Best Forex brokers with volatility index
Best Forex broker with volatility index - IC Markets
Top Forex brokers with volatility index:
IC Markets - Best for scalping strategies
Admiral Markets - Best for comfortable trading
MultiBank - best for versatility
Libertex - best for innovative trading
Pepperstone - best for forex trading
You have probably come across the term volatility index when dealing with forex. The majority of seasoned traders will tell you that they utilize volatility indices to reap massive returns. However, do you know what a volatility index means? Do you know how and where to trade with the volatility index? Luckily, by the end of this guide, you will have everything you need to know about the volatility index. Let's get right to it!
Warning:
There is a high level of risk involved when trading leveraged products such as Forex/CFDs. Between 65% and 82% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
What is CBOE volatility index (VIX)?
The Chicago Board Options Exchange (CBOE) established the CBOE Volatility Index (VIX) in 1993 as a real-time measure of the expected volatility of the U.S. stock market. Also known as the "fear index", VIX shows the implied volatility of the S&P 500 Index (SPX) over a 30-day forward projection. Although the VIX is based on S&P 500 volatility, it is usually used as a benchmark for the entire U.S. stock market.
Investors usually use the VIX to measure the level of stress, risk, or fear in the market when making investment decisions. Moreover, traders can trade the VIX using a variety of options and exchange-traded products. Alternatively, they can use VIX values to price derivatives.
VIX has a strong negative correlation to the stock market price. Therefore, if the VIX rises, then it means that stock prices are usually falling and the market is unstable. On the other hand, if the VIX declines then it implies that the stock prices are rising and the market is relatively stable and stress-free. A VIX value below 20% is typically considered a stable period (stress-free), while levels of 30% or more are high volatility and unstable periods resulting from increased uncertainty and fear among investors.
List of 10 best volatility index (VIX) brokers 2024
In this era, there are numerous options when it comes to brokers, and choosing one that suits you is sometimes difficult. Luckily, we have compiled a list of the best VIX brokers for you below.
IC Markets
Admiral Markets
MultiBank
Libertex
Pepperstone
HFM (Hot Forex)
AvaTrade
eToro
Saxo Bank
IG
Minimum deposit | Regulation | Volatility indices to trade | ||
---|---|---|---|---|
IC Markets |
$200 |
ASIC, CySec |
Volatility index futures (CFD) |
|
Admiral Markets |
$100 |
FCA, ASIC |
Volatility index futures (CFD) |
|
MultiBank |
$50 |
MAS, ASIC, BAFIN |
Volatility index futures (CFD) |
|
Libertex |
$10 |
CySec |
Volatility index futures (CFD) |
|
Pepperstone |
$200 |
ASIC, CySec |
Volatility index futures (CFD) |
|
HFM (Hot Forex) |
$5 |
FCA, FSCA, FSA |
Volatility index futures (CFD) |
|
AvaTrade |
$100 |
Central Bank of Ireland, ASIC, FSCA |
Volatility index futures (CFD) |
|
eToro |
$10 |
FINRA, FCA, CySec, ASIC, SEC (US) |
Volatility index futures (CFD) |
|
Saxo Bank |
$2000 |
FCA, MAS, FINMA, ASIC |
Volatility index futures (direct futures trading) |
|
IG |
$50 |
CFTC (US) FCA, BaFin, CySec, FSCA |
Volatility index futures (CFD) |
Best Forex brokers to trade volatility index compared
IC Markets
IC Markets Trading Company was founded in 2007 in Sydney, Australia. The broker is licensed under the Australian Financial Services License (AFSL) and the Australian Securities and Investment Commission (ASIC). The broker is also a member of the Australian Financial Complaint Authority (AFCA), the governing body that sets the industry standard for the resolution of disputes between consumers and financial service providers, and regularly undertakes audits.
Trading Instruments
60 currency pairs, futures, CFDs on indices, commodities, metals, stocks and bonds
Commissions
Standard Account EURUSD Average Spread 0.3 pips, + fee 0.03%
Tools
MetaTrader4/5
cTrader
Licensing
IC Markets is licensed and regulated in Australia (ASIC), Cyprus (CySEC), The broker is also a member of the Australian Financial Complaint Authority (AFCA).
