Synthetic indices can be used by newer traders to learn about chart analysis and trading mechanics, but they can also move quickly and involve significant risk.
If you are unfamiliar with synthetic indices, you may want to begin with a demo account so you can understand how the different instruments behave without risking real funds.
Before trading with real funds, make sure you understand:
- how the synthetic instrument behaves;
- its volatility characteristics;
- the position size you are using;
- applicable leverage and margin requirements; and
- how much you could lose.
Different synthetic indices have different price behaviours and levels of volatility.
Whether a particular financial product is appropriate for you depends on your experience, objectives and tolerance for risk.