The UrAvgTrader Complete Guide to Synthetic Indices

Section 1

My Trading Story

Every trader has a turning point. Mine was the day I accidentally stumbled into Volatility Indices — and I never looked back.

You probably knew me as a Forex trader. I began my trading journey with currencies, then expanded into Stocks, Crypto, and Indices — sharpening my skills as an analyst across every asset class I touched. But my journey took a defining turn the day I was introduced to Volatility Indices.

What I found was something that re-ignited everything I loved about trading. The pure price action. The 24/7 access. The lack of manipulation. I took a step back from Forex and spent months backtesting, studying, and applying different strategies specifically to VIX — until I built a trading system that consistently delivered high-probability setups.

That system became the foundation of everything I share. This guide is the upgraded version — fused with cutting-edge educational material from Deriv — to give you the most complete starting point I've ever put together. Whether you're brand new to trading or coming in with experience, there's something here built specifically for you.

Welcome. Let's build your edge. — UrAvgTrader

📌

How to Use This Guide

This guide is organized in tiers. Look for the Beginner and Intermediate labels throughout. Beginners should read start to finish. If you already know the basics, jump straight to the VIX Strategy section.

Section 2

Beginner

What Are Synthetic Indices?

If you've never traded Synthetic Indices before, this section will give you a clear, complete understanding of what they are and why they're special.

The Simple Definition

Synthetic Indices are simulated financial instruments that mimic the behavior of real-world markets — without being tied to real-world events. They move through a cryptographically secured random number generator that is independently audited for fairness. No bank. No central government. No manipulation from big institutional players.

Think of them as markets engineered to behave like real markets — with real patterns, real trends, and real opportunities — but without the noise of economic news or political disruption.

💡

Why This Matters to You

Because the price generator is a computer program with no outside interference, pure price action concepts — support and resistance, Fibonacci levels, breakout patterns — actually work here. The market respects structure. That's what makes VIX a trader's dream.

Key Benefits at a Glance

⏰ 24/7/365

Trade any time — weekends, holidays, Christmas. No session times, no gaps. Your schedule is the only limit.

🛡️ No Manipulation

Powered by a certified RNG — no hedge funds, no banks, no institutions moving price against your position.

📈 Uniform Volatility

Unlike Forex, volatility stays consistent. No NFP spikes. No overnight gaps. What you see is what you trade.

💵 Low Entry Barrier

Start with as little as $5 on a real account, or practice risk-free with $10,000 in virtual funds on a demo.

⚡ Pure Price Action

Support and resistance levels are respected. Fibonacci levels work. Break-and-retest setups are clean.

🎯 Tight Spreads

Among the tightest spreads in the industry — your orders execute with precision and your targets get hit cleanly.

Honest Disadvantages

⚠️

Know the risks before you trade.

Some indices (especially VIX75 and VIX100) are extremely volatile and can move fast enough to wipe an account. Large stop losses are required on higher-volatility indices. The 24/7 nature can encourage overtrading in traders who lack discipline. And Deriv sometimes goes offline for scheduled maintenance — always stay informed via their official channels.

Section 3

Beginner

Types of Synthetic Indices

Deriv offers a wide range of Synthetic Indices. Here's your complete map of what's available — and what to focus on as a beginner.

⭐ Volatility Indices — The Foundation

These are the primary instruments covered in this guide — and the ones I personally trade. They simulate real-world market volatility at different intensities, giving you full control over how much risk you take on.

Index	Volatility Level	Tick Speed	Min Lot Size	Best For
VIX 10	10% volatility	2 seconds	0.005	Complete beginners
VIX 25 (1s) — "25s"	25% volatility	1 second	0.005	Beginners → Intermediate
VIX 50 (1s) — "50s"	50% volatility	1 second	0.005	Intermediate
VIX 75 — "R75"	75% volatility	2 seconds	0.001	Intermediate–Advanced
VIX 100 (1s) — "100s"	100% volatility	1 second	0.10	Intermediate–Advanced
VIX 250 (1s)	250% volatility	1 second	0.001	Experienced only

💡 The (1s) versions update every second — faster action, more volatile. Normal versions update every 2 seconds. Same volatility number does NOT mean same price movement.