Investment programs
Copy trading, PAMM
Account minimum
$200
Deposit and withdrawal
Bank transfer, Debit/Credit card
Admiral Markets
In 2001, Admiral Markets began operations, and they’ve gone on to become one of the best Forex brokers in the world. They have a head office in the UK.
Trading Instruments
Forex and CFD
Commissions
There are four main account types that clients can choose between. The commissions overall remain pretty consistent for all four account types.
Tools
MetaTrader 4
MetaTrader 5
Volatility Protection Tools
Licensing
Admiral Markets is licensed under the FCA (UK Financial Conduct Authority), CySEC, FSCA, and SCB.
Investment programs
Not supported
Account minimum
$1
Deposit and withdrawal
Bank transfer, Debit/Credit card, Electronic wallets (not for all markets)
MultiBank
Established in 2005, MultiBank Group has successfully stamped its authority in the world of trading. It has a valid impact in the foreign exchange industry with providing exemplary products, services, and trading platforms. With a paid-up capital of over $322 million, MultiBank Group is recognized as one of the largest only financial derivatives providers worldwide.
Trading Instruments
Forex, Metals, Shares, Indices, Commodities, Cryptocurrencies
Commissions
Standard Account EURUSD Average Spread 1.7 pips, 0.1 pips and $3 per lot - ECN account fee
Tools
MT4
MT5
Licensing
ASIC, BAFIN, CNMV, FMA, TFG, HKCE, AUSTRAC, VFSA, CIMA
Investment programs
Copy trading, PAMM
Account minimum
$50
Deposit and withdrawal
Bank transfer, Debit/Credit card, Electronic wallet
Libertex
Libertex is a trading and investment software from Indication Investments Ltd, which appeared in the market back in 1997. The broker was awarded the Best Trading Platform at the recent Forex Awards.
Trading Instruments
Over 250 CFDs underlying assets on Forex, crypto, metals, etc
Commissions
Standard Account EURUSD Average Spread 0.3 pips, + fee 0.03%
Tools
Libertex
Licensing
Libertex is regulated and supervised by the Cyprus Securities and Exchange Commission (CySEC) under license CIF No. 164/12.
Investment programs
Managed accounts
Account minimum
100 EUR
Deposit and withdrawal
Bank transfer, Debit/Credit card, Electronic wallets
Pepperstone
Pepperstone (Pepperstone.com) was founded in 2010 in Melbourne, Australia, by professional traders who were not satisfied with the quality of services provided by most brokers. The founders decided to avoid many of the disadvantages of competitors, including high commissions, delayed execution of orders, etc. They also focused on improving the technical component. The company has set itself the goal of changing the “rules of the game” and setting the bar high for online trading. Today, the broker provides clients all over the world with some of the best technological solutions and favorable trading conditions.
Trading Instruments
With Pepperstone you can trade CFDs on Forex, Index, Stocks, Currency Indices, Commodities, ETFs
Commissions
The fees are charged as the spread
Tools
cTrader
TradingView
MetaTrader 4
MetaTrader 5
Licensing
Pepperstone is regulated by the FCA
Investment programs
Copy trading
Account minimum
$200
Deposit and withdrawal
Bank transfer, Debit/Credit card, Electronic wallets (not for all markets)
HFM
HFX (HotForex) is a broker owned by the HF Markets Group, offers a wide variety of account types, and has the widest selection of trading assets and high-quality software. HotForex also has favorable trading conditions and instant execution of orders. Plus, a solid list of tools and services allow everyone to choose the best option. The broker's reliability is confirmed by the license of several regulators.
Trading Instruments
Currencies, CFD, commodities, indices
Commissions
Standard Account EURUSD Average Spread 1.3 pips, ECN/STP Account Fee $3 per lot and spread 0.1 pip
Tools
МТ4
МТ5
Licensing
The company's activities are controlled by several regulators: FCA (UK Financial Conduct Authority), DFSA (Danish Financial Supervisory Authority), FSCA (South African Financial Services Authority), and FSA (Seychelles Financial Services Authority), CMA Capital Markets Authority (Kenya)
Investment programs
Copy trading, Bond CFDs
Account minimum
$5
Deposit and withdrawal
Bank transfer, Debit/Credit card, Electronic wallets
AvaTrade
If you’re just starting out with Forex trading, then AvaTrade is one of the best brokers on the market. They offer a wide variety of educational resources that you can use to fast-track your Forex trading knowledge.
Trading Instruments
Ava Trade offers Forex and CFD Trading.
