• eur/usd 1.1862

    0.18

    BTC/usd 15.674.99

    8.60

    ETH/usd 674.99

    13.60

  • eur/usd 1.1862

    0.18

    BTC/usd 15.674.99

    8.60

    ETH/usd 674.99

    13.60

  • eur/usd 1.1862

    3.95

    BTC/usd 15.674.99

    4.78

    ETH/usd 674.99

    11.37

Advantages Of Trading Synthetic Indices

The introduction of synthetic indices brought about a lot of questions among traders. Everyone wanted to know what are they, the advantages of trading synthetic indices given that many traders where already trading currencies. After I started trading synthetics I realized that they are more volatile compared to other currencies . Some of the advantages I realized are explained in the paragraphs below.

Synthetic indices are simulated markets that mimic the behavior of actual markets, they are continuous indices with deep liquidity however they are not affected by news events.

DERIV

Advantages of trading synthetic indices on Deriv:

Synthetic indices are traded 24 hours a day, 7 days a week icluding holidays whereas forex is traded 5 days a week. Thus with indices one can trade when not busy during the weekend. For those who are busy during the week this is a good option since they can trade on Saturdays and Sundays.

Indices have tight spreads. Spread is the difference between the bid and the ask. With larger spreads trades are not executed exactly at the actual price where you executed your order which can increase your risk. Therefore tight spreads are an advantage when it comes to risk management minimizing traders loses on price difference and conducive when running trading robots. Lower operational cost.

Synthetics are free from liquidity where event leads to huge bid-ask spreads and high price fluctuations which can lead to lost of investments.

Synthetic indices fluctuations are high, this high volatility provide trading with many trading opportunities. Price movement is necessary in the financial markets in order to make profits. Thus an increase in volatility increases the chances to make more money however the increase in risk is directly proportional to the increase in risk.

There are four main asset types on Synthetics. These are crash, boom, jump indices , range break indices and volatility . Different levels of volatility on synthetic are volatility 100 Index, volatility 75 Index, volatility 50 Index, volatility 25 Index, and volatility 10 Index. In the Volatility 100 Index, the volatility is kept at 100%, the volatility is maintained at 10%, meaning there are much low price swings and no significant price gaps. Thus a trader has a larger pool to choose  from these innovative trade types depending on preference of strong price swings or lower. A trader can even decide to choose one master it and become good at it.

When trading synthetic indices you do no require large capital, thus anyone can trade without capital barriers.

 

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