Other Synthetic Instruments

💥 Crash & Boom Indices

Crash Indices are programmed for sudden drops; Boom Indices for rapid surges. The number (300, 500, 1000) indicates how frequently a crash or boom occurs on average per tick. Great for traders who like to ride strong directional moves.

↔️ Drift Switch Indices (DSI)

These shift between bullish, bearish, and sideways trends at set intervals (10, 20, or 30 minutes on average). Ideal for swing traders who use stop-and-reverse strategies.

📐 Step Indices

Price moves in fixed steps (0.1 to 0.5) with each tick — no wild swings. Predictable and steady. Great for trend-following strategies using moving averages.

📊 Range Break Indices

Price bounces between upper and lower boundaries, with sudden breakouts creating a new range. Breakouts happen every 100 or 200 boundary hits on average.

⚡ DEX Indices

Spike dramatically every 15, 30, or 45 minutes on average — with smaller price moves in between. High-risk, high-reward for experienced traders who time the spikes.

🐢 Daily Reset Indices

Simulate simplified bull and bear market trends. Each index resets daily to a baseline — useful for traders who want a fresh market every day.

🎯

My Recommendation

Start with VIX 10 or VIX 25 until you're comfortable with how these markets move. Then step up to VIX 75 and the 1-second indices. Never start on VIX 250 — it moves so fast that even experienced traders can get caught off guard.

Section 4

Beginner

Synthetic Indices vs Forex

If you're coming from Forex, here's the direct comparison so you know exactly what's different and what stays the same.

Feature	Synthetic Indices	Forex
Market Hours	✓ 24/7/365	24/5 (weekdays only)
Volatility	✓ Constant, predictable	Variable — depends on news, sessions
Manipulation Risk	✓ Very low (RNG-based)	High — banks, institutions, HFT
News Events Impact	✓ None	Major impact (NFP, FOMC, CPI, etc.)
Price Action Clarity	✓ Very clean S/R levels	Moderate — fake outs are common
Broker Options	Deriv only	✓ Many brokers
Lot Size Complexity	Different per index	✓ Standardized
Spreads	✓ Very tight (as low as 1 pt)	Varies by broker and pair
Min Deposit	✓ As low as $5	Varies — often $100+
Weekend Trading	✓ Yes	✗ No

📝

The Bottom Line

If you know how to read price action and trade Forex, you already have the foundation to trade Synthetics — and you'll likely find it cleaner. The same skills apply. The main difference is the absence of fundamental noise, which actually makes technical analysis more reliable here than in any other market I've traded.

Section 5

Beginner

Getting Started with Deriv

Deriv is the only broker that offers Synthetic Indices — and they've been doing it for over 25 years. Here's how to get set up.

Open a Demo Account — Go to Deriv.com and create a free demo account. You'll get $10,000 in virtual funds that reset whenever you need them. Use this to learn the platform before risking real money.
Set Up MetaTrader 5 (MT5) — Download MT5 from the App Store, Google Play, or use Deriv MT5 Web directly in your browser (no download needed). MT5 is the primary platform for CFD trading on Volatility Indices.
Connect to the Deriv Server — When setting up MT5, make sure you connect to the Deriv-specific server, not the default MetaQuotes server. Deriv provides the account server details when you register.
Set Up TradingView Charts — For chart analysis, Deriv has a special TradingView integration at Deriv X (deriv.com/derivx). This gives you access to clean VIX charts with all your favorite tools. I personally use this for all my chart analysis.
Fund a Real Account — When you're ready to trade live, you can start with as little as $5. Go through the KYC (Know Your Customer) process — it's online and usually takes under 10 minutes.

📊 Deriv MT5

The main CFD trading platform. Powerful, customizable, and familiar if you've used MT4 before. Available on web, desktop, iOS, Android, and Huawei.

CFD TradingChartsIndicators

🖥️ Deriv Trader

The primary platform for Digital Options. Simple, web-based, and available on any device. Great for beginners exploring Options on Synthetics.

OptionsWeb-BasedMobile

📈 Deriv X + TradingView

A powerful web platform that integrates TradingView charts with direct trade execution — your best tool for chart analysis and multi-window setups.

TradingViewCFDsMulti-Chart

🔄 Deriv cTrader

Great for copy trading and automated strategies. Lets you follow proven traders, share your own trades for commission, and run trading bots via cTrader Algo.