Commissions
AvaTrade has an average overall cost of trading is 0.61 pips and requires you to make a minimum deposit of $100!
Tools
MetaTrader and WebTrader
AvaTrade
AvaTrade WebTrader
Copy trading
AvaOptions
Licensing
AvaTrade is licensed under the FCA (UK Financial Conduct Authority), CySEC, FSCA, and SCB.
Investment programs
Copy trading, managed accounts
Account minimum
$100
Deposit and withdrawal
Bank transfer, Debit/Credit card, Electronic wallets (not for all markets)
eToro
The eToro broker was founded in 2007. The company promotes itself as a social trading platform working with traders from over 140 countries. The broker has several divisions operating under different jurisdictions and licensed by different regulators
Trading Instruments
eToro supports different types of CFDs (Forex, metals, commodities), as well as direct US stocks and crypto trading. The broker provides access to trading a total of 2500 + trading assets.
Commissions
In the CFD market, the broker uses spread as the commission. US stocks trading is free, crypto trading fee is 1% of trade value.
Tools
eToro Web/5
eToro Mobile
CopyTrader
Licensing
eToro (Europe) is licensed by the Cypriot regulator CySEC and eToro (UK) is licensed by the British regulator FCA. The broker also has a representative office in Australia and the USA.
Investment programs
Copy trading
Account minimum
$10-$50
Deposit and withdrawal
Bank transfer, Debit/Credit card
Saxo Bank
The SaxoBank brokerage company was founded in 1992 under the original name Midas. In 2001, the broker was licensed by the FSA, a Danish Financial Supervisory Authority. After that, the company changed its name to SaxoBank. Today the broker provides online access to various financial markets to clients from 170 countries. In 2017, the SaxoTraderGO terminal was recognized as the best trading platform for active trading according to FX Week’s e-FX Awards and ADVFN International Financial Awards.
Trading Instruments
WIth Saxo Bank you can trade Forex, CFDs, stocks, ETFs, futures, bonds, Forex options, quoted options
Commissions
The fees are charged as the spread
Tools
SaxoTraderGO
SaxoTraderPRO
Licensing
Saxo Bank is licensed under FINMA, FCA (UK Financial Conduct Authority), Monetary Authority of Singapore (MAS)
Investment programs
Robo-portfolios, Funds, Bonds
Account minimum
$10000
Deposit and withdrawal
Bank transfer, Debit/Credit card
IG
The Forex broker IG Markets is a structural subdivision of the IG Group corporation. Its securities are listed on the London Stock Exchange and are included in the FTSE 250 index. IG Markets is a UK registered company created in 1974, but since its inception, its representative offices have appeared in some other European countries. Since 2014, a retail line of brokerage services has been opened. The main activity of the broker is the provision of services for trading financial derivatives (CFDs).
Trading Instruments
IG offers Forex and CFD Trading.
Commissions
Even though IG has no minimum deposit requirement, they charge a commission that’s well above the industry average.
Tools
MetaTrader
Copy Trading
Licensing
IG is licensed under the FCA (UK Financial Conduct Authority), BaFin, and is also listed on the London Stock Exchange.
Investment programs
Not supported
Account minimum
$0
Deposit and withdrawal
Bank transfer, Debit/Credit card
How to choose the best volatility index (VIX) brokers
Are you a novice VIX trader looking for reliable and trustworthy brokers to trade with? Or are you a seasoned trader looking to upgrade your trading platform? Knowing what to look out for could save you time and money and help you find the best volatility index (VIX) brokers to suit your needs.
Here are some key factors to consider when choosing the best volatility index (VIX) brokers.
Regulation and security. Ensure the broker you choose is regulated by a reputable authority, such as the U.S. Commodity Futures Trading Commission (CFTC) or the Financial Conduct Authority (FCA). Regulatory oversight helps protect your funds and ensures the broker adheres to industry standards.
User-friendly platform. Look for a broker with an intuitive and user-friendly trading platform. As a beginner, you should feel comfortable navigating the platform, placing trades, and accessing essential tools and resources.
Risk management tools. Make sure the broker offers risk management tools such as stop-loss orders, take-profit orders, and margin call notifications. These tools can help you protect your capital and minimize potential losses.
How Is VIX Calculated?
