If you've spent any time in trading communities recently — especially in Africa — you've probably heard people talking about synthetic indices. Some traders swear by them. Others avoid them completely. And most beginners have no idea what they actually are.
In this post, we're going to cover everything. What synthetic trading is, how it works, the different types of synthetic instruments, how it compares to forex, and which platforms we recommend for trading synthetics.
By the end, you'll have a clear picture of whether synthetic trading is something worth exploring — or something to approach with caution.
What Is Synthetic Trading?
Synthetic trading refers to trading artificially generated financial instruments that simulate real market conditions — but are not tied to any actual underlying asset like a currency, stock, or commodity.
Instead of trading the real EUR/USD forex pair (which is influenced by economic data, central banks, and global events), you are trading a computer-generated market that mimics price movement using mathematical algorithms and random number generators.
The key word here is synthetic — these markets are created, not naturally occurring. They are designed to behave like real markets — with trends, volatility, and price action — but they operate independently of real-world economic events.
Synthetic indices were pioneered and popularized by Deriv (formerly Binary.com) and have since gained massive traction, particularly among traders in Africa, Asia, and other emerging markets.
How Do Synthetic Indices Work?
Synthetic indices are generated by a proprietary random number generator (RNG) that is independently audited to ensure fairness and randomness. The algorithm produces price movements that:
- Follow realistic volatility patterns
- Include trending and ranging behavior
- Simulate crash and boom scenarios
- Operate 24 hours a day, 7 days a week — including weekends
Because the price is generated by an algorithm rather than real-world supply and demand, synthetic markets are not affected by:
- Economic news releases (NFP, CPI, interest rate decisions)
- Central bank interventions
- Geopolitical events
- Market manipulation by institutional players
This is both the biggest advantage and the biggest limitation of synthetic trading — and we'll come back to that.
Types of Synthetic Indices
There are several categories of synthetic instruments available on platforms like Deriv. Here are the main ones:
Volatility Indices
These simulate constant volatility levels. The number in the name refers to the average volatility percentage per year.
- Volatility 10 Index (V10) — low volatility, slower price movements, good for beginners
- Volatility 25 Index (V25) — moderate volatility
- Volatility 50 Index (V50) — medium-high volatility
- Volatility 75 Index (V75) — high volatility, fast price movement, very popular
- Volatility 100 Index (V100) — extremely high volatility, very fast-moving
Note: The V75 (Volatility 75 Index) is by far the most traded synthetic instrument globally. Its fast price movement and tight spreads make it attractive to active traders.
Crash & Boom Indices
These simulate markets that "crash" or "boom" at statistically random intervals.
- Crash 300, 500, 1000 — price generally trends upward but experiences sudden sharp drops (crashes) approximately every 300, 500, or 1000 ticks
- Boom 300, 500, 1000 — price generally trends downward but experiences sudden sharp spikes (booms) approximately every 300, 500, or 1000 ticks
These are unique instruments with no real-world equivalent and require a specific strategy to trade effectively.
Jump Indices
Jump indices combine regular volatility movements with occasional larger "jump" moves in either direction. Options include Jump 10, Jump 25, Jump 50, Jump 75, and Jump 100.
Step Index
The Step Index has a unique price structure — it moves in fixed increments, either up or down by the same amount each tick. This creates a very distinctive pattern compared to all other instruments.
Range Break Indices
These instruments trade within a defined range and "break out" of that range at statistically random intervals — simulating breakout trading conditions.
DEX Indices (Daily Expiry)
A newer category — these indices expire daily and are designed for shorter-duration positions.
The Two Platforms We Recommend for Synthetic Trading
1. Deriv (www.deriv.com)
Deriv is the home of synthetic indices — they created the market and remain the leading platform for synthetic trading globally.
Why we recommend Deriv:
- The widest selection of synthetic instruments available — Volatility, Crash/Boom, Jump, Step, Range Break indices and more
- Multiple trading platforms available — DTrader (simple), Deriv MT5, Deriv X (advanced)
- Independently audited RNG — pricing is fair and transparent
- Low minimum deposit — accessible for traders with limited starting capital
- Regulated and trusted — operating since 1999 under Binary.com before rebranding
- Fast withdrawals with multiple payment options including local African payment methods
Best for: Traders who want the full range of synthetic instruments and the deepest liquidity in the synthetic market.
2. Weltrade (www.weltrade.com)
Weltrade is an international forex and CFD broker that also offers a strong selection of synthetic indices alongside traditional forex pairs.
Why we recommend Weltrade:
- Offers synthetic indices alongside a full suite of forex pairs — ideal for traders who want both in one platform
- MetaTrader 4 and MetaTrader 5 available — familiar interface for traders already using MT4/MT5
- Competitive spreads on synthetic instruments
- Strong customer support
- Multiple account types suitable for different capital levels
- Supports local deposit and withdrawal options across Africa
Best for: Traders who want to trade both forex and synthetic indices from a single platform without switching between brokers.
