Brokers With Synthetic Indices
Brokers with synthetic indices provide unique trading opportunities on products that emulate realistic market movements. Unlike a traditional index, a synthetic index often has no correlation to underlying assets and is not impacted by real events. This tutorial explains how trading synthetic indices work, alongside their pros and cons. Our team also list the best synthetic indices brokers.
The leader in synthetic indices is undisputedly Deriv, with multiple proprietary indices that can’t be found elsewhere. However, they don’t accept traders from a long list of countries, including the US, Canada, UK and several others. The list of brokers with synthetic indices below will only show those that accept your location.
Best Synthetic Index Brokers 2024
We tested multiple brokers and found that these 5 platforms offer the best synthetic index trading products:
Brokers With Synthetic Indices Comparison
| Broker | Minimum Deposit | Minimum Trade | Platforms | Regulator | Visit |
|---|---|---|---|---|---|
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- | 0.01 Lots | WebTrader, AvaTradeGO, AvaOptions, MT4, MT5, AlgoTrader, TradingCentral, DupliTrade | ASIC, CySEC, FSCA, ISA, CBol, FSA, FSRA, BVI, ADGM | Visit |
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$5 | 0.01 Lots | Deriv Trader, MT5 | MFSA, LFSA, VFSC, BFSC | Visit |
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$0 | 0.01 Lots | MT4, MT5, cTrader, TradingView, AutoChartist, DupliTrade | FCA, ASIC, CySEC, DFSA, CMA, BaFin, SCB | Visit |
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$5 | 0.01 Lots | MT4, MT5 | ASIC, CySEC, DFSA, FSC, FSCA | Visit |
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$200 | 0.01 Lots | MT4, MT5, cTrader, TradingView, TradingCentral, DupliTrade | ASIC, CySEC, FSA | Visit |
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$100 | 0.01 Lots | MT4, MT5, TradingView | ASIC, FCA, xCySEC, SCB | Visit |
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$0 | 0.01 Lots | MT4, TradingView, TradingCentral | ASIC, FCA, MAS | Visit |
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$100 | 0.01 Lots | MT4, MT5 | ASIC | Visit |
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$50 | $10 | eToro Web, CopyTrader, TradingCentral | FCA, ASIC, CySEC, FSA, FSRA, MFSA | Visit |
|
- | - | MT4, MT5 | - | Visit |
|
- | 0.01 Lots | Skilling Trader, MT4, cTrader, TradingView | CySEC | Visit |
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$0 | 0.01 Lots | Web, ProRealTime, L2 Dealer, MT4, AutoChartist, TradingCentral | FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA | Visit |
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$50 | 0.01 Lots | ProTrader, MT4, MT5, TradingView, DupliTrade | FCA, ASIC, FSCA, VFSC | Visit |
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$100 | 0.01 Lots | FxPro Platform, MT4, MT5, cTrader, AutoChartist, TradingCentral, DupliTrade | FCA, CySEC, FSCA, SCB, FSC | Visit |
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$0 | 0.01 Lots | Web, MT4 | FCA, ASIC, MAS, CIRO, BaFin, FMA, DFSA | Visit |
#1 - AvaTrade
Why We Chose AvaTrade
AvaTrade is a leading forex and CFD broker, established in 2006 and regulated across 9 jurisdictions. Over 400,000 users have signed up with the broker which processes over 2 million trades each month. The firm offers multiple trading platforms, including MT4, MT5, and a proprietary WebTrader. 1250+ financial instruments are available for day trading, alongside a comprehensive education center and multilingual customer support.
"AvaTrade offers the full package for short-term traders. There is powerful charting software, reliable execution, transparent fees, and fast account opening with a low minimum deposit."