The Volatility Index (VIX) is a widely followed measure of market volatility and is often referred to as the "fear gauge." It represents the market's expectation of future volatility and is calculated using the prices of options on the S&P 500 index. Here's a step-by-step guide on how the VIX is calculated:
Selecting options
The first step in calculating the VIX involves selecting a range of calls and put options on the S&P 500 index (SPX). These options should have a specific time of expiration, typically 30 days, and must be traded on a standardized exchange.
Calculating implied volatility
For each of the selected options, calculate the implied volatility- which is the market's estimate of the future price fluctuations of the S&P 500. This calculation is usually done using an options pricing model like the Black-Scholes model.
Weighting
After calculating the implied volatilities of the selected options, they are weighted based on their time to expiration. Options with shorter timeframes have higher weights in the VIX calculation, as they are considered more representative of short-term market expectations. The weighting is done using the square root of time rule, where options with less than 30 days to expiration are given a weight of one.
Average implied volatility
Once the implied volatilities of the selected options are appropriately weighted, they are used to calculate the average implied volatility. This average reflects the market's consensus on the expected volatility of the S&P 500 over the specified time horizon.
Annualization
To obtain an annualized value, the calculated average implied volatility is multiplied by a factor that accounts for the number of trading days in a year. This factor is typically the square root of 252, which represents the number of trading days in a year based on the usual five-day trading week. The result is the VIX value, which represents the annualized expected volatility of the S&P 500 index.
With the result, investors and brokers can have an idea of the market's expectation of future volatility, offering critical insights for trading strategies and risk management.
Other types of synthetic indices
Over time, some exchanges have set up synthetic indices, which are engineered to simulate real-world market and price movements. Synthetic indices are not affected by world events and news, but they behave like real markets and are based on a cryptographic random number generator. Synthetic indices are usually audited by an independent third party so that they aren't manipulated.
Some of the most renowned synthetic indices offered by exchanges are "crash and boom" indices, step indices, "range break" indices, and jump indices. You can trade on synthetic indices 24/7, and they are free of market and liquidity risks. Nonetheless, many traders who believe that profitable trades are made from analyzing current events and human psychology usually perceive synthetic indices as closer to gambling.
Can I trade the volatility index (VIX) in Forex?
The VIX paved the way for traders to use volatility as a tradable asset, although through derivative products. Like all indices, one cannot buy the VIX directly, but investors can take a position in VIX through futures or options contracts. Active traders, hedge fund managers, and large institutional investors use VIX-linked securities to diversify their portfolios.
Most brokers usually allow investors to use CFDs to take a position on the movement of the VIX. Traders can also trade VIX futures and Exchange Traded Funds (ETFs). As we mentioned earlier, when you trade the VIX, you aren't trading an asset directly because there is no physical asset to buy or sell. However, you can trade the VIX by leveraging derivative products designed to track the price of the volatility index.
Pros of Trading VIX in Forex
Trading VIX has several advantages depending on the strategies that you use to trade. Let's quickly go over some of the pros of trading VIX in Forex.
1. Trading volatility in Forex offers investors the opportunity to capitalize on the shifts in market share prices. Investors can take hedging positions depending on the projected shifts and can make tremendous profits.
2. When trading VIX in Forex, investors typically have a deeper understanding of current market conditions. This allows investors to leverage trend trading and reap returns. Traders are better placed to try and understand whether market conditions have reached extreme positions in either direction.
3. VIX offers investors a chance to broaden their portfolios by offering them access to an interesting and less common asset.
Cons of Trading VIX in Forex
We have seen some of the upsides of trading VIX in forex, and like all things, it also has its downsides. With this being said, let's take a look at some of the limitations.
1. Daily fluctuations are usually a challenge to keep up with. As much as VIX gives a 30-day projection of volatility, sometimes daily fluctuations are hard to keep up with and some investors end up making losses while tying all their belief in the VIX.
2. Trading VIX in forex is not suitable for beginners. Seasoned traders usually make tremendous profits from trading VIX, but rookies often end up losing significant amounts of money.
What is The Best U.S. Forex Broker to Trade VIX?
As we mentioned earlier, finding the best broker is sometimes difficult given the options available today. However, not all brokers are created equal, some are simply better than others. Our top pick when it comes to the best U.S. forex broker to trade VIX is eToro.
eToro is a great brokerage for investors to make CFD trades with up to 10x leverage on VIX futures. They have a community of almost 20 million accounts, traders, and investors. Traders can invest in futures through their web browser terminals, with no need to use an external trading platform. Traders can also trade three of the most popular volatility index funds: VXX, UVXY, and SVXY with up to 5x leverage.
