Some of the most frequently asked questions about synthetic indices trading is why this article is a must-read for every trader who desires to find answers about synthetic indices. Therefore, to satisfactorily give this quest its accurate perception, kindly digest the content of this article again and again as it unfolds the sentiments behind the market, what people (traders) think about synthetic indices, and what synthetic indices genuinely represent.
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Table of Contents
Some Frequently Asked Questions about Synthetic Indices Trading
Question 1: What is Synthetic Indices trading?
Synthetic indices trading is a simulated trading asset that mimics real market situations. It was developed in 2016 by Deriv.com (formerly known as Binary.com) as a buffer after the black swam in 2015. The black swam of 2015 took place when the Swiss Bank took off the 1.20 peg against the Euro. As this is one of the financial downstream, the frequency of other economic downstream have been observed to be more regular, hence, the idea behind Synthetic indices.
Synthetic indices assets were developed to allow traders to trade without fundamental interferences. After the development of the market, the assets were made to operate on a cryptographically secure random number generator, have constant volatility and are not affected by market or liquidity risks.
Question 2: Is Synthetic Indices trading Forex (foreign exchange) trading?
Synthetic indices trading is not forex. Instead, it is a financial asset developed by an independent broker (Deriv.com, formerly known as Binary.com). Synthetic indices differ from forex trading with the following features: absence of fundamental interruptions, movement based on cryptographically secured numbers instead of the value of a currency or metal, etc. Also, each market traded in Synthetic indices is independent of each other (non-correlated), a unique characteristic prevalent in forex trading.
Question 3: What is traded in a synthetic indices market?
Derivatives (cryptographically generated numbers) are traded in synthetic indices. These numbers are generated, secured and used algorithmically as price and traded in simulated patterns as the forex market. Assets traded in synthetic indices include the Boom and Crash indices, the Volatility indices, Step index, Jump indices, Range Break, Derived Indices, Basket Indices and DEX Indices. These assets total over 49 independent markets that a trader can choose from.
Question 4: Are synthetic indices assets worth trading due to market manipulations?
Synthetic indices assets are worth trading. Or would the market have survived this long if everybody failed or lost money while trading it? I don’t think so. I tell traders to be mindful of what they feed their minds with. As much as they are failing traders, they also have enviable trading histories and results. Also, concerning the issue of market manipulation, I cannot say the market is manipulated due to a lack of concrete evidence. This is not to disregard individual perceptions and sentiments in the social media space. But, choosing to trade every form of financial asset has peculiar risks and rules. Therefore, choose a financial investment that suits your risk appetite and makes you comfortable trading.
Question 5: As a beginner in Synthetic Indices trading, which market should I begin my trading adventure?
This is one of the fundamental questions so many traders ask. Many factors must be considered when choosing a market to begin a trading adventure. These include factors such as your initial deposit (equity), your risk appetite, trading style (indicator or price action trading), trading personality (a voracious risk taker or a steady day and swing trader), etc. These and many other factors are what should be put into consideration as a beginner trader.
Question 6: How many strategies work in Synthetic Indices trading?
Every form of trading strategy works in synthetic indices trading, from price action trading to indicators, Smart Money Concepts (SMC), Charts and Patterns, Candlestick patterns, Quasimodo patterns, etc. All of these strategies work, and even many more. In addition, the different trading platforms for synthetic indices (DERIV X and Meta Trader 5 platforms) all come with different technical analysis tools and indicators. Also, these platforms allow traders to develop custom indicators, including bots and EAs, to assist them in their trading adventures.
Question 7: What is the most profitable strategy for Synthetic Indices trading?
The word, most profitable strategy is, more or less, a sentiment. Every strategy works in trading, and this includes synthetic indices trading. This is because there is no strategy that is failure or loss-proof. As such, if you stick to the rules of a trading strategy that goes well with you, such will work for you. Therefore, while seeking ‘the most profitable strategy’, one should find out the type of market that he/she understands and stick there. Jumping from one strategy to another only makes you continue the cycle of doom and losses.
Question 8: Can Synthetic Indices trading make me rich?
Yes! Synthetic indices can make you rich. You can also earn a living from trading the synthetic indices markets. However, this is not to say that it is a get-rich-quick business. Trading is a mentally tasking exercise that demands training and character drills. Hence, it is not a journey for the faint-hearted. More so, just like in every field of endeavour, there are success and failure stories. So, trading the synthetic indices market does not guarantee a pre-determined outcome. You must learn what makes many traders succeed and why many fail to understand how to direct your steps.
