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Introduction to Volatility Index — The UrAvgTrader System
Zero experience required. Complete each section in order to unlock the next — at your own pace, no rushing.
Complete sections in order. Each unlocks the next. Your progress is saved automatically.
Start with a Demo Account. Everything in this guide applies to both demo and live. Master the system on demo before depositing real money.
Synthetic Indices are simulated trading instruments that mimic or reflect the behavior of real financial markets. Since they are not real-world markets based on real-world fundamentals, you might ask — what actually moves them?
Randomly generated numbers produced by a cryptographically secured computer program. The broker cannot influence or predict which numbers will be generated — meaning little to no manipulation. An independent third party audits the system for fairness.
Synthetic Indices are only offered by Deriv — 20+ years of experience, 1M+ satisfied customers. You'll use two tools daily: TradingView to analyze charts and MetaTrader 5 (MT5) to execute trades.
Watch "How to get started with VIX (Volatility Indices)" on UrAvgTrader's YouTube: youtu.be/5bEGSEKkBVQ
The #1 type. VIX 10, 25, 50, 75, 100. The number = % of real-world market volatility. Also available as faster (1s) versions. Start with VIX 25 or VIX 50.
Simulate sudden spike events. Popular with experienced traders. Not recommended for beginners.
Price moves in fixed increments. More predictable pattern. Unique to Deriv.
UrAvgTrader's new favorite! Features sudden jumps in price creating exciting setups for traders who understand the patterns.
The number in each Volatility Index (10, 25, 50, 75, 100) = percentage of real-world market volatility simulated. Higher number = faster and more aggressive price movement.
News events, interest rates, earnings — none of it affects Synthetics. Two fewer things to worry about as a beginner.
Consistent volatility year-round. No "best time of day." Fits around your schedule perfectly.
Trade any time — weekdays, weekends, holidays. Unlike Forex which closes on weekends.
Support & Resistance ACTUALLY WORKS here. Less manipulation means cleaner, more reliable setups.
Some indices have spreads as low as 1 point. Your limit orders activate with precision.
Start with any amount. Great for beginners who want to practice without large upfront capital.
The most popular index can wipe a small account quickly. Not for beginners. Start with 25 or 50.
Requires 400+ point minimum stop loss. Unrealistic for small accounts.
Different minimums per index. Always check the minimum lot size and calculate your position size before entering a trade.
24/7 access can be addictive. Discipline is non-negotiable. The broker has built-in limits you can set.
| Factor | Synthetic Indices | Forex |
|---|---|---|
| Affected by news | No ✓ | Yes ✗ |
| Market Hours | 24/7/365 | 24/5 weekdays |
| Volatility | Uniform | Varies by session |
| Manipulation Risk | Very Low | Higher (Big Money) |
| S&R Reliability | Very High | Moderate |
| Broker Choices | 1 (Deriv) | Many |
| Platform | MT5 only | MT4, MT5, cTrader |
Before we get into the strategy, we need to define the jargon you'll use every single day on your trading journey.
Always start on a Demo Account. Beginners make platform mistakes. Don't practice with real money — save that for when you're comfortable with every button on MT5.
Trades held days to weeks. Higher timeframes (2hr–Daily). Under 6 trades per week. UrAvgTrader's preferred style — ideal for people with jobs and busy lives. Requires patience.
3–5 trades per day, all closed same day. Lower timeframes. Requires significant screen time. Can build bad habits in new traders.
10–30 trades per day, held seconds to minutes. Extremely fast. Leads to mental fatigue and stress. Not recommended for beginners — resist the urge.
VIX is 24/7/365 — trade when you have free time. Start with swing trading: analyze the charts, set your limit orders, and let the market come to you.
Market Analysis is the activity traders do to determine whether to Buy or Sell. For traditional Forex there are 3 types — but for Synthetic Indices, you only need one:
| Analysis Type | Forex | Synthetic Indices |
|---|---|---|
| Fundamental Analysis News, rates, politics | Required | Not Needed ✓ |
| Technical Analysis Charts and price action | Required | Required ✓ |
| Sentimental Analysis Market gut feeling | Optional | Not Needed ✓ |
Synthetic price is generated by a computer — not affected by world events. Only Technical Analysis matters. Two fewer things to learn. Already making this simpler than Forex.
