Synthetic indices brokers let you trade on the volatility of markets. Compare brokers for boom and crash markets and choose a broker that can let you trade on stocks and shares in the volatility 75 index.

Featured Index BrokerIndex Account OptionsKey Index FactsStandard Index CostsMore Info

IG

CFDs: Yes
Spread Betting: Yes
DMA Index: Yes
Pro Account: Yes
Index Options: Yes
Indices Available: 34
Standard Margin: 5%
Pro Margin: 0.45%
Minimum Deposit: £250
Inactivity Fee: £12 pm
HQ: London, UK
UK 100: 1 point
Wall Street: 2.4 points
NASDAQ: 1 point
CAC 40: 1 point
DAX 30: 1.2 points
Overnight Financing: 0.0022%
See OfferYour capital is at risk. 73% of retail CFD accounts lose money

CMC Markets

CFDs: Yes
Spread Betting: Yes
DMA Index: Yes
Pro Account: Yes
Forex Index: Yes
Indices Available: 22
Standard Margin: 5%
Pro Margin: na
Minimum Deposit: £100
Inactivity Fee: £10 pm
HQ: London, UK
UK 100: 1 point
Wall Street: 2.4 points
NASDAQ: 2 point
CAC 40: 1 point
DAX 30: 1 points
Overnight Financing: 0.0027%
See Offer66% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider

Pepperstone

CFDs: Yes
Spread Betting: Yes
DMA Index: Yes
Pro Account: Yes
Index Options: No
Indices Available: 16
Standard Margin: 5%
Pro Margin: 0.5%
Minimum Deposit: £100
Inactivity Fee: £0
HQ: Melbourne, Australia
UK 100: 1 point
Wall Street: 2.4 points
NASDAQ: 1 point
CAC 40: 1 point
DAX 30: 1.2 points
Overnight Financing: Variable
See Offer79.3% of retail investor accounts lose money when trading spread bets and CFDs with this provider

City Index

CFDs: Yes
Spread Betting: Yes
DMA Index: No
Pro Account: Yes
Index Options: Yes
Indices Available: 21
Standard Margin: 5%
Pro Margin: 0.25%
Minimum Deposit: $50
Inactivity Fee: $10 pm
HQ: London, UK
UK 100: 1 point
Wall Street: 2 points
NASDAQ: 1 point
CAC 40: 1.3 points
DAX 30: 1.2 points
Overnight Financing: Variable
See Offer70% of retail investor accounts lose money when trading CFDs with this provider

Markets.com

CFDs: Yes
Spread Betting: Yes
DMA Index: No
Pro Account: Yes
Index Options: Yes
Indices Available: 10+
Standard Margin: 5%
Pro Margin: 0.5%
Minimum Deposit: £100
Inactivity Fee: £0
HQ: Cyprus
UK 100: 2 points
Wall Street: 2 points
NASDAQ: 2 points
CAC 40: 2 points
DAX 30: 1.2 points
Overnight Financing: 0.0111%
See Offer77% of retail investor accounts lose money when trading CFDs with this provider

Spreadex FinancialsSpreadex

CFDs: Yes
Spread Betting: Yes
DMA Index: No
Pro Account: Yes
Index Options: No
Indices Available: 37
Standard Margin: 5%
Pro Margin: 0.45%
Minimum Deposit: £100
Inactivity Fee: £0
HQ: St Albans, UK
UK 100: 1 point
Wall Street: 2.4 points
NASDAQ: 2 points
CAC 40: 2 points
DAX 30: 1.2 points
Overnight Financing: Variable
See Offer
69% of retail investors lose money when trading spread bets and CFDs with this provider