Copy TradingBotsCommunity

🎬

Watch Before You Trade

I've put together YouTube tutorials walking through the platform setup step by step. Head to YouTube: UrAvgTrader for the "How to Get Started with VIX" video — it covers everything visually in a way that this guide can't fully replicate.

Section 6

Beginner

Reading Charts & Timeframes

Before any strategy, you need to understand how to read a chart. This is the language of the market — and once you speak it, everything else makes sense.

Candlestick Charts — The Trader's Language

Candlestick charts are the industry standard for a reason. Each candlestick tells you four things about price in a given time period: where it opened, where it closed, the highest point it reached, and the lowest point it touched.

🟢 Bullish (Green) Candle

Price closed higher than it opened. Open is at the bottom of the body, close is at the top. The wicks show how high and low price traveled.

🔴 Bearish (Red) Candle

Price closed lower than it opened. Open is at the top of the body, close is at the bottom. Long wicks indicate rejection by buyers or sellers.

Choosing Your Timeframe

The same market can look completely different across different timeframes. Use higher timeframes for bias and structure, and lower timeframes for entries.

Timeframe	What It Shows	Best Used For
1 Minute (M1)	Very short-term movements, lots of signals	Scalping entries; noisy on its own
5–15 Minute	Short-term structure, good entry timeframe	Entry confirmation, scalp/day trading
30 Min – 1 Hour	Medium-term structure and trend	Entry timing on swing setups
4 Hour	Broader trend direction, fewer signals	Swing trade structure and analysis
Daily	Overall trend, major S/R levels	Directional bias, key levels
Weekly	Long-term market picture	Major structure zones for all traders

🔍

Multi-Timeframe Analysis (MTF)

My approach: Identify the trend on the 1hr or 4hr → Find the setup level on the 30m → Enter on the 5m or 15m when confirmation appears. Never trade just one timeframe in isolation.

How Markets Move — The Three States

Every market, including Synthetic Indices, cycles through three states. Learning to identify which state you're in is the foundation of every good trade decision:

📈

Uptrend

Series of higher highs and higher lows. Look for buy setups. Ride the impulse legs upward.

📉

Downtrend

Series of lower highs and lower lows. Look for sell setups. Trade the impulse legs downward.

➡️

Sideways Range

Price oscillates between support and resistance. Trade the boundaries or wait for a breakout.

Uptrend, Sideways Trend, and Downtrend diagram

Section 7

Beginner + Intermediate

10 Chart Patterns Every Trader Must Know

Chart patterns are the roadmap of trader psychology. These 10 formations repeat across every market — including all Synthetic Indices — and knowing them gives you a structured way to plan entries, exits, and stops.

⚠️

A Pattern Is a Guide, Not a Guarantee

These patterns have historically predicted certain movements, but no pattern works 100% of the time. Use them as one layer of your decision-making — never as the only reason to enter a trade. Always protect yourself with a stop loss.

Reversal Patterns — Trend Changers

🏔️ Bearish Reversal

Head & Shoulders▲ view

Three peaks — large middle "head" with two smaller "shoulders." Break below the neckline signals a downward reversal. Target: distance from head to neckline.

🏔️ Bullish Reversal

Inverse Head & Shoulders▲ view

The upside-down version. Three troughs — large middle "head" with two smaller "shoulders." Break above neckline signals an upward reversal.

W Bullish Reversal

Double Bottom▲ view

Two failed attempts at a support level form a "W" shape. Price then breaks above the neckline and trends upward. Buy just above the neckline.

M Bearish Reversal

Double Top▲ view

Two failed attempts at a resistance level form an "M" shape. Price breaks below the neckline and trends downward. Short below the neckline.

🌅 Bearish Reversal

Rounding Top▲ view

Market slowly loses momentum and forms a smooth arc downward. Each high is lower than the last. Break below the neckline confirms a reversal.

🌄 Bullish Reversal

Rounding Bottom▲ view

Market forms a smooth U-shape base. A series of higher lows followed by a breakout above the cup rim confirms the bullish reversal.

Continuation Patterns — Trend Extenders

☕ Bullish Continuation

Cup & Handle▲ view

A rounding bottom (the "cup") followed by a small consolidation dip (the "handle"). Breakout above the handle rim signals a strong bullish continuation.

