Synthetic Indices and Stock Indices share a word, but they are very different products. Stock Indices like the S&P 500 or FTSE 100 track a basket of listed companies and move with the economy behind them. Synthetic Indices are generated by an algorithm. They have no underlying market, run 24/7, and produce price movement on a defined volatility profile.

If you trade Synthetic Indices alongside, or instead of, Stock Indices, the differences shape everything practical: when you can trade, what moves the price, and how you size positions. This article compares both sides to show where they align and where they differ.

Key takeaways

1. Stock Indices track a real basket of companies (Standard & Poor's (S&P) 500, Financial Times Stock Exchange (FTSE) 100, Deutscher Aktienindex (DAX) 40) and move with macro events, earnings, and central bank policy.

2. Synthetic Indices are algorithm-generated. They've no underlying companies, no exchange hours, and no news risk.

3. Trading hours: Stock Indices follow exchange hours and close on weekends. Synthetic Indices trade continuously, 24/7.

4. Volatility: Stock Indices have variable volatility that clusters around news. Synthetic Indices target a fixed volatility level by design. A Volatility 75 Index produces a 75-level profile consistently across days, weeks, and months.

7. Where they come from: Stock Indices are published by exchanges and index providers. Synthetic Indices were created by Deriv on a proprietary algorithm.

8. How to choose: Stock Indices give you exposure to a real economy. Synthetic Indices give you a market with engineered, predictable behaviour. The right one depends on your strategy.

Who created Synthetic Indices

Synthetic Indices were created by Deriv, built on a proprietary algorithm that generates price movement independently of real-world markets. Other brokers have since added them to their offering, but the category itself originated here.

This matters in practice because the originator controls the full instrument family: the established Volatility, Crash, Boom, Step, and Jump indices, plus newer additions such as the High Frequency Volatility variants added in April 2026, and the Crash and Boom 50 and 150 indices added in May 2026. Brokers that have added Synthetic Indices later are passing through a licensed subset of the family.

What Stock Indices are: S&P 500, FTSE 100, DAX 40

A stock index is a calculated measure of a defined basket of assets, constructed and published by an index provider. The S&P 500 represents 500 large-cap US-listed companies, weighted by market capitalisation, published by S&P Dow Jones Indices. The FTSE 100 captures the largest 100 companies on the London Stock Exchange, published by FTSE Russell. The DAX 40 tracks the leading 40 listed in Frankfurt, published by Deutsche Börse. You trade them through Contracts for Difference (CFDs) and other derivatives offered by brokers. The price of a stock index moves when its components move. Apple reports earnings, and the S&P 500 reflects it. The European Central Bank changes policy, and the DAX responds. A geopolitical event hits oil prices, and energy-weighted indices feel it first. A stock index is essentially a window onto an actual economy, and trading it means trading a view on that economy.

That shapes the practical side of trading. Stock Indices follow the trading hours of their underlying exchanges. They produce overnight gaps when news breaks outside the session. Their volatility clusters around scheduled events: central bank meetings, earnings season, employment data. If you trade Stock Indices, you are trading the news cycle as much as the chart.

What Stock Indices are: Algorithm-generated tradeable instruments

A synthetic index doesn't represent anything in the real world. There's no underlying basket of companies, no listed exchange, no opening or closing bell. Instead, the index is generated by a cryptographically secure random number engine that produces price movement on a defined statistical profile.

That phrase, defined statistical profile, does most of the work. Each synthetic index targets a specific behaviour. The Volatility 75 Index is engineered to produce price movement with a constant 75-level volatility profile. The Crash 1000 Index produces frequent small upward movements punctuated by occasional sharp drops, on a statistically defined frequency. Jump indices, Step indices, and the newer High Frequency Volatility variants each carry their own engineered characteristics.

Because the engine runs independently of any real-world input, a synthetic index ignores interest rate decisions, earnings reports, and geopolitical events. It produces a continuous price feed, 24 hours a day, 7 days a week. The behaviour at 3:00 am on a Sunday is statistically the same as at 2:00 pm on a Tuesday. That continuity is by design. You get a tradeable market with a known volatility regime, available whenever you can trade.

Key differences between Synthetic Indices and Stock Indices

The clearest way to see how the two categories compare is across the dimensions that affect how you trade:

Each row points to a different practical consequence. Macro sensitivity affects what you have to watch. Market hours affect when you can trade. Volatility behaviour affects how you size positions and where you place stops. Provider affects who is responsible for the integrity of the price feed.

What this means for indices in practice

Three practical differences stand out once you start trading both.

First, news risk. Trading the S&P 500 means accepting that a Federal Reserve press conference at 2:00 pm (Greenwich Mean Time (GMT) (GMT-5)) can move the instrument significantly in a few minutes. The move may have nothing to do with the technical setup that brought you into the trade. Synthetic Indices remove that variable. No news event moves them, because the price is generated by something news cannot reach.

Second, trading hours. Stock Indices follow session structure. A trader in Asia who wants to trade the S&P 500 trades during their evening; a trader in Europe who wants the Nikkei trades early morning. Synthetic Indices have no session structure. The Volatility 75 Index behaves the same way at every hour of every day, including weekends. If your schedule does not match any specific session, this changes what is possible.

Third, volatility profile consistency. A stock index can be unusually quiet for weeks and then move sharply for a single afternoon. A synthetic index targets a defined volatility level by design. Trade the Volatility 100 Index and you're trading an instrument whose volatility profile stays statistically stable across days, weeks, and months. That predictability is a feature: it's easier to design strategies that depend on a known volatility regime, backtest them on data that reflects live behaviour, and deploy them with consistent assumptions.

Both categories have a place. Stock Indices give you exposure to a real economy. Synthetic Indices give you a market with engineered characteristics. The right instrument is the one that fits what you're trying to do.

Why trading hours with the Originator matters

Not every broker that offers Synthetic Indices built them. Several brokers now provide access to synthetic instruments as part of their range, but access and origin are different things. The broker that built the algorithm controls the full instrument family, including newer additions as they launch, and is the source of the specifications, the volatility design, and the price feed itself. A broker offering access only carries whatever subset it has licensed. Trading with Deriv means trading with the broker that helped to pioneer the category, and access to one of the most comprehensive ranges of synthetic instruments available.

Try Stock Indices on a free Deriv demo account

Synthetic Indices have been on Deriv since the category began. The full range is available on Deriv MT5 and Deriv cTrader: Volatility, High Frequency Volatility, Crash and Boom, Step, and Jump. A free demo account lets you see how each one behaves before funding a live account. Open a demo account and try the full Synthetic Indices family on Deriv MT5.