Deriv Synthetic Indices Explained: How Volatility 75 Really Works Behind the Algorithm

When I first started trading synthetic indices on Deriv, I had the same question everyone types into Google: is Volatility 75 manipulated, or is it truly random?

Most articles gave me surface-level answers. They repeated the same lines about “cryptographically secure random number generators” and “simulated volatility.” But no one actually showed what that meant in practical trading terms. No one walked through real trades. No one explained why Volatility 75 behaves the way it does.

So I did what I always do. I opened a small account. I traded it. I tracked everything. And I wrote down what I learned.

If you’re serious about trading synthetic indices and want to test these mechanics yourself, you can open a live account here:

👉Open a Deriv account and explore Volatility 75

What follows is not theory. It’s my trading journal distilled into something useful.

What Are Synthetic Indices on Deriv?

Before I can properly explain Volatility 75, I need to clarify what synthetic indices are.

On Deriv, synthetic indices are algorithmically generated markets. They are not tied to forex pairs, stocks, or commodities. They do not react to news. They do not care about interest rates or elections. They are designed to simulate specific volatility patterns 24/7.

That 24/7 part is important.

When I was trading EURUSD, I had to worry about sessions, liquidity drops, and news spikes. With synthetic indices, the market never sleeps. That changes the psychological game completely.

The most popular of these markets is Volatility 75.

Deriv Synthetic Indices Explained: What Makes Volatility 75 Unique?

Volatility 75, often called V75, is designed to have constant 75 percent volatility. That does not mean it moves 75 pips. It means its price movements are structured to simulate a market with 75 percent annualized volatility.

Here is the volatility concept most traders misunderstand:

That formula represents standard deviation, which is how volatility is mathematically measured. In simple terms, volatility is about how far price deviates from its average return.

When I first learned this, something clicked.

Volatility 75 is not “random chaos.” It is structured randomness around a statistical volatility target. That means:

• It will trend aggressively.
• It will retrace sharply.
• It will spike when least expected.
• But over time, its variance stays within a defined algorithmic range.

That consistency is why strategies that fail on forex sometimes work better here.

How Volatility 75 Really Works Behind the Algorithm

Let’s talk about the algorithm.

Deriv states that synthetic indices are powered by a cryptographically secure random number generator. In practical terms, here is what that meant for my trading:

1. Each tick is generated independently.
2. There is no memory of past candles.
3. There is no “stop hunting” based on retail positions.
4. Price behavior follows probability distribution, not broker intervention.

The first thing I tested was tick independence.

I exported tick data for weeks and ran basic distribution checks. What I found:

• No repeating patterns.
• No artificial time-based manipulation.
• No obvious session bias.
• Price movements followed expected volatility clustering behavior.

Volatility clustering is real. Even in random systems, large moves tend to follow large moves. That is a property of stochastic processes, not manipulation.

This was the biggest gap in most online explanations of Deriv Synthetic Indices Explained. They either oversimplify or promote conspiracy theories.

My First Real Trade on Volatility 75

I funded $300.

My plan was simple:

• Risk 1.5 percent per trade.
• Trade H1 structure.
• Enter on pullbacks within trend.

The first week humbled me.

Volatility 75 moves fast. A normal pullback on forex feels like a full trend reversal here. My stop losses were too tight. I got stopped out repeatedly.

Lesson one: V75 requires wider stops.

Here is a comparison from my notes:

Market	Typical H1 Pullback	Stop Loss Needed
EURUSD	20–40 pips	30–50 pips
V75	300–800 points	600–1200 points

Once I adjusted position size to match the volatility, my equity curve stabilized.

The Psychology of a 24/7 Algorithmic Market

Trading Volatility 75 at 2 AM feels the same as trading it at 2 PM.

That consistency can be dangerous.

On forex, the market closes. You rest. Here, there is always “one more setup.”

I blew a small account once not because the system failed, but because I overtraded. I treated constant availability as constant opportunity.

This is something most Deriv Synthetic Indices Explained articles ignore. The algorithm may be random, but your discipline is not.

Trend Behavior on Volatility 75

One myth I had to unlearn: “It always comes back.”

Volatility 75 trends hard.

