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How Volatility Indices Work on Deriv (and the Risks You Should Know)

By James Chambo September 15, 2023 2 min read 135 views

Deriv (formerly Binary.com) offers a set of synthetic instruments called Volatility Indices, which simulate market volatility using a computer-generated price feed rather than tracking a real-world asset. They are popular because they trade 24/7, including weekends, unlike traditional forex pairs.

What Are Volatility Indices?

Unlike the VIX (Wall Street's real "fear index", derived from S&P 500 options pricing), Deriv's Volatility Indices are entirely synthetic — generated by a defined statistical model, not by real market participants. They come in different versions (e.g. Volatility 10, 25, 75, 100) representing different levels of simulated volatility.

How to Get Started

  1. Open an account with Deriv and complete verification.
  2. Fund your account using a supported deposit method.
  3. Select a Volatility Index from the platform's asset list.
  4. Use a demo account first to understand how the instrument behaves before trading live.

Understand the Risks Before You Trade

Because Volatility Indices are synthetic and can move sharply in either direction, they carry real risk of rapid losses — there is no such thing as a guaranteed "decent profit" on any instrument. Use proper position sizing, always set a stop loss or use a defined risk per trade, and treat any capital you allocate as money you can afford to lose in full.

This article explains how the product works; it is not a recommendation to trade it.

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