△ Bilateral Breakout

Ascending Triangle▲ view

Horizontal resistance + rising support = price being compressed. Breakout typically goes in the direction of the prior trend. Enter just above/below the resistance line.

▽ Bilateral Breakout

Descending Triangle▲ view

Flat support + falling resistance = compressed price range. The opposite of an ascending triangle. Breakout confirms the direction. Set target = triangle height.

↗️ Bearish Reversal

Rising Wedge▲ view

Price makes higher highs, but with smaller waves — momentum is fading. Eventually breaks downward. Stop above the wedge; target = height of the wedge start.

↘️ Bullish Reversal

Falling Wedge▲ view

Price contracts lower but with narrowing range — selling pressure is decreasing. Usually breaks upward. Caution: Often confused for a bearish pattern — it isn't.

💡

Pattern + Volume + Structure = High Probability

A chart pattern alone is not enough. The best setups occur when a pattern aligns with the broader trend, appears at a key support or resistance level, and is confirmed by your indicators (EMA, Stochastic). Stack confirmations, not just patterns.

Section 8

Intermediate

The Technical Toolkit

These are the exact indicators I use in my VIX Trading Strategy — explained clearly with the settings I've personally tested and validated on Volatility Indices.

🧠

Master Price Action First

Every indicator in this section is a confirmation tool — not a signal generator. Price action and market structure always come first. The indicators help you enter with more confidence and avoid bad timing. Never take a trade based on an indicator alone.

📐 Price Action & Market Structure

The most important skill in trading. Market structure refers to how price moves from one point to the next in a sequence of impulse moves and retracements.

Uptrend: Higher High (HH) → Higher Low (HL) → Higher High (HH) — buy on the HL formations.
Downtrend: Lower High (LH) → Lower Low (LL) → Lower High (LH) — sell on the LH formations.
Break and Retest: Price breaks a support/resistance level, then returns to "retest" it before continuing. This is the cleanest, most reliable pattern on VIX.

💡

On Synthetic Indices, support and resistance levels are respected far more consistently than in Forex because there's no institutional manipulation breaking them out of the blue.

📏 Fibonacci Retracement

The Fibonacci tool identifies where price is likely to retrace to after an impulse move — the ideal entry zone for the next leg in the direction of the trend.

Key Levels: 23.6%, 38.2%, 50%, 61.8%, 70.5% My Focus: 61.8% and 70.5% — the "OTE" (Optimal Trade Entry) zone

How to apply correctly: The Fib tool should ONLY be drawn from a clear Higher Low (HL) to a new Higher High (HH) in an uptrend — or from a Lower High (LH) to a new Lower Low (LL) in a downtrend. Applying it to anything else is improper and the levels won't be respected.

⚠️

If there's no new HH or LL formed — the Fib tool is NOT applicable. I've seen traders get burned applying Fibs to equal lows or sideways ranges. Structure points must be valid.

📊 Exponential Moving Average (EMA)

My Setting: 80 EMA | Timeframe: 30m / 1hr and above

The 80 EMA is my go-to trend indicator for VIX. It acts as both a trend filter and a dynamic support/resistance level.

Price above 80 EMA + EMA pointing up → Look for buy setups only.
Price below 80 EMA + EMA pointing down → Look for sell setups only.
Price crosses the EMA: When price violates the EMA, the immediate retest of the EMA on the 30m/1hr is a high-probability entry.
EMA + Fib 70.5: When the 70.5 Fib level aligns with the 80 EMA, that's a premium entry zone. Don't miss it.

🌀 Stochastic Oscillator

Inputs: 14, 3, 3 | Upper Limit: 90 | Lower Limit: 10

The Stochastic tells you when a current market phase (impulse or retracement) might be coming to an end — identifying overbought and oversold conditions.

Buying setup: Price above EMA, in retracement phase. Stochastic at 10 or below → when it crosses upward → enter buy.
Selling setup: Price below EMA, in retracement phase. Stochastic at 90 or above → when it crosses downward → enter sell.

Use in conjunction with the EMA and price action — not in isolation.

📉 RSI (Relative Strength Index)

Standard Setting: 14-period RSI | Overbought: 70 | Oversold: 30

The RSI measures how fast and far price has moved relative to itself. Useful for confirming when a reversal might be near.