Candlestick patterns are the language of the market. In the UrAvgTrader system: Blue = Bullish (buyers in control) and Gold = Bearish (sellers in control).
🔵 Blue = Bullish
Close is ABOVE the Open. Buyers were in control during this candle.
🟡 Gold = Bearish
Close is BELOW the Open. Sellers were in control during this candle.
Wicks / Shadows
Show the HIGH and LOW of the session. Long wick = price was rejected at that level.
UrAvgTrader personally uses Blue for Bullish candles and Yellow/Gold for Bearish candles in his charts. You'll see this color scheme throughout the guide. You can customise your own colors in TradingView — what matters is Open vs Close, not the color.
Long Bull
Strong buyer pressure
Long Bear
Strong seller pressure
Short Body
Indecision / low activity
Long Upper Wick
Buyers pushed up, sellers pushed back
Long Lower Wick
Sellers pushed down, buyers fought back
Focus on just two patterns to start. Master these and you have a real edge:
Q1: What does a long lower wick tell you about that candle?
Technical Analysis is your most important skill. It starts with understanding Price Action and Market Structure. Don't rush — charting is like art, and IT TAKES TIME TO BE GREAT.
Each candle on a chart represents one unit of time. On a 1hr chart, one candle = 1 hour of trading activity. On a 1m chart, one candle = 1 minute.
1m
Scalp
5m
Day
30m
Day
1hr
Swing
4hr
Swing
Daily
Big Picture
Always check higher timeframes first (4hr, Daily) for the big picture, then drop to lower timeframes (1hr, 30m) to find your entry. Higher timeframe structure is more reliable.
The market can only do two things: go UP or go DOWN. It moves in waves — Impulse Waves (the move in the trend direction) and Retracement Waves (the pullback).
Always trade Impulse Legs. Enter at the END of a retracement, at the possible START of a new impulse. Trade with the trend — never against it.
Uptrend: HH + HL pattern repeating
Downtrend: LH + LL pattern repeating
Best and most profitable condition. This is where you make money.
Price trapped between a clear floor and ceiling. Can be traded with specific rules, but trickier. Approach with caution as a beginner.
Nothing makes sense. No clear direction. DO NOT TRADE. Step away from the charts. Protecting your capital is your job in choppy conditions.
Market Flow is the overall direction of price — it tells you whether to be a buyer or a seller right now. Three types:
Transitional Market Flow is a retracement move against the overall trend. It has the potential to either reverse the entire market — or just be a pullback before the original trend resumes.
Transitional flow is an advanced concept. For now, just identify the overall direction on higher timeframes and only trade in that direction. Don't try to trade against the trend yet.
Q1: In Bullish Market Flow, where do you ONLY look to enter trades?
An APS is where price will react in one of two ways: a BREAK or a BOUNCE. If price is NOT at an APS, there is no valid entry.
Support and Resistance that moves with price. Floors = buyers step in. Ceilings = sellers push back. In bullish flow, buy from floors. In bearish flow, sell from ceilings.
The Optimal Entry Level for continuation trades after new market structure forms. Only apply after a confirmed new HH or new LL. Draw from HL → HH or LH → LL.
Tracks the trend visually. Price above rising EMA = buy zone. Price below falling EMA = sell zone. When EMA is flat = ranging, remove it.
If price is NOT at one of these 3 APS, the entry is INVALID. Wait for price to come to you. Your job is not to chase — it is to anticipate and wait.
Interaction is how price reacts at an Area of Price Sensitivity. It gives the first clue of what price wants to do next. Three patterns to know:
Pattern A or B at an APS = look to enter in the direction of the trend. Pattern C (violation) = the APS is broken, re-evaluate your analysis or the overall market direction before entering anything.
Transition is how the market switches from one Market Flow to the next — via a Break → Retest → Follow Through.