Saxo Markets

CFDs: Yes
Spread Betting: No
DMA Index: Yes
Pro Account: Yes
Index Options: Yes
Indices Available: 23
Standard Margin: 5%
Pro Margin: 1.5%
Minimum Deposit: £500
Inactivity Fee: £25 pq
HQ: Copenhagen, Denmark
UK 100: 1 point
Wall Street: 3 points
NASDAQ: 1 points
CAC 40: 2 points
DAX 30: 1 point
Overnight Financing: Variable
See Offer
70% of retail investor accounts lose money when trading CFDs with this provider


Capital.com

CFDs: Yes
Spread Betting: Yes
DMA Index: No
Pro Account: Yes
Index Options: No
Indices Available: 23
Standard Margin: 5%
Pro Margin: 1.5%
Minimum Deposit: £20
Inactivity Fee: 0
HQ: Gibraltar
UK 100: 2 points
Wall Street: 5 points
NASDAQ: 1.9 points
CAC 40: 1.5 points
DAX 30: 1.8 point
Overnight Financing: Variable
See Offer
76.72% of retail investor accounts lose money when trading CFDs with this provider

FXCM

CFDs: Yes
Spread Betting: Yes
DMA Index: No
Pro Account: Yes
Index Options: No
Indices Available: 15
Standard Margin: 5%
Pro Margin: na
Minimum Deposit: $50
Inactivity Fee: $50
HQ: NY, USA
UK 100: 1.63 points
Wall Street: 2.94 points
NASDAQ: 1.64 points
CAC 40: 1 point
DAX 30: 1.93 point
Overnight Financing: Variable
See Offer
67% of retail investor accounts lose money when trading CFDs with this provider
FXTM

FXTM

CFDs: Yes
Spread Betting: No
DMA Index: No
Pro Account: Yes
Index Options: No
Indices Available: 11
Standard Margin: 5%
Pro Margin: na
Minimum Deposit: $50
Inactivity Fee: $5
HQ: Larnaca, Cyprus
UK 100: 4.5 points
Wall Street: 2.5 points
NASDAQ: 3.6 points
CAC 40: 2.7 point
DAX 30: 4.2 point
Overnight Financing: Variable
See Offer
77% of retail investor accounts lose money when trading CFDs with this provider
Table last updated: 25th November 2021 2:53 pm

What is volatility trading?

VXX and VXZ (its sister fund) were the first ETNs (Exchange Traded Notes) made available for volatility trading in the United States. To properly understand what VXX is, you need to understand how its value is assessed, and how Barclays (Britain’s foremost multinational banking and financial services company) earns equity from running it, and what it actually tracks.

Typically speaking, VXX trades like any other stock. As such, it can be sold, bought, or sold short whenever the market is open for trading, and that includes both pre-market and after-market timeframes. The average daily volume consists of 75 million shares, and its liquidity and spread status is very good; the bid–ask spreads are just a penny. Here are a few of the best brokers for trading VXX Volatility

How to trade the VXX

You can read more about How To Use Volatility ETNs (VXX & VXZ) To Protect Your Stock Portfolios in our guide below written by Jackson Wong PhD

With this in mind, brokers that typically have tight spreads don’t have the same issue with trading VXX. spread betting broker IG Index, for example, has a relatively high average spread of on ETNs such as VXX and VXZ however, they do offer one of the widest ranges of accessable markets and are listed on the LSE.

Similarly, forex broker CMC Markets, while having a good average spread already, has an extra sweetener for large-scale investors. It has a “big trader rebate scheme” with its own modern trading platform. If you’re after a long-term growth strategy with a large amount of capital, trading VXX with CMC Markets could be a wise move.

CFD broker Saxo offers VIX CFDs as well as DMA VIX on exchange futures contracts.  MT4 broker XTB offers the ability to create your own basket of assets to trade so you can trade volatilities indices against other assets like Gold and USDJPY.

Whichever of the best brokers for trading VXX Volatility or CFD trading platforms you decide to go with, ensure that you do thorough research to mitigate risk and maximise your potential return on investment.

Spread betting on market volatility using the VIX

The VIX is a contract traded on the CBOE that measures volatility in the market.  The price is dependent on how much the price of the S&P 500 moves and has been around since 1993.