Question 9: Is Synthetic Indices trading more complicated than Forex trading?
The answer to this is both yes and no. Yes, because I have seen people who have abandoned trading the synthetic indices for forex trading. And no, I have also seen people who left forex trading for the synthetic indices market. In addition, I also know traders who trade both markets successfully. Either way, what seems complicated is only a relative perception. If you find out what it takes to succeed, you will succeed.
Question 10: How do I become consistently profitable in my trading adventure?
To become consistently profitable, stick to one trading strategy (trading system) and improve. Consistently sharpen your skills by studying, watching videos, and attending seminars and gatherings organised by brokers. Also, having a few people you can converse with about trading. This goes a long way to remedy the issue of non-profitability in trading.
Question 11: Is Synthetic Indices trading gambling?
The word gambling means to have an uncertain outcome from something of staking something of value. However, trading is entirely different from gambling due to its nature and structure. In trading, price follows a pattern of structural highs and lows, which signifies a period of market volatility and trend. This is, however, not the same as gambling, where there is no perceived pattern and reliable history/data for analysis. Like every other financial trading platform, such as Forex, Stocks, Cryptocurrency and Indices, synthetic indices trading follows suit by obeying its cyclic history; thus, it is not gambling.
Question 12: How long does it take to learn Synthetic Indices trading?
Like every trading adventure, synthetic trading takes some time to learn, but consistent practice takes months and years to master. So, while learning, bear with yourself and be patient
Question 13: How can I open a Synthetic Indices trading account?
To open a synthetic indices account, kindly click here
Question 14: What controls the Synthetic Indices market?
A transparent and independent third party controls the synthetic indices market.
Question 15: How long does it take to be profitable in Synthetic Indices trading?
Profitability is a matter of the correct application of knowledge over time. No one can precisely determine the period of a trader’s profitability. For some, it begins from the first day of trading. For others, it starts over time. One thing is imminent: Every trader makes money when he/she understands the market price. For instance, if the price is making higher highs, and you go bullish, you will make a profit over time, except if the market is on a pullback.
Question 16: What are the benefits of trading Synthetic Indices markets?
Trading the synthetic indices market comes with its bubble share of bounties. This includes trading without fundamental interferences, trading on weekends, trading on high leverage and fair margin rates, quick deposits and withdrawals, absence of slippage, etc.
Question 17: What are the demerits of trading Synthetic Indices markets?
Like trading every other financial asset, synthetic indices come with their fair share of demerits. This includes loss of money, emotional drain, anger, frustrations due to repeated failures, etc. However, these demerits can be addressed by seeking a mentor, a trading community and consistently improving oneself.
Question 18: Can copy trading be done on Synthetic Indices?
For now, Deriv.com has yet to make room for copy trading to be done on any of the synthetic indices trading platforms. It is believed that over time, such will be thought about. But, as of now, no copy trading access is granted by Deriv.com.
Question 19: How can I grow my small account by trading Synthetic Indices?
Growing accounts is very tasking. However, it is worth the journey. To grow an account, a trader needs to follow a trading plan. For more information on the trading plan, kindly email me at juvirtrades@gmail.com for guidance.
Question 20: How much equity can I begin Synthetic Indices trading with?
The minimum amount of equity that can be funded in Deriv.com is 10 USD. However, I recommend that a trader begin trading at least 50 USD. This makes room for mistakes, miscalculations and pullbacks.
Question 21: Is Synthetic Indices trading for everyone?
Yes! Everyone and anyone can learn synthetic indices. However, one should follow the financial regulatory laws of his/her nation of residence to avoid issues.
If this publication has been helpful to you and you desire to know more about what to takes to be successful in trading, kindly do the following
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Risk Disclaimer
Deriv offers complex derivatives, such as options and contracts for difference (“CFDs”). These products may not be suitable for all clients, and trading them puts you at risk. Please make sure that you understand the following risks before trading Deriv products: a) you may lose some or all of the money you invest in the trade, b) if your trade involves currency conversion, exchange rates will affect your profit and loss. You should never trade with borrowed money or with money that you cannot afford to lose.