Price violates a key floor (in a downtrend) or ceiling (in an uptrend) with a strong candle closing beyond it.
Price pulls back to the broken level. The old ceiling is now retested as a new floor (or old floor as new ceiling). This is your potential entry zone.
Price respects the retested level and moves in the new direction — confirming the transition is complete and the market flow has officially changed.
Risk Management is equally if not MORE important than Technical Analysis. Losing is part of trading. The only thing you truly control is how much you lose per trade.
Know exactly how much money you stand to lose before you enter. Calculate your lot size based on your account balance, risk percentage, and stop loss distance.
Fully detach from the money. Be comfortable losing that set amount. If a loss will hurt you emotionally, the position is too big.
Q1: What is the maximum % of your account you should risk on ONE trade?
Trading is 20% Technical — 80% a Mind Game. Most courses skip this. We don't. Your mindset will take you further than any strategy ever will.
Reading charts and identifying setups. Built through screen time and backtesting.
Rules for how much you lose. The only thing you truly control in any market.
Your mental approach. Consistency here separates profitable traders from everyone else.
Drives decisions that feel right but are too risky. Leads to oversizing trades, revenge trading, and overtrading to "make money quickly."
After losses, stops you from taking valid setups. You doubt your system and miss your best opportunities because past losses cloud your judgment.
Trading is like being dropped in the middle of the desert with no instructions. From birth we were told what to do — by parents, teachers, bosses. Trading is the complete opposite. You are 100% responsible for every decision. Many people aren't ready for that. Are you?
Your primary expectation from analysis. Example: "Market is bullish, I'll look to buy from the next price floor."
Your backup if Plan A is invalidated. Example: "If the floor is violated, I'll wait for a retest and look to sell." Planning for both means you can never truly be wrong.
Every journey needs a map. Your Trading Plan is a concise set of rules governing how you find trades, enter, manage, and exit. 99% of traders don't have one. That's a major reason most traders fail.
An edge means your rules shift the probability of a trade going in your favour from 50/50 to 60/40 or better. The only way to find your edge: backtest. Study historical price action. That's exactly how UrAvgTrader developed his system.
A Trade Journal holds you accountable for every decision. Document every trade — winners, losers, and missed opportunities. It reveals patterns in your habits, good and bad.
Create a private Telegram channel with only you as subscriber. Post your analysis before the trade. Reply with results afterward. Cloud-backed, searchable, always accessible — the most efficient journal you can build for free.
Follow this 6-step process every single time you sit down to trade. No shortcuts.
Is the market Bullish or Bearish? Check the 2hr, 4hr, and 8hr timeframes. This sets your bias: Buy Only or Sell Only.
Is the market forming HH's and HL's (bullish) or LH's and LL's (bearish)? Confirm it's trending — avoid choppy conditions.
Is price on an Impulse Leg or a Retracement Leg? Wait for the retracement to end — enter at the start of the next Impulse.
Where is the next Broken Floor/Ceiling, 70.5 Fib level, or 80 EMA interaction? No APS = No Entry. Period.
When price reaches your APS, look for Pattern A (Test) or Pattern B (Rejection). This is your green light to enter.
Know your exact dollar risk before you press Buy or Sell — calculate your lot size every time, no exceptions. Then trade your plan — and leave it alone.
"Plan the Trade — Trade the Plan"
The UrAvgTrader system is concise but effective. The knowledge is simple — the application requires discipline, patience, and time. You can have all the knowledge in the world about trading but if you can't apply it systematically, you are set up for failure.
Study this system. Backtest it. Apply it. And when you're ready to go deeper — the Advanced Guide is waiting.
"The Trade either Works or it Doesn't Work. Either way, MOVE ONTO the next Trade."
Trading is Simple — but it is NOT Easy.
Trading with CFDs, synthetic indices, and similar instruments is not suitable for many people and carries significant risk. All content here is for educational purposes only and does not constitute investment advice. Never trade with money you cannot afford to lose. Past performance gives no indication of future results. UrAvgTrader accepts no liability for trading losses incurred.