RSI at 30 or below → Oversold → potential buy (confirm with price action).
RSI at 70 or above → Overbought → potential sell (confirm with price action).
For Digital Options: buy (Rise/Call) when RSI is at 30, sell (Fall/Put) when RSI is at 70+.

Section 9

Intermediate

Trade Execution — CFDs & Options

There are two main ways to trade Synthetic Indices on Deriv. Understanding both gives you flexibility in how you approach the market.

📊 CFDs (Contracts for Difference)

A CFD lets you profit from the price movement of a Synthetic Index without owning the underlying asset. You go long (buy) if you think price will rise, or short (sell) if you think price will fall. Your profit or loss is the difference in price × your lot size × position.

CFDs have no fixed expiry date and use leverage — giving you the ability to control large positions with small capital. This is what I trade primarily on MT5.

MT5Deriv XcTrader

🎯 Digital Options

Options are fixed-risk contracts where you predict an outcome and receive a fixed payout if you're right. Your maximum risk is always your stake — no margin calls, no surprises.

Options can be as short as 1 tick or as long as days. They're excellent for beginners because the risk is defined upfront every single time.

Deriv TraderFixed RiskSmartTrader

Options Types Explained

📊 Rise / Fall

The simplest Option. Predict whether the exit price will be higher (Rise) or lower (Fall) than the entry price at the end of the contract period. Great starting point for beginners.

🎯 Higher / Lower

Choose a target price (barrier) and predict whether the market will be above or below it at expiry. Gives you more precision in entry targeting.

👆 Touch / No Touch

Predict whether price will or won't touch a specified barrier level at any point during the contract. Higher barriers = higher potential payouts but lower probability.

💹 Accumulator Options

Your favorite for limited-risk, high-reward scenarios. Your stake accumulates with up to 5% compounding growth per tick — as long as price stays within a specified range. The skill is knowing when to exit before the barrier is breached. Once triggered, you lose your stake + accumulated gains.

⚡ Multipliers

Select a multiplier (up to 2,000×) and predict if price goes up or down. Your payout is amplified by the multiplier — and your losses are limited to your initial stake. Includes stop loss, take profit, and deal cancellation features.

CFD Order Types

Order Type	What It Does	Use When
Market Order	Executes immediately at current price	You want to enter right now
Buy Limit	Buy at a price lower than current market	Price expected to dip before rising
Sell Limit	Sell at a price higher than current market	Price expected to rally before falling
Buy Stop	Buy at a price above current market	Breakout strategy — buy on new highs
Sell Stop	Sell at a price below current market	Breakout strategy — sell on new lows
Take Profit (TP)	Auto-closes trade at your profit target	Always — lock in your gains automatically
Stop Loss (SL)	Auto-closes trade to limit losses	Always — protect your capital

Section 10

Intermediate

The UrAvgTrader VIX Trading Strategy

This is the strategy I developed through years of backtesting and live trading. It's built on price action as the foundation, supported by a small stack of confirming tools — nothing excessive, nothing unnecessary.

The 6 Elements of the Strategy

Pure Price Action — The foundation. Read the market structure. Identify impulse legs and retracements. Find break-and-retest setups. This always takes precedence over every indicator.
Market Structure (HH, HL, LH, LL) — Understand where the market is in its cycle. Only trade in the direction of the confirmed trend.
Fibonacci Retracement (70.5 OTE) — Apply the Fib tool from a valid HL to a new HH (or LH to LL). Look for price to retrace to the 61.8–70.5 zone before entering.
80 EMA — Confirms the trend direction and acts as dynamic support/resistance. Price above EMA = buy bias. Price below EMA = sell bias.
Stochastic Oscillator (14, 3, 3) — Confirms when a retracement phase might be ending. Used to time entries when price is at key levels.

🔑

The Golden Rule of This Strategy

You don't need all 6 elements on every trade. Price action alone is enough for advanced traders. The indicators are there to confirm what you already see in price action — not to replace it. When all elements align, that's your highest-probability setup.

3 Core Areas of Price Sensitivity

All entries and exits are clustered around these three zones. When price reaches one of these areas, that's where you start watching for your setup:

📊

Price Floors & Ceilings

Broken support/resistance levels that are retested — the classic break-and-retest zones.

📏

The 80 EMA

Dynamic support in uptrends, dynamic resistance in downtrends. Price often reacts sharply here.

