requirements.
Funding your volatility indices trading account with at least $50 will allow you to ride out any short-term reversals that may go against you.
Which are the best volatility indices to trade on Deriv?
This depends on personal preference. There are a variety of volatility indices that have different levels of volatility. If you prefer high volatility you can choose assets like v75, v100, v200 (1s) or V 300 (1s). For slower volatility, you can choose indices like v10 or v25. It is best to demo trade a variety of volatility indices so you can choose which ones you prefer.
What is the best time to trade volatility indices?
Volatility indices have uniform volatility around the clock. This means that you can trade them at any time of the day. This is different from forex where there are some periods with low volatility. You just have to be on the lookout for the best setups.
What is the difference between volatility 75 and volatility 75 (1s)?
The difference between the two is the rate of update. Volatility 75 updates once every 2 seconds while volatility index 75 (1s) updates once every second so it moves faster and has more volatility.