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What are Volatility Indices?

Volatility Indices are synthetic financial instruments designed to imitate various levels of market volatility. Unlike assets tied to physical markets, these indices rely on secure algorithms that generate random price movements. This means that their price is not affected by economic factors, news events, or the usual buyer-seller dynamics seen in other markets.
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Key Features:

• Synthetic Nature: These indices do not correlate with real-world markets or assets, providing a unique trading experience.
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• Engineered Volatility: Each index is programmed to maintain specific volatility levels, catering to traders who want to focus solely on price movement simulation.
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Types of Volatility Indices Offered

Deriv offers an array of Volatility Indices, differentiated by their targeted volatility levels, which are represented numerically. The indices are categorized into two primary groups based on their tick frequency:
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1. Tick Frequency

• 1-Second Ticks (1s): These indices exhibit smaller, more frequent price changes, allowing for quick trades.
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• 2-Second Ticks: These indices tend to show larger price changes at each tick, providing opportunities for more significant movements.
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2. Volatility Ranges

• Two-Second Ticks: Volatility levels range from 10 to 100.
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• One-Second Ticks: These indices offer a broader volatility range, from 10 to 250.

When selecting between one-second and two-second tick indices, consider your trading style. If you prefer a higher frequency of trading and smaller price movements, one-second ticks might be the better choice. Conversely, if you are looking to capitalize on larger shifts in price, two-second ticks can provide those opportunities.
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Why Trade Volatility Indices?

Trading Volatility Indices can be a strategic choice for a diverse trading portfolio due to their unique characteristics:
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• No Market Dependency: The movements are purely a reflection of algorithmic changes rather than real-world events, making them an ideal choice for traders seeking to avoid unexpected market influences.
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• Defined Volatility Levels: The built-in volatility framework allows traders to tailor their strategies based on their risk tolerance and trading goals.
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• Increased Flexibility: With both one-second and two-second tick options, traders can find an index that aligns with their trading strategy and rhythm.
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Conclusion

In summary, Volatility Indices represent an innovative way to engage with synthetic market movements, free from traditional market constraints. With a range of options based on tick frequency and predefined volatility levels, these indices provide a versatile choice for traders looking to enhance their strategies. We encourage you to explore Volatility Indices further to discover how they can fit into your trading approach.