📐

70.5 Fibonacci Level

The OTE (Optimal Trade Entry). When this aligns with the EMA, the probability goes through the roof.

Section 11

Intermediate

The 4 Indices I Trade

I've traded across all 10 Volatility Indices and settled on these four based on how well my strategy applies to each one. Focus beats breadth — always.

Volatility 25 (1s) Index — "25s"

Min Lot: 0.005

Rec. SL: 15–25 pts

Target R:R: 1:4, 1:6, 1:10

Feels Like: GBPJPY

One of my personal favorites. Moves relatively fast and has the kind of energy that GBPJPY traders will immediately recognize. It respects price action beautifully — the break-and-retest pattern is extremely prevalent here.

Key Observations: 25s prefers to break out and sometimes runs hard without immediately retesting — the retest can come a day later. Fibonacci works best on the 2hr–4hr timeframe for swing setups. For entries, use the 15m–30m with EMA crossover confirmation from the 1hr. In strong trends, it breaks and retests HL points (uptrend) or LH points (downtrend).

Volatility 50 (1s) Index — "50s"

Min Lot: 0.005

Rec. SL: 20–30 pts

Target R:R: 1:4, 1:6, 1:10

A newer favorite that replaced VIX100 in my rotation. Very similar in personality to 25s, which makes it easy to analyze once you've learned one. The profit potential here is excellent.

Key Observations: Similar to 25s — price action is primary. Loves to break and retrace to the 61.8–70.5 Fib zone on lower timeframes. When it trends, it can trend hard for up to a week. Never fight the trend on 50s. Focus on minor ceilings and floors broken and retested around the 70.5 area.

Volatility 100 (1s) Index — "100s"

Min Lot: 0.10

Rec. SL: 100–150 pts

Target R:R: 1:4, 1:6, 1:10

My foundation index — the one I developed the original strategy on. Note the minimum lot size of 0.10, which makes it less ideal for small accounts, but the profit potential on each setup is proportionally strong.

Key Observations: 100s loves to break out and retrace hard to the 61.8–70.5 Fib area. These retracements offer sharp, clean entry opportunities. It can slow to a crawl and range for extended periods — this is usually a precursor to a breakout, so patience is required. Once a daily zone breaks, 100s tends to move from one level to the next with clean structure.

Volatility 75 Index — "VIX75" / "R75" ⭐

Min Lot: 0.001

Rec. SL: 50–100 pts

Target R:R: 1:4, 1:6, 1:10

The flagship. The most popular Volatility Index in the world — and for good reason. VIX75 moves with conviction and when it trends, it tends to stay trending. It was the first VIX Index I ever traded, and it still holds a special place in my rotation.

Key Observations: VIX75 is forever bullish on the higher timeframe — always bias toward longs on the big picture. The simplest strategy here is the Break and Retest. Capitalize on current momentum for short-term trades. Sometimes it ranges and coils before exploding — be patient and don't force entries in choppy conditions.

⚠️

Respect VIX75. When it moves, it moves fast. The minimum lot size has been reduced from 0.01 to 0.001 because accounts were getting wiped. Always size your position carefully before entering a trade on R75.

Section 12

Intermediate

Advanced Strategies

Once you've got the fundamentals locked in, these strategies will help you expand your edge and diversify how you approach the market.

📉 Moving Average Crossover System

A systematic approach to trend following. Use a 6 EMA and 21 EMA on a 1-minute chart for short-term signals, or adapt the same system to any timeframe.

Buy signal: 6 EMA crosses above 21 EMA → enter long.
Sell signal: 6 EMA crosses below 21 EMA → enter short.
This is a "Stop and Reverse" (SAR) system — always in the market, switching from long to short on every crossover.
Not every trade wins, but the winning trades should outweigh the losses when combined with good risk management.

📊 Simple Swing Trading System (SMA + RSI)

Ideal for traders who don't want to sit at a screen all day. Use the 1hr or 4hr timeframe with:

50-period SMA — Identifies the overall trend.
20-period SMA — Tracks shorter-term price direction.
RSI (14) — Confirms momentum without overbought/oversold extremes.

Buy: 20 SMA crosses above 50 SMA + RSI above 50 but below 70 → enter on a pullback to the 20 SMA.