It’s no secret that most spread betting clients make money when the market is moving one way or another.  It is the basic principle of trend.  If there is one it is easier to follow and therefore make money.  So the VIX provides a visualisation of how easy it is to make money, it is also a fairly predictable indicator.

You can either trade the VIX through futures contracts on the CBOE market of by placing a bet through a spread betting broker.

The market moves through cycles of volatility and activity and boring non movement.  These movements were traded by options contract strategies, but since 2004 when the VIX futures was introduce anyone can have a go.  A good indicator to keep an eye on.

How To Use Volatility ETNs (VXX & VXZ) To Protect Your Stock Portfolios

When asked what he thought of the stock market, JP Morgan quipped: ‘It will fluctuate’. Indeed. Markets go up and down – and when prices are down, investor fear increase and volatility spikes. This is simply because of higher market uncertainty. Given volatility’s inverse behaviour to prices, volatility indices are usually known as the ‘fear gauges’.

One of the most established volatility indices is the VIX index. This index is based on the options on the S&P 500 Index (SPX), the most-watched US equity index. SPX is a very broad measure of the US stock market and it tracks the cream de la cream of US listed firms.

But you can not trade an index directly.  Neither can you trade volatility directly like you trade stocks. To do that, you need derivatives – like futures and options – to make a bet on the direction of the index. Thus VIX futures (based on the VIX index) were created at around 2004 to facilitate trading and hedging of volatility.

Sensing a growing demand for retail volatility products, astute finance firms like Barclays pushed this concept further by creating a series of Exchange Traded Notes (ETN). These notes were based on VIX futures (nearest two).

What brokers offer VXX and VZN trading and volatility indices?

You can compare the best CFD brokers for trading VXX here or take a look at the individual reviews for brokers below:

What is Volatility Trading?

In 2009, Barclays created two of the earliest volatility ETNs – VXX and VXZ (its sister fund). These ETNs were made available for volatility trading in the United States just like any other stocks (prospective here).* They can be sold, bought, or sold short whenever the market is open for trading, and that includes both pre-market and after-market timeframes. The current market cap of VXX is around $800 million. The average daily volume consists of 40 million shares, and its liquidity and spread status is very good. The bid–ask spreads are just a penny.

For example, the chart below shows the typical spread from IG index. In other words, moving in and out of volatility products are not overly expensive here in the UK.

To trade volatility ETNs successfully, however, you need to remember two things:

  1. Volatility ETNs are not meant for long-term holdings
  2. Volatility ETNs are high risk and prices can swing wildly over a short period of time

You can judge this from the price movements of VXX in 2018. Throughout the year, prices went from $28 to $50 twice. Daily 5-10% moves occur regularly; overnight price gaps further amplify this swings. So, how exactly do you use VXX to hedge against your long-only portfolio?

The general rule of thumb is to buy a small amount when the product is down for some time. Why? This is because markets tend to go up slowly and go down quickly, especially as we are on a bull cycle.

For example, VXX can roll lower continuously for six months and then, all of a sudden, surge. This price behaviour is typical (red circle, below). Accordingly, when VXX is down, buy some and hold for a few weeks before selling out.  Of course, you may very well sell at a loss, but try to think of this as as the cost of protection for your share portfolio. The trick is to time your entry because VXX can move very fast.

Other entry signals for VXX include: 1) A bullish crossover of VXX against some medium-term moving average such as the 50 or 100-day moving average, or 2) Corrective setbacks after hitting multi-week highs, ie, around $32.

In all these cases, the advice is to limit the holding period because volatility ETNs can depreciate over time.  Of course, having stop-losses on these positions are critical. Also, if you had timed VXX’s rally correctly, use trailing stops to protect your profits.

*http://www.ipathetn.com/US/16/en/documentation.app?instrumentId=259118&documentId=6204338

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