Keep in mind that CFDs are leveraged trading products, meaning that you can lose money quickly.
How to Trade VIX with Forex Brokers
It is important to remember that volatility traders aren't interested in whether the price of the S&P 500 is going to rise or fall, because they can capitalize on both. What volatility traders are interested in is whether the market is volatile or not.When opening a position on the VIX, you can typically take a long or short position.
ITraders who go long on the VIX believe that volatility is going to increase and the VIX value will rise. This is usually a popular position in times of financial instability when there's a lot of uncertainty in the market. However, if you take a long position and there is no volatility in the market, then you'll suffer a loss.
IOn the other hand, traders who take short positions usually believe that the S&P 500 is going to rise in value. Short-selling volatility is often common when interest rates are low, there's progressive economic growth, and low volatility across financial markets. When you take a short position and the S&P 500 value rises, then the VIX is likely to lower, and you can take profits. However, taking a short position with volatility is inherently risky, and there's potential for insurmountable loss if volatility spikes.
Most trading platforms offer demo CFD trading accounts that allow you to practice using virtual funds before staking any real money. You can use a demo account as training wheels to help you find the perfect balance for strategy before opening a live account.
FAQ
Can I Buy VIX Directly?
No, you can't buy VIX directly, as is the case with all indices. This is because there's no physical asset to buy or sell. Investors can take positions in VIX through futures or options contracts.
What Does VIX Indicate?
The CBOE VIX indicates the level of fear or stress in the stock market using the S&P 500 index as the proxy for the entire market.
Why is VIX also Called the “Fear Index”?
VIX indicates the level of fear in the stock market, and because of this is usually referred to sometimes as the fear index.
How Do I Trade VIX?
VIX can be traded through futures or options contracts since you cannot buy VIX.
Methodology for compiling our ratings of Forex brokers
Traders Union applies a rigorous methodology to evaluate brokers using over 100 quantitative and qualitative criteria. Multiple parameters are given individual scores that feed into an overall rating.
Key aspects of the assessment include:
Regulation and safety. Brokers are evaluated based on the level/reputation of licenses and regulations they operate under.
User reviews. Client reviews and feedback are analyzed to determine customer satisfaction levels. Reviews are fact-checked and verified.
Trading instruments. Brokers are evaluated on the range of assets offered, as well as the breadth and depth of available markets.
Fees and commissions. All trading fees and commissions are analyzed comprehensively to determine overall costs for clients.
Trading platforms. Brokers are assessed based on the variety, quality, and features of platforms offered to clients.
Other factors like brand popularity, client support, and educational resources are also evaluated.
Find out more about the unique broker assessment methodology developed by Traders Union specialists.
Glossary for novice traders
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1
Broker
A broker is a legal entity or individual that performs as an intermediary when making trades in the financial markets. Private investors cannot trade without a broker, since only brokers can execute trades on the exchanges.
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2
Volatility
Volatility refers to the degree of variation or fluctuation in the price or value of a financial asset, such as stocks, bonds, or cryptocurrencies, over a period of time. Higher volatility indicates that an asset's price is experiencing more significant and rapid price swings, while lower volatility suggests relatively stable and gradual price movements.
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3
Trading
Trading involves the act of buying and selling financial assets like stocks, currencies, or commodities with the intention of profiting from market price fluctuations. Traders employ various strategies, analysis techniques, and risk management practices to make informed decisions and optimize their chances of success in the financial markets.
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4
Index
Index in trading is the measure of the performance of a group of stocks, which can include the assets and securities in it.
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5
CFD
CFD is a contract between an investor/trader and seller that demonstrates that the trader will need to pay the price difference between the current value of the asset and its value at the time of contract to the seller.
Team that worked on the article
Oleg Tkachenko is an economic analyst and risk manager having more than 14 years of experience in working with systemically important banks, investment companies, and analytical platforms. He has been a Traders Union analyst since 2018. His primary specialties are analysis and prediction of price tendencies in the Forex, stock, commodity, and cryptocurrency markets, as well as the development of trading strategies and individual risk management systems. He also analyzes nonstandard investing markets and studies trading psychology.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).