Forex vs. Synthetic Trading — A Full Comparison
Now let's get to the comparison most traders want to see. How does synthetic trading really stack up against forex?
| Feature | Forex | Synthetic Indices |
|---|---|---|
| What you trade | Real currency pairs | Algorithm-generated instruments |
| Market hours | 24/5 (Mon–Fri) | 24/7 — including weekends |
| Affected by news | Yes — heavily | No — completely unaffected |
| Volatility | Varies by session | Constant and predictable by instrument |
| Spreads | Variable — can widen during news | Fixed or very stable |
| Minimum capital | Low | Very low — some start from $5 |
| Leverage | Up to 1:500 (broker dependent) | Up to 1:1000 on some platforms |
| Liquidity | Highest in the world | Platform-dependent (no external market) |
| Prop firm access | Yes — most prop firms trade forex | Very limited — most prop firms don't offer synthetics |
| Skill transferability | Global — skills apply everywhere | Limited — specific to synthetic platforms |
| Technical analysis | Applies fully | Applies — but patterns can be less reliable |
| Fundamental analysis | Critical | Irrelevant |
| Regulated market | Yes — globally regulated | Platform-regulated only |
| Weekend trading | Not available | Available — major advantage |
Key Differences Explained
1. News and Fundamentals
This is the most significant difference. In forex, a surprise interest rate decision or a major geopolitical event can move a currency pair 200+ pips in minutes. You need to understand and respect economic calendars, central bank decisions, and global risk sentiment.
In synthetic trading, none of this matters. The price is generated by an algorithm. An NFP report, a Fed rate hike, or a war in Eastern Europe has zero effect on the Volatility 75 Index. This makes synthetic trading simpler in one way — but it also means you miss out on the high-probability fundamental setups that experienced forex traders capitalise on.
2. Market Hours — The Weekend Advantage
Forex closes on Friday evening and reopens on Sunday evening. Synthetic indices run 24/7 — 365 days a year. For traders in Nigeria and across Africa who want to trade on Saturday morning or Sunday afternoon, synthetics are the only game in town.
This is one of the genuine, practical advantages of synthetic indices for African traders — you can trade whenever your schedule allows.
3. Volatility — Predictable vs. Dynamic
In forex, volatility changes depending on the trading session (London, New York, Tokyo), news events, and market sentiment. You need to adapt your strategy to current conditions.
In synthetic trading, each instrument has a fixed, stated volatility level. The V75 will always be more volatile than the V25. That consistency makes position sizing and risk management more straightforward once you understand each instrument.
4. Prop Firms and Career Path
This is a major point that many synthetic traders overlook. The global prop firm industry — FTMO, Topone Trader, The Funded Trader, MyForexFunds, and hundreds of others — operates almost exclusively on forex pairs and commodities like Gold. Very few prop firms offer synthetic indices.
If your goal is to get funded, trade larger capital, and build a serious trading career — forex is the path. Synthetic trading skills don't transfer directly to prop firm challenges.
5. Technical Analysis
Both markets use the same technical tools — candlesticks, market structure, support and resistance, SMC, trendlines. However, because synthetic prices are algorithmically generated, some patterns behave slightly differently than in real markets. Liquidity sweeps and institutional order flow concepts apply less directly in synthetics because there are no real institutions driving the price.
Price action and structure still work — but the "why" behind the moves is mathematical, not institutional.
Advantages of Synthetic Trading
✅ Available 24/7 including weekends — trade whenever you want
✅ No news risk — positions won't be blown by surprise economic releases
✅ Fixed volatility — easier to manage risk once you know the instrument
✅ Very low minimum capital — accessible for new traders with small accounts
✅ Fixed spreads — no sudden spread widening during volatile periods
✅ Fast price movement — great for scalpers who like frequent trading opportunities
✅ Good for practice — developing discipline and technical skills on low capital
Disadvantages of Synthetic Trading
❌ No real-world fundamentals — limits the depth of your market education
❌ Not offered by most prop firms — difficult to scale with institutional capital
❌ Platform-dependent — you are entirely at the mercy of the broker's algorithm and pricing
❌ Addictive nature — the constant availability and fast movements can encourage overtrading
❌ Skills don't transfer globally — a synthetic trader switching to forex needs to relearn a lot
❌ Regulatory protection — less regulated than traditional forex markets
❌ Crash/Boom can be brutal — traders who don't understand the instrument lose fast
So Which Should You Trade — Forex or Synthetics?
The honest answer: it depends on your goals.
Trade Synthetics if:
- You're a beginner with very limited capital who wants to learn technical skills
- You want to trade on weekends and outside standard market hours
- You need a news-free environment to practice discipline
- You want to scalp frequently with fixed spreads and predictable volatility
Trade Forex if:
- Your goal is to get funded by a prop firm
- You want to build a globally transferable trading skill set
- You want to trade based on real market fundamentals and institutional flow
- You want access to the deepest liquidity market in the world
- You're serious about long-term trading as a career or business
The best approach? Many of our students at TrueIncome do both — they use synthetic indices to build discipline and earn on low capital, while they develop their forex skills with the goal of passing a prop firm challenge. The two don't have to be mutually exclusive.
Final Thoughts
Synthetic trading is a legitimate and growing space — especially for traders in Africa who want 24/7 access, low capital requirements, and a news-free environment to develop their skills. Platforms like Deriv and Weltrade offer excellent options for getting started.
But if your long-term goal is to trade serious capital, get funded by a prop firm, and build a sustainable trading income — forex is where you need to be.
At TrueIncome, we'll help you build both. Whether you're starting on synthetics or jumping straight into forex, our structured training programme gives you the foundation to succeed in any market.
👉 Join the Free 4-Week Forex Training
👉 Book a Mentorship Session
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About the Author James Tobi is a funded forex trader and founder of TrueIncome LTD. He has mentored 500+ traders across different skill levels, helping them pass prop firm challenges and trade profitably using Smart Money Concepts.
Risk Disclaimer: Forex trading and synthetic indices trading both involve significant risk and may not be suitable for all investors. Past performance does not guarantee future results. Always trade with capital you can afford to lose.