- DayTrading Review Team
- Instruments: CFDs, Forex, Stocks, Indices, Commodities, ETFs, Bonds, Crypto, Spread Betting
- Regulator: ASIC, CySEC, FSCA, ISA, CBol, FSA, FSRA, BVI, ADGM
- Platforms: WebTrader, AvaTradeGO, AvaOptions, MT4, MT5, AlgoTrader, TradingCentral, DupliTrade
- Minimum Trade: 0.01 Lots
- Leverage: 1:30 (Retail) 1:400 (Pro)
Pros
- Automated trading is supported through MetaTrader Expert Advisors (EAs), as well as the AvaSocial and DupliTrade tools
- Day traders can access stable spreads and zero commissions with no hidden fees
- WebTrader is well-suited to beginners and features a strong suite of technical analysis tools and market research for day traders
Cons
- Traders from the US are not accepted
- There is no ECN account with raw spreads
- There’s an above-average $50 inactivity fee after three months, though this won't impact active day traders
#2 - Deriv.com
Why We Chose Deriv.com
Deriv.com is a low cost, multi-asset broker with over 2.5 million global clients. With just a $5 minimum deposit, the firm offers CFDs, multipliers and more recently accumulators, alongside proprietary synthetic products which can't be found elsewhere. Deriv provides both its own in-house charting software and the hugely popular MetaTrader 5.
"Deriv.com will suit day traders looking to make fast-paced trades using CFDs and multipliers with high leverage up to 1:1000. The broker is also the industry leader in synthetic indices, which simulate real market movements and are available around the clock. "
- DayTrading Review Team
- Instruments: CFDs, Multipliers, Forex, Stocks, Indices, Commodities
- Regulator: MFSA, LFSA, VFSC, BFSC
- Platforms: Deriv Trader, MT5
- Minimum Deposit: $5
- Minimum Trade: 0.01 Lots
- Leverage: 1:1000
Pros
- Traders can use multipliers between 1 and 30, with take profit, stop loss and deal cancellation parameters
- The low $5 minimum initial deposit suits those on a lower budget
- Deriv bolstered its short-term trading opportunities in 2024 with accumulator options on simulated indices featuring up to 5% growth rates
Cons
- The range of 100+ assets trails some competitors such as Quotex which offers 400+
- There's no loyalty program or rebate scheme for high volume traders
- There are limited copy trading tools and analysis features compared to alternatives like IQ Cent
#3 - Pepperstone
Why We Chose Pepperstone
Established in Australia in 2010, Pepperstone is a top-rated forex and CFD broker with over 400,000 clients worldwide. It offers access to 1,300+ instruments on leading platforms MT4, MT5, cTrader and TradingView, maintaining low, transparent fees. Pepperstone is also regulated by trusted authorities like the FCA, ASIC, and CySEC, ensuring a secure environment for day traders at all levels.
"Pepperstone stands out as a top choice for day trading, offering razor-sharp spreads, ultra-fast execution, and advanced charting platforms for experienced traders. New traders are also welcomed with no minimum deposit, extensive educational resources, and exceptional 24/7 support."
- DayTrading Review Team
- Instruments: CFDs, Forex, Currency Indices, Stocks, Indices, Commodities, ETFs, Crypto, Spread Betting
- Regulator: FCA, ASIC, CySEC, DFSA, CMA, BaFin, SCB
- Platforms: MT4, MT5, cTrader, TradingView, AutoChartist, DupliTrade
- Minimum Deposit: $0
- Minimum Trade: 0.01 Lots
- Leverage: 1:30 (Retail), 1:500 (Pro)
Pros
- Now offering spread betting through TradingView, Pepperstone provides a seamless, tax-efficient trading experience with advanced analysis tools.
- There’s support for a range of industry-leading charting platforms including MT4, MT5, TradingView, and cTrader, catering to various short-term trading styles, including algo trading.
- Award-winning customer support is available via telephone, email or live chat with response times of <5 minutes during testing.
Cons
- There’s no simplified proprietary trading platform, nor are there any social trading features, which could be a disadvantage if you are new to day trading.
- Pepperstone does not support cTrader Copy, a popular copy trading feature built into the excellent cTrader platform and available at alternatives like IC Markets.
- Pepperstone’s demo accounts are active for only 30 days, which may not be not long enough to familiarize yourself with the different platforms and test trading strategies.
#4 - XM
Why We Chose XM
XM is a globally recognized forex and CFD broker with 10+ million clients in 190+ countries. Since 2009, this trusted broker has been known for its low fees on 1000+ instruments. XM is regulated by multiple financial bodies, including the ASIC and CySEC.
