In this lesson, we’ll dive into how to effectively trade Accumulators and Turbos on Volatility Indices. Understanding the mechanics of these options contract types will help you capitalize on price movements while managing your risk effectively.
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What are Accumulators?

Accumulators allow your stake to grow exponentially based on small price movements within a defined range. The key features of Accumulators include:

• Compounding Returns: Returns build each time the price stays within the specified range relative to the previous tick. This means even minor price movements can lead to significant returns over time.
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• Growth Rate: You can select a growth rate for your Accumulators, typically between 1% and 5%. This rate dictates how quickly your payout increases as long as the price remains within the defined range.
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• Knockout Feature: If the price touches or exceeds either the upper or lower barrier during the contract, the accumulator "knocks out," and your loss is capped at the initial stake.
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Example: Setting Up an Accumulator Trade

Let’s illustrate how to set up an Accumulator trade on the Volatility 10 (1s) Index:

1. Strategy Parameters:
   
   • Growth Rate: 1%
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   • Initial Stake: $10
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   • Take Profit: $1 (approximately 10 ticks)
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2. Execution: Once the trade is placed, the contract value increases with each tick, as long as the price stays within the set range.
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3. Manual Closing: You have the option to close the position manually if you prefer not to use a take-profit level.
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4. Monitoring: It’s important to monitor the trade closely, especially in the volatile environment of the Volatility Indices.
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What are Turbos?

Turbos are another type of options contract designed to capitalize on directional price movements. With Turbos, you can predict whether the underlying index price will rise or fall during a specified duration:

• Up or Down Prediction: You choose the “Up” option if you believe the index price will rise, or the “Down” option if you expect it to fall.
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Pricing and Duration

• Payout Structure: The payout for Turbo contracts is determined by the payout per point, which varies based on how far the final price is from your chosen barrier. The closer your barrier is to the spot price at entry, the higher the payout potential, but this also increases your risk.
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• Trading Durations: There are two main types of Turbo contracts:
  
  • Tick Contracts: Short-term trades expiring within 5 to 10 ticks.
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  • Minute Contracts: Longer durations ranging from 15 seconds to several days, allowing for manual closure before expiry if needed.
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Example: Setting Up a Turbo Trade

Suppose you expect the price of the Volatility 10 (1s) Index to rise over the next 10 minutes. Here’s how to set up a Turbo contract:

• Trade Details:
  
  • Payout per Point: $1.80 USD
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  • Duration: 10 minutes
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  • Initial Stake: $10
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  • Take Profit: $10

As you monitor the price action, decide whether to let the trade run or close it early if you achieve your profit target.
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Important Considerations

While trading Accumulators and Turbos can offer exciting opportunities, they also carry risks, particularly in the volatile environment of Volatility Indices. Here are some key tips for managing those risks:

• Start Small: Begin with smaller stakes while testing new strategies or trading under unfamiliar market conditions to minimize risk.
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• Utilize Take-Profit Levels: Establish clear take-profit levels to secure gains when the price moves in your favor.
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• Monitor Closely: Due to market volatility, keep a close eye on your positions and adjust your strategy as needed to mitigate risks.
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Conclusion

To wrap up, understanding how to trade Accumulators and Turbos can significantly enhance your trading strategy on the Deriv platform. Practice these concepts on a demo account to refine your skills and build confidence before transitioning to live trading.

In our next lesson, we will explore trading strategies using the Jump Indices and how to leverage digital options effectively. Thank you for attending this lesson, and happy trading!