Volatility Indices Explained


Volatility Indices are the most widely traded synthetic instruments on Deriv. Each index simulates price movements at a specific, constant volatility level. The number in the name (10, 25, 50, 75, 100) represents the relative volatility — higher numbers mean faster and larger price swings.

Understanding the Volatility Scale

Volatility 10 Index (V10)

• Behavior: The calmest synthetic index with very smooth price action
• Pip Movement: Approximately 0.01-0.05 per tick
• Best For: Beginners, range trading, and scalping with tight stop losses
• Character: Long, slow trends with minimal noise
• Recommended Timeframes: M15, H1, H4
• Typical Daily Range: Small — suitable for learning without large drawdowns

Volatility 25 Index (V25)

• Behavior: Moderate volatility with clearly defined trends
• Pip Movement: Approximately 0.05-0.15 per tick
• Best For: Swing trading, trend following, and beginners ready to step up from V10
• Character: Good trending behavior with moderate pullbacks
• Recommended Timeframes: M5, M15, H1
• Typical Daily Range: Medium — balanced risk and opportunity

Volatility 50 Index (V50)

• Behavior: Medium volatility — the balanced middle ground
• Pip Movement: Approximately 0.5-2.0 per tick
• Best For: All-round trading, suitable for most strategies
• Character: Regular trends, clear support/resistance, and reliable patterns
• Recommended Timeframes: M5, M15, H1
• Typical Daily Range: Medium to large

Volatility 75 Index (V75)

• Behavior: High volatility with fast, aggressive price movements
• Pip Movement: Approximately 2-10 per tick
• Best For: Experienced traders seeking fast returns, breakout strategies
• Character: Strong impulsive moves followed by sharp corrections
• Recommended Timeframes: M1, M5, M15
• Typical Daily Range: Large — requires careful risk management
• Why It's Popular: V75 is the most traded synthetic index globally due to its high pip value and frequent trading opportunities

Volatility 100 Index (V100)

• Behavior: Extreme volatility with the fastest price action
• Pip Movement: Approximately 5-20 per tick
• Best For: Advanced scalpers and adrenaline traders
• Character: Wild swings, rapid trend changes, high reward with high risk
• Recommended Timeframes: M1, M5
• Typical Daily Range: Very large

Volatility 10s, 25s, 50s, 75s, 100s (The "S" Variants)

The "s" variants (1s suffix) tick once every second instead of every two seconds. They provide:

• Faster price updates for scalpers
• More data points per minute
• Slightly different trading feel compared to standard variants
• Same volatility level, just faster tick rate

How to Choose the Right Volatility Index

Based on Experience Level:

Based on Strategy:

• Scalping: V75, V100 (fast moves, quick entries/exits)
• Day Trading: V50, V75 (good intraday trends)
• Swing Trading: V10, V25 (long, clean trends)
• Range Trading: V10, V25 (tight ranges, mean reversion)

Risk Management for Volatility Indices

Position Sizing Rules:

1. V10-V25: Risk 2-3% per trade maximum
2. V50: Risk 1-2% per trade maximum
3. V75: Risk 0.5-1% per trade maximum
4. V100: Risk 0.25-0.5% per trade maximum

Stop Loss Guidelines:

• Always use stop losses — synthetics can move fast
• Place stops beyond the most recent swing high/low
• For V75 and V100, use wider stops relative to your entry
• Avoid placing stops at round numbers (too obvious)

Technical Analysis on Volatility Indices

All standard technical analysis works on volatility indices:

• Moving Averages — Trend direction confirmation
• RSI — Overbought/oversold levels
• Bollinger Bands — Volatility-based entries
• Fibonacci Retracements — Pullback levels
• Support/Resistance — Price memory zones
• Chart Patterns — Triangles, channels, head and shoulders

Why TA Works Well on Synthetics:

Since there are no news events or fundamental factors, price action on synthetic indices is purely technical. This means chart patterns and indicators tend to be more reliable than on forex pairs where news can invalidate setups.

Key Takeaways

• Each volatility level suits a different trading style and risk tolerance
• V75 is the most popular due to its balance of speed and opportunity
• Always reduce position size as volatility increases
• Technical analysis is highly effective on volatility indices because there are no fundamental disruptions
• Start with lower volatility (V10/V25) and gradually move up as your skill improves