Sell: 20 SMA crosses below 50 SMA + RSI below 50 but above 30 → enter on a bounce to the 20 SMA.

🐢 Donchian Channel Breakout (4-Week Rule)

One of the oldest systematic strategies — used by the legendary "Turtle Traders" in the 1980s. Works on Synthetic Indices surprisingly well.

Buy when price makes a new 4-week (or 20-period) high.
Sell/Short when price makes a new 4-week (or 20-period) low.
Available in TradingView under Indicators → Donchian Channels.
Works best on higher timeframes (Daily, 4hr). Can also be adapted to 1-minute charts for Digital Options.

🤖 Automated Trading with Deriv Bot

Deriv offers a built-in browser-based trading bot that requires zero coding skills. You can set parameters, use ready-made templates, and automate your Option strategies.

You can also use cTrader Algo to automate CFD strategies — including some of the systems covered in this guide — and let them run 24/7 without manual intervention.

⚠️

Always test automated strategies on a demo account first. A bot that runs profitably in backtesting can still fail in live markets. Monitor your bots regularly — don't just set and forget without review.

Section 13

Every Trader

Risk Management — The Real Edge

You can have the best strategy in the world and still blow your account without this. Risk management is not optional. It is the difference between trading for years and burning out in weeks.

🔴

Losing is part of the game — but blowing your account is not.

The goal of risk management is not to win every trade. It's to ensure that losing trades don't cause you so much financial or emotional damage that you can't recover. A few well-managed profitable trades can outweigh multiple small losses.

Core Risk Rules

📏
Risk only 1–5% per trade. If your account is $1,000, your maximum loss on any single trade is $10–$50. Beginners should stick to 1–2% while building consistency; experienced traders can scale up to 5% on high-confidence setups. This allows you to survive a losing streak and stay in the game.
🛡️
Always use a Stop Loss. No exceptions. Even if you "know" the trade will work. A CFD without a stop loss can wipe your entire account in one move on a volatile index like VIX75 or VIX100.
🎯
Trade Risk:Reward of 1:4 or better. My standard targets on all VIX indices are 1:4, 1:6, and 1:10. That means even winning 30% of your trades can still make you profitable if your wins are 4× or more your losses.
🧮
Calculate your lot size carefully. VIX lot sizes are not standardized like Forex — 0.10 on VIX75 behaves like a standard 1.00 lot in Forex. Always determine the correct lot size based on your account balance and risk percentage before entering.
🧘
Set trading limits for yourself. Deriv has built-in options to set daily loss limits and trading volume caps. Use them. Overtrading due to greed or revenge trading after a loss is how most accounts get wiped.
🔄
Separate wins from losses emotionally. Your trading psychology is just as important as your system. Stay level-headed whether you're on a winning streak or a losing run. The market doesn't care about your feelings — your discipline has to.

R:R Reference — VIX Indices

Index	Min Lot	Recommended SL	Target R:R
25s	0.005	15–25 points	1:4 / 1:6 / 1:10
50s	0.005	20–30 points	1:4 / 1:6 / 1:10
100s	0.10	100–150 points	1:4 / 1:6 / 1:10
VIX75 (R75)	0.001	50–100 points	1:4 / 1:6 / 1:10

💡

The Psychology of Winning

Ask yourself: Do you want to be right, or do you want to make money? Those aren't the same thing. Most new traders need to be right more often than wrong — but a trader who is right 30% of the time and uses 1:6 R:R is far more profitable than one who is right 70% of the time taking 1:0.5 R:R. Master your exits as much as your entries.