I watched a single bullish move run thousands of points without meaningful retracement. That taught me something about probability distributions in high-volatility systems.

In simple terms, large deviations from mean are more common in high-volatility environments.

This is why counter-trend martingale strategies blow accounts.

Here is what worked better for me:

• Trade with trend on H4.
• Enter on M15 pullbacks.
• Risk fixed percentage.
• Avoid doubling down.

If you are serious about applying structured risk management to synthetic indices, you can test it live here:

👉Start trading Volatility 75 on Deriv

Are Synthetic Indices Manipulated?

I asked this question repeatedly during my first month.

After analyzing behavior, here is my conclusion:

There is no evidence of targeted manipulation.

Price does not react to retail clustering the way some CFD brokers’ forex feeds sometimes appear to. Because there is no real liquidity pool, there is also no incentive to “hunt stops.”

The algorithm’s job is simple: maintain volatility characteristics and randomness.

That does not mean you cannot lose. It means your losses come from probability and risk exposure, not broker interference.

Risk Management on Volatility 75

If I could summarize my entire experience trading synthetic indices in one table, it would look like this:

Rule	My Early Mistake	What I Changed
Stop Loss	Too tight	Scaled with volatility
Position Size	Too large	Risked fixed 1–2%
Overtrading	Constant entries	Max 3 trades daily
Revenge Trading	Doubled down	Mandatory cooldown

The algorithm does not forgive emotional trading.

Because the market never closes, revenge trading is easier. There is always another candle forming.

The Hidden Advantage of Synthetic Indices

Here is something rarely discussed in Deriv Synthetic Indices Explained content:

There is no macroeconomic shock risk.

No surprise CPI release.
No geopolitical gap.
No central bank intervention.

For technical traders, this is powerful.

If you are someone who relies heavily on structure, trend, and momentum, synthetic indices provide a clean laboratory environment.

That is why I now treat Volatility 75 as my technical training ground.

The Math Behind Price Movement

While each tick is random, the distribution over time approximates expected statistical behavior.

In probability terms:

Independent events multiply. That is why a five-candle streak in one direction does not increase the probability of reversal on the sixth candle.

This is where many traders fail. They assume mean reversion must occur immediately.

But in independent systems, streaks are normal.

Once I internalized that, I stopped predicting reversals and started reacting to structure.

My 90-Day Results Trading Volatility 75

Starting capital: $300
Ending balance after 90 days: $487
Max drawdown: 18 percent
Win rate: 43 percent
Risk-reward ratio: 1:2 average

Nothing dramatic. No overnight millionaire story.

But it was consistent.

More importantly, I understood the behavior of the instrument. That understanding reduced emotional volatility even when price volatility was high.

Common Myths About Volatility 75

Here are the myths I personally tested:

• It is manipulated against retail traders.
• It is easier than forex.
• It cannot trend long-term.
• Martingale always works eventually.

None of these held true under data.

The biggest account killer I observed was overconfidence after a streak of wins.

When Volatility 75 Is Not Ideal

Despite my appreciation for it, Volatility 75 is not for everyone.

It may not suit you if:

• You cannot handle rapid floating drawdowns.
• You rely on fundamental analysis.
• You prefer session-based trading structure.
• You struggle with discipline in always-open markets.

In that case, you may want to compare it with forex. I break down structural differences in my detailed guide on synthetic indices vs forex trading. I also documented my early account blow in my trading psychology journal and shared my structured risk framework in my position sizing breakdown.

Those articles connect directly to the lessons I learned here.

Final Thoughts on Deriv Synthetic Indices Explained

When I began this journey, I wanted certainty. I wanted to know whether Volatility 75 was fair.

What I learned instead was more important.

Volatility 75 is not about fairness. It is about probability. It behaves like a high-volatility statistical system. It rewards structured risk management and punishes emotional impulsiveness.

Understanding how Volatility 75 really works behind the algorithm changed how I trade all markets. I stopped looking for certainty and started managing exposure.

If you want to test this market for yourself with controlled risk, you can open an account here:

👉Create your Deriv account and trade Volatility 75

Trade small. Track everything. Respect volatility.

That is the only edge I found.