If you have searched for “Volatility 75”, “Boom 1000” or “Crash 500”, you have met synthetic indices. They are one of the most popular products among new traders in Zambia and across Africa, but many beginners start trading them without understanding what they actually are. This guide explains everything from scratch, in plain English.
The short answer: a synthetic index is a computer-simulated market. Its price is created by a mathematical algorithm, not by real buyers and sellers, so it is not a currency, share or commodity. It is available 24 hours a day, and it is high-risk.
What Is a Synthetic Index?
A normal market, such as EUR/USD or gold, moves because real people, banks and companies buy and sell, reacting to news, interest rates and economic events. A synthetic index does not work like that. Its price is produced by a random-number generator that follows specific rules, for example “keep the volatility at 75%” or “produce a sudden upward spike about once every 1,000 ticks”.
You trade these prices the same way you trade other CFDs (contracts for difference): you bet on whether the price will go up (buy) or down (sell) and you make or lose money according to the move. There is no company behind the price and no economic news to analyse.
Why Do Synthetic Indices Exist?
- They never close. Real forex markets close on weekends. Synthetic indices are generated 24 hours a day, 7 days a week, so people who work during the day can trade in the evening or at weekends.
- They are not affected by news. There are no surprise interest-rate announcements or political shocks, so the behaviour follows the set rules.
- Low starting capital. Small position sizes let people start with a few dollars.
Those benefits are real, but so are the downsides: they encourage constant trading, move fast and are easy to over-leverage.
The Main Types of Synthetic Indices
| Family | How it behaves | The number means |
|---|---|---|
| Volatility Indices | Constant volatility, price moves up and down continuously | The volatility level: 10, 25, 50, 75 or 100 (higher = bigger swings) |
| Boom Indices | Slowly drifts down, then suddenly spikes up | Average number of ticks between spikes: 300, 500 or 1000 |
| Crash Indices | Slowly drifts up, then suddenly spikes down | Average number of ticks between spikes: 300, 500 or 1000 |
| Step Index | Moves in tiny, fixed up-or-down steps | Fixed step size |
| Jump Indices | Constant volatility with occasional large jumps | The volatility level: 10, 25, 50, 75 or 100 |
| Range Break Indices | Price stays in a range, then breaks out | Average length of the range: 100 or 200 |
Key Terms Every Beginner Should Know
- Tick: a single price update. Volatility Indices update every two seconds (or every second for the “1s” versions).
- Volatility: how much and how fast a price moves. Higher volatility means bigger profits and bigger losses in the same time.
- Spike: a sudden, sharp price move in one direction, characteristic of Boom and Crash.
- Lot size: the size of your trade. Bigger lots make each price move worth more money to you.
- Leverage and margin: borrowed exposure that lets you control a bigger position than your deposit alone. It multiplies risk.
- Stop loss: an order that closes your trade at a set loss level to limit damage.
- Random-number generator (RNG): the algorithm that creates the prices.
Are Synthetic Indices Fair or Rigged?
Brokers that offer them, such as Deriv, state that their prices come from a cryptographically secure random-number generator that is independently audited. In other words, there should be no hidden pattern you can exploit, and no one can predict the next tick. Because the numbers are random by design, no chart pattern, indicator or “secret strategy” can reliably predict them. The broker is also the counterparty to your trade, which is why it is important to choose a reputable one and to read the broker’s own explanation of how prices are generated.
The Risks - Please Read This
- They are not investments. There is no underlying company or economy, so nothing can “grow” over time. Over the long run, the costs (spreads, swaps) work against you.
- They move very fast. A Volatility 75 or Boom 1000 chart can move against you in seconds, and stop losses can slip.
- They can feel like gambling. Constant availability and fast results make it easy to over-trade, chase losses and trade emotionally.
- Most beginners lose money. Many retail traders lose their deposits, especially early on.
- They are mostly offered offshore. They are mainly provided by brokers with offshore licences, so investor protection may be limited. See our Deriv review.
Read the Risk Disclaimer and our 5 risk management rules before you trade.
How to Start Safely as a Beginner
- Learn first. Read the guides below for the index you are interested in.
- Use a demo account. Practise with virtual money until you can follow a written plan. See how to create a demo account.
- Start with the calmest products. Lower-volatility indices such as Volatility 10 or 25 are usually gentler than V75 or V100.
- Use the smallest lot size and risk only 1–2% of your account on any trade.
- Always set a stop loss and avoid trading right after a loss.
- Keep a journal and review it every week.
- Only use money you can afford to lose.
Explore the Guides
Choose a family or a specific index from the list on this page to learn exactly what it is, what the number means, how it moves and the risks to watch for.
This guide is educational and is not investment advice. Product details are simplified and can change; confirm current specifications with your broker. Trading synthetic indices carries a high risk of loss.