Section 14

Quick Reference Glossary

Ask Price: The price you buy at. Also called the offer price.
Bid Price: The price you sell at. Opposite of the ask price.
Bullish: A market that is rising, or a positive view on price direction.
Bearish: A market that is declining, or a negative view on price direction.
Breakout: A sustained move through a key support or resistance level.
CFD: Contract for Difference. Trade price movements without owning the asset.
EMA: Exponential Moving Average. Gives more weight to recent price data.
Fibonacci Retracement: A tool that identifies potential support/resistance levels based on Fibonacci ratios.
Higher High (HH): When price makes a new high above the previous high — confirms uptrend.
Higher Low (HL): When price makes a new low above the previous low — confirms uptrend structure.
Lower High (LH): When price makes a new high below the previous high — confirms downtrend.
Lower Low (LL): When price makes a new low below the previous low — confirms downtrend structure.
Leverage: Borrowed capital that lets you control a larger position than your deposit.
Lot Size: The size of your trade. Varies per Synthetic Index — always calculate based on your account balance and risk percentage.
Margin: The deposit required to open and maintain a leveraged CFD trade.
Market Structure: How price moves in a sequence of impulse moves and retracements (HH/HL/LH/LL).
OTE: Optimal Trade Entry. The 61.8–70.5 Fibonacci zone — the sweet spot for retracement entries.
Price Action: Trading based purely on price movement and chart patterns, without relying on indicators.
R:R (Risk:Reward): The ratio of your potential loss to your potential gain. Always aim for 1:4 or higher.
RSI: Relative Strength Index. Measures overbought/oversold conditions. Range: 0–100.
SMA: Simple Moving Average. Gives equal weight to all data points in the period.
Spread: The difference between the bid and ask price. The broker's built-in cost per trade.
Stop Loss (SL): An order that automatically closes your trade if price moves against you by a set amount.
Support & Resistance: Price levels where buying (support) or selling (resistance) has historically been strong.
Synthetic Indices: Simulated financial instruments powered by a certified RNG — not real-world market data.
Take Profit (TP): An order that automatically closes your trade when your profit target is reached.
Tick: The smallest price movement in the market. Synthetic Indices move in ticks.
Uptrend / Downtrend: A sequence of higher highs/lows (uptrend) or lower highs/lows (downtrend).
VIX: Volatility Index. Used informally to refer to all Volatility Indices on Deriv.

VIX Ultimate Guide

The Complete Guide to TradingSynthetic Indices

📖 What's Inside This Guide

My Trading Story

What Are Synthetic Indices?

The Simple Definition

Key Benefits at a Glance

⏰ 24/7/365

🛡️ No Manipulation

📈 Uniform Volatility

💵 Low Entry Barrier

⚡ Pure Price Action

🎯 Tight Spreads

Honest Disadvantages

Types of Synthetic Indices

⭐ Volatility Indices — The Foundation

Other Synthetic Instruments

💥 Crash & Boom Indices

↔️ Drift Switch Indices (DSI)

📐 Step Indices

📊 Range Break Indices

⚡ DEX Indices

🐢 Daily Reset Indices

Synthetic Indices vs Forex

Getting Started with Deriv

📊 Deriv MT5

🖥️ Deriv Trader

📈 Deriv X + TradingView

🔄 Deriv cTrader

Reading Charts & Timeframes

Candlestick Charts — The Trader's Language

🟢 Bullish (Green) Candle

🔴 Bearish (Red) Candle

Choosing Your Timeframe

How Markets Move — The Three States

Uptrend

Downtrend

Sideways Range

10 Chart Patterns Every Trader Must Know

Reversal Patterns — Trend Changers

Head & Shoulders▲ view

Inverse Head & Shoulders▲ view

Double Bottom▲ view

Double Top▲ view

Rounding Top▲ view

Rounding Bottom▲ view

Continuation Patterns — Trend Extenders

Cup & Handle▲ view

Ascending Triangle▲ view

Descending Triangle▲ view

Rising Wedge▲ view

Falling Wedge▲ view

The Technical Toolkit

📐 Price Action & Market Structure

📏 Fibonacci Retracement

📊 Exponential Moving Average (EMA)

🌀 Stochastic Oscillator

📉 RSI (Relative Strength Index)

Trade Execution — CFDs & Options

📊 CFDs (Contracts for Difference)

🎯 Digital Options

Options Types Explained

📊 Rise / Fall

🎯 Higher / Lower

👆 Touch / No Touch

💹 Accumulator Options

⚡ Multipliers

CFD Order Types

The UrAvgTrader VIX Trading Strategy

The 6 Elements of the Strategy

3 Core Areas of Price Sensitivity

Price Floors & Ceilings

The 80 EMA

70.5 Fibonacci Level

The 4 Indices I Trade

Volatility 25 (1s) Index — "25s"

Volatility 50 (1s) Index — "50s"

Volatility 100 (1s) Index — "100s"

Volatility 75 Index — "VIX75" / "R75" ⭐

Advanced Strategies

The Complete Guide to Trading
Synthetic Indices