"XM is one of the best forex and CFD brokers we have tested. The flexible account types will suit a variety of short-term trading styles while the $5 minimum deposit and smooth sign-up process make it easy to start trading."
- DayTrading Review Team
- Instruments: Forex, Stock CFDs, Turbo Stocks, Indices, Commodities, Precious Metals, Energies, Shares, Crypto, Futures
- Regulator: ASIC, CySEC, DFSA, FSC, FSCA
- Platforms: MT4, MT5
- Minimum Deposit: $5
- Minimum Trade: 0.01 Lots
Pros
- Accessible trading accounts with a $5 minimum deposit and fast account opening
- The broker offers premium research including market sentiment, fundamental insights and strategy builders
- 1000+ instruments are available, including recently added thematic indices, providing exposure to emerging industries
Cons
- PayPal deposits are not supported
- There is weak regulatory oversight through the global entity
- There's $5 inactivity fee after only 3 months, though this won't affect active traders
#5 - IC Markets
Why We Chose IC Markets
IC Markets is a globally recognized forex and CFD broker known for its excellent pricing, comprehensive range of trading instruments, and premium trading technology. Founded in 2007 and headquartered in Australia, the brokerage is regulated by the ASIC, CySEC and FSA, and has attracted more than 180,000 clients from over 200 countries.
"IC Markets offers superior pricing, exceptionally fast execution and seamless deposits. The introduction of advanced charting platforms, notably TradingView, and the Raw Trader Plus account, ensures it remains a top choice for intermediate to advanced day traders."
- DayTrading Review Team
- Instruments: CFDs, Forex, Stocks, Indices, Commodities, Bonds, Futures, Crypto
- Regulator: ASIC, CySEC, FSA
- Platforms: MT4, MT5, cTrader, TradingView, TradingCentral, DupliTrade
- Minimum Deposit: $200
- Minimum Trade: 0.01 Lots
- Leverage: 1:30 (ASIC & CySEC), 1:500 (FSA), 1:1000 (Global)
Pros
- With ultra-fast execution speeds averaging 35 milliseconds and deep liquidity, IC Markets provides an optimal trading environment for scalpers, hedgers, and algorithmic traders.
- IC Markets offers fast and dependable 24/5 support based on firsthand experience, particularly when it comes to accounts and funding issues.
- You have access to over 2,250 CFDs across various markets, including forex, commodities, indices, stocks, bonds, and cryptocurrencies, allowing for diversified trading strategies.
Cons
- Despite four industry-leading third-party platforms, there is no proprietary software or trading app built with new traders in mind.
- The breadth and depth of tutorials, webinars and educational resources still need work, trailing alternatives like CMC Markets and reducing its suitability for beginners.
- Interest isn't paid on unused cash, an increasingly popular feature found at alternatives like Interactive Brokers.
What Is A Synthetic Index?
Synthetic index is a term used to describe an index that is not comprised of underlying assets, such as stocks, instead using random number generators to provide a value.
Synthetic indices typically take two forms: asset-based, tracking the value of a specific market or element of a market, or they can be simulated, based on computer-generated data entirely separate from any actual markets but designed to imitate real-life price movements.
Understanding these different products can be confusing due to the interchangeability of the synthetic index label. This can also make it difficult for traders to discover which brokers offer synthetic indices trading.
Here, we break down both types of synthetic indices, listing their differences, respective merits and supporting brokers.
Simulated Synthetic Indices
Commonly offered by forex brokers and binary options brokers, simulated synthetic indices use complex algorithms designed to mirror realistic price movements. In contrast to asset-based products, simulated synthetic indices are markets with no correlation to any underlying asset.
Simulated synthetic index brokers often provide traders with several options for their preferred trading vehicle and simulated market conditions. In addition, these markets can normally be traded 24/7.
However, some investors are understandably wary of these products due to the opacity of these over-the-counter products. Some traders believe that for these products to be viable, the algorithms must be broker-favored, and therefore abstain from these artificial markets.
