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What are synthetic indices and how to trade them
<p>Synthetic indices are gaining serious traction among retail traders. They’re available 24/7, can move faster than most markets, and are tailor-made for strategy-focused trading.</p> <p>But what exactly are they? How do you trade them? And are they right for your trading style?</p> <p>In this guide, we’ll walk you through everything you need to know - from how synthetic indices work to the tools and platforms you need to get started.</p> <h2>Introduction: Why synthetic indices matter</h2> <p>Traditional markets follow real-world events such as economic news, earnings, and global politics. Synthetic indices don’t. They’re <strong>algorithmic instruments</strong> built to mimic market behavior in a fully simulated environment.</p> <p>Why does this matter?</p> <p>It creates a unique trading opportunity: <strong>high-volatility, technical-focused, and round-the-clock price action.</strong></p> <h2>What are synthetic indices?</h2> <p>Synthetic indices are <strong>digital markets</strong> generated using computer algorithms. They’re not based on actual assets like currencies, stocks, or commodities. Instead, they simulate the <strong>price behavior</strong> of real markets based on fixed rules, especially around volatility.</p> <p>In simple terms: synthetic indices offer you the <strong>movement and excitement of traditional markets</strong>, but with <strong>complete independence</strong> from real-world events.</p> <h3>How are they simulated?</h3> <p>Synthetic indices use a <strong>random number generator (RNG)</strong> governed by strict mathematical models to create price action.</p> <p>What’s unique:</p> <ul> <li><strong>Consistent volatility</strong> (e.g., 50%, 75%, 100%)</li> <li><strong>No news interference</strong></li> <li><strong>No market sessions</strong></li> </ul> <h2>Key benefits of synthetic indices</h2> <p>Why do so many traders switch to synthetic?</p> <ul> <li><strong>24/7 trading:</strong> No market closures, ever. Trade day or night, weekdays or weekends.</li> <li><strong>High volatility:</strong> Designed with constant movement. Perfect for active traders.</li> <li><strong>Technical focus:</strong> No news events - cleaner charts and price action.</li> <li><strong>Controlled environment:</strong> Volatility levels are fixed, so you can trade based on skill and strategy.</li> </ul> <h2>Popular types of synthetic indices</h2> <p>Synthetic indices come in different forms. Each one behaves differently, so you can find the right match for your style.</p> <h3>Volatility indices</h3> <p>These are simulated markets with <strong>constant volatility levels</strong>.</p> <ul> <li><strong>Volatility 50</strong> – Moderate speed</li> <li><strong>Volatility 75</strong> – More momentum</li> <li><strong>Volatility 100</strong> – High-speed action</li> </ul> <p>They behave like S&P 500 or VIX equivalents but have constant behavior and are not driven by external news factors.</p> <h3>Crash and Boom indices</h3> <p>These include <strong>sudden price spikes</strong>.</p> <ul> <li><strong>Crash indices:</strong> Sudden drops happen every 300/600/1000 ticks</li> <li><strong>Boom indices:</strong> Sudden upward moves on similar intervals</li> </ul> <p>These moments create potential for quick setups.</p> <h3>Jump indices</h3> <p>Price “jumps” occur randomly every 20 minutes.</p> <ul> <li>Available in 50, 75, and 100 volatility levels</li> <li>Balanced between consistent movement and sudden action</li> </ul> <h2>How to trade synthetic indices</h2> <p>Trading synthetic indices is like trading forex or stocks, excluding the fundamentals.</p> <h3>Platforms that offer them</h3> <p>You can <strong>trade synthetic indices on ThinkTrader or MT5 trading platforms</strong>. With ThinkMarkets, they’re built directly into the <strong>platforms’ trading experience</strong>, so you get professional tools, fast execution, and flexibility.</p> <p>Start trading synthetic indices on ThinkTrader and earn ThinkRewards loyalty point, which you can redeem for trading credit or cash.</p> <h3>24/7 availability</h3> <p>Unlike forex or stocks, synthetics never close. You can trade on weekdays, weekends, even late at night.</p> <p>This is ideal for:</p> <ul> <li>Traders in different time zones</li> <li>Weekend traders</li> <li>Part-time or after-work sessions</li> </ul> <h3>Tools, charting, and leverage</h3> <ul> <li><strong>Charting:</strong> Use indicators, trendlines, and price patterns just like you would in traditional markets.</li> <li><strong>Leverage:</strong> ThinkMarkets offers leverage of up to 1:2500 on select synthetic indices - one of the highest in the industry.</li> <li><strong>Demo access:</strong> Not ready to go live? You can always <a href="https://portal.thinkmarkets.com/account/individual/demo" target="_blank">try a demo account</a> and practice without risk.</li> </ul> <h2>Risks and considerations</h2> <p>With high speed comes high responsibility.</p> <h3>What to keep in mind</h3> <ul> <li><strong>Fast movement is high risk</strong><br /> Always use stop-losses and manage your position size.</li> <li><strong>Algorithmic means no fundamentals</strong><br /> Don’t expect earnings or economic data to matter - synthetic trading is purely technical.</li> <li><strong>Psychology plays a bigger role</strong><br /> Quick moves mean emotions can interfere. Stick to your plan.</li> </ul> <h2>Who should trade synthetic indices?</h2> <p>Synthetic indices aren’t for everyone, but they’re a great fit for certain types of traders.</p> <h3>Ideal for:</h3> <ul> <li><strong>Technical traders:</strong> If you love charting, patterns, and indicators - this is your space.</li> <li><strong>Volatility seekers:</strong> Love price action? These indices are designed to move.</li> <li><strong>Weekend warriors:</strong> Don’t want to wait for Monday? Trade whenever you want.</li> <li><strong>Demo testers:</strong> Not sure yet? <a href="https://portal.thinkmarkets.com/account/individual/demo" target="_blank">Practice synthetic indices trading</a> risk-free on a demo account.</li> </ul> <h2>Comparison: Synthetic indices vs real indices</h2> <table align="left" border="1" cellpadding="1" cellspacing="1" style="width:100%;"> <thead> <tr> <th scope="col"><strong>Feature</strong></th> <th scope="col"><strong>Synthetic indices</strong></th> <th scope="col"><strong>Real indices (e.g. S&P 500)</strong></th> </tr> </thead> <tbody> <tr> <td>Availability</td> <td>24/7</td> <td>Limited (market hours only)</td> </tr> <tr> <td>News impact</td> <td>None</td> <td>High</td> </tr> <tr> <td>Volatility</td> <td>Fixed and predictable</td> <td>Variable</td> </tr> <tr> <td>Price drivers</td> <td>Algorithmic</td> <td>Economic and political events</td> </tr> <tr> <td>Platform</td> <td>ThinkTrader, MT5</td> <td>ThinkTrader, MT5, exchanges</td> </tr> <tr> <td>Beginner friendly</td> <td>Yes</td> <td>Depends on market</td> </tr> </tbody> </table> <br /> <h2>Ready to explore synthetic indices?</h2> <p>Synthetic indices are fast and built for 24/7 strategies. Whether you're a technical analyst, weekend trader, or just looking to learn, they offer an alternative way to trade with structure and clarity.</p> <p><a href="/en/metatrader5/">Open an account</a> to start trading synthetic indices today</p> <p><a href="https://portal.thinkmarkets.com/account/individual/demo" target="_blank">Practice first with a demo</a></p> <p><a href="/en/trading-academy/">Learn more about trading strategies</a> in our Trading Academy</p>