Asset-Based Synthetic Indices
Asset-based synthetic indices track the value of specific market sectors or market values. Popular examples of asset-based synthetic indices are the S&P 500 Volatility Index (VIX) and the US Dollar Index (USDX).
With synthetic indices based on spot assets, such as currency indices or market sector instruments, many of these products are hedged with real assets by the firm that provides the index.
A combination of swaps, futures, options and spot assets can also be used to back more sophisticated synthetic indices, though some of these products may not be fully hedged due to their complexity.
This measure attempts to secure the values of synthetic indices, though collapses have happened in the past – more on this later.
Simulated Vs Asset-Based Synthetic Indices
To help you decide which type of synthetic index is best for your goals and trading style, we have compared simulated and asset-based indices across several key categories:
Trading Vehicles
Simulated
With simulated synthetic indices brokers, trading instruments are more limited, often via binary options or CFDs. There are fewer forex brokers with simulated synthetic indices, with products mainly offered by binary options brokers.
While these products are different in terms of leverage, fees and payouts, strategies are more limited than with asset-based synthetic indices. Binary options are typically traded in the short term by investors with an all-or-nothing strategy.
Asset-Based
With asset-based synthetic indices, traders can use a variety of trading vehicles. Synthetic index brokers may offer contracts for difference (CFDs), exchange-traded funds (ETFs), futures, and options.
This gives traders more choice, opening up possibilities in terms of strategies and timeframes. The variety of vehicles available to trade asset-based synthetic indices also offers traders both high and low leverage options.
Payouts & Risk
Simulated
Simulated synthetic indices are typically traded through binary options or CFDs, and their payouts and capital risks vary depending on the vehicle used.
Binary options offer fixed payouts for a winning trade, with the best brokers for synthetic indices offering payouts of over 95% for a correct prediction. Traders cannot lose more than they invest in a position.
While CFDs offer leveraged profit potential, they also carry significant risks, including the possibility of losing more than the initial investment.
When trading at synthetic indices brokers using CFDs, ensure that your chosen brokerage offers features like stop losses and negative balance protection.
Asset-Based
Due to the wide range of vehicles available when trading asset-based synthetic indices, investors can choose a trading strategy suited to their personal risk/reward tolerance.
Products range from the highly leveraged CFD market down to the more stable ETF setup.
Safety & Security
Simulated
Brokers with simulated synthetic indices are not typically regulated by top-tier financial authorities such as the SEC or FCA. Synthetic index binary options and forex brokers may not store client finds in tier-one banks or provide access to investor compensation schemes.
In addition, the opacity of simulated trading algorithms may not sit well with some investors. There is limited evidence to suggest that synthetic index brokers skew their algorithms to disadvantage investors, but with no real market to base prices on, the opportunity to manipulate simulated prices is arguably there.
Asset-Based
Asset-based synthetic indices are typically traded through regulated exchanges and brokers, which offer a higher level of security and transparency.
For example, the best brokers with synthetic indices brokers are regulated by the FCA, SEC, ASIC or CySEC. This regulatory oversight provides traders with some level of protection against fraud, market manipulation, and other forms of misconduct.
However, this does not mean that asset-based synthetic index investments are safe. On 5 February 2018, VIX futures rose from their opening level of 16 into the low 30s by the afternoon. This caused two synthetic indices that offered an inverse VIX tracker to fall by over 95% each, wiping out the funds of traders.
Due to the nature of synthetic indices, such losses are often difficult to reverse.
Trading Hours
Simulated
One of the unique advantages of brokers with synthetic indices is the ability to trade a market with infinite liquidity that operates 24/7.
Other than scheduled maintenance and platform downtimes, the algorithms for simulated synthetic indices run constantly, giving traders around the world an equal chance to trade.
Asset-Based
The operating hours for asset-based synthetic indices usually follow the trading hours of the underlying assets that make up the index.
The longest trading hours can often be found via forex brokers with synthetic indices or futures brokers, with trading available up to 11 hours per day. However, even these extended market instruments do not typically trade on weekends.
Trading Fees
The fees and commissions paid when trading synthetic indices are often dependent on the vehicle and broker rather than the type of index. There are also other types of charges to consider when choosing the best brokers for synthetic indices, which we will get into later on.
Traders can opt for low or zero-commission brokers to trade ETFs and there are no commission fees when speculating with most binary options brokers. The highest fees will come when trading through forex brokers with synthetic indices CFDs, plus futures and options.
Comparing Brokers With Synthetic Indices
The list of synthetic indices brokers includes several top brands. To help you find which broker offers the best synthetic indices trading conditions, look for the following qualities:
Vehicles
The first step when choosing a trading platform is to establish the type of synthetic index available.
Binary options and forex brokers can sometimes support both asset-based synthetic indices and simulated synthetic indices.
However, traditional stocks, futures and options brokers typically shy away from the less transparent natures of simulated synthetic indices.
Markets & Customization
The next item to compare is which broker offers the synthetic index markets you favor.
When trading simulated synthetic indices, the best brokers offer a range of different products set up with various algorithms simulating different market conditions.
For asset-based synthetic indices, this can mean finding brokers that support products from a range of financial markets, such as stocks and forex.
Fees & Payouts
Simulated synthetic indices are often traded as binary options or “multipliers”, although some forex brokers allow CFD trading with simulated synthetic indices.
With binary options, there are no trading fees, with profits dictated by payouts. While investors should shop around for the most competitive payouts, ensure that you are not enticed into a suspect broker by high payouts alone.
CFD profits are similar from broker to broker. Spreads and charges such as commissions and swap fees make the difference between trading firms.
With asset-based synthetic indices, payouts will often depend on the trading product, which is largely independent of a specific broker. However, fees and commissions can significantly influence how much profit is made by a successful trader.
Look for low spreads and commissions when trading CFDs, and low or zero commissions for ETF and futures trading. This said, some brokers with synthetic indices can draw investors in with low trading fees and add account or deposit charges, so do your due diligence before signing up.
Regulation & Security
The safety of funds and sensitive personal information is key when trading any product.
To give yourself the best chance at staying safe, favor brokers with regulation from reputable bodies such as the US CFTC or UK FCA.
The best brokers for synthetic indices will also offer additional measures, such as two-factor authentication (2FA) and fund insurance schemes.
Trading Platforms
Choosing brokers with synthetic indices that support stable, reliable and user-friendly platforms is a must. Some synthetic indices brokers use proprietary solutions so make use of a demo account to trial these terminals before committing money.
Alternatively, opt for a popular and well-supported platform such as MetaTrader 4 (MT4) or MetaTrader 5 (MT5). These platforms offer advantages such as customizable indicators and automated trading tools.
Payments
Choose brokers with synthetic indices that offer low-cost, high-speed deposit options. Ideally, these solutions will include choices with some protection, such as PayPal or credit cards. In addition, native support for your local currency will help you avoid conversion fees.
In the CFD and binary options space, there are also some synthetic indices brokers with bonus schemes. But while deposit bonuses can be attractive, ensure you understand any withdrawal terms before opting in.
Final Word On Synthetic Indices Brokers
When comparing brokers with synthetic indices, there are several considerations to keep in mind. Firstly, traders should favor synthetic index brokers with oversight from reputable regulators. Other considerations include market availability, trading platform support, accepted payment methods and fees.
Get started with our list of the best brokers with synthetic indices.
FAQ
What Are Synthetic Indices?
Synthetic indices are trading products that typically derive their value from random number generators and complex algorithms. They are designed to reflect realistic market movements. Synthetic indices can often be traded 24/7 at the top brokers.
Which Broker Has Synthetic Indices?
Various online brokers offer synthetic indices trading. Among the best brokers that trade synthetic indices are Deriv and Spectre-ai. Alternatively, use our list of top-rated synthetic index brokers.
What Are Synthetic Indices In Forex?
Synthetic indices in forex can refer to either the CFD trading of synthetic indices or the specific subtype of synthetic index that track currencies.
Can I Trade Synthetic Indices On MT4 & MT5?
Yes, some brokers with synthetic indices offer trading on MetaTrader 4 (MT4) and MetaTrader 5 (MT5). Among the top trading firms are Pepperstone and CMC Markets.