Best Volatility 75 Index Brokers

Read our HF Markets Review to learn more about the trading conditions of the broker.

Find out more about the Plus500 platform features on our Plus500 review.

Read our IC Markets review to learn about their platformm.

Find out more about the FXCM trading conditions on our FXCM review.

What is the Volatility 75 Index (VIX)?

The Volatility 75 index, or VIX, is run by the Chicago Board of Options Exchange (CBOE). This index is meant to help traders and investors gauge the volatility in the US stock market. It is especially effective in tracking the market sentiments held by institutional investors. The index looks forward. This means that it predicts the “implied volatility” of the stock market for the next 30 days.

The higher the value of the VIX index, the more fear there is in the stock market and it is more likely that the stock market will fall. In contrast, when the VIX index is lower, it means that investor confidence is high and the stock market is expected to be bullish. The neutral value of the VIX index is set at 30.

Since the VIX index has a negative correlation to the S&P 500, contrarian investors use it to hedge their bets. However, numerous traders and investors also use the VIX for speculative and diversification purposes. Even though the VIX is only based on the S&P 500, it is often seen as being an indicator of the entire US stock market.

Any CFD trader that is involved in US securities should be aware of the VIX and use it to inform their trades. The VIX plays a key role in gauging the markets and can help a trader predict future market movements. Traders can also directly trade the VIX if they want to bet on the future direction of the US equity market.

The VIX is available as a CFD instrument offered by numerous global CFD brokers. The VIX is offered by each of the brokers mentioned above in this article. If a South African CFD trader is involved with the US markets, then they can use the VIX for hedging or speculative purposes.

Why You Might Want to Trade Volatility 75?

There are a few reasons traders go long or short on VIX 75,

One of the main reasons why traders use the volatility index is to hedge their positions. When the market is falling, the value of the index rises. This means that if you have both a stock position and a position in the volatility index, the rise in the value of the latter can offset the losses from the former. This approach is common with traders with a huge portfolio of individual stocks. Usually, they will sell off the stocks in their portfolio when the market is tanking so they can buy later.

However, this might not be effective because the price might change too quickly and the advantage of entering the market at a lower price can be lost. This is why such traders use the VIX 75 which measures the volatility of the S&P 500 companies to hedge their trading.

In addition, many investors use the volatility index to profit from its changes. One of the most popular options for this is to trade on the movement of the market’s volatility. With the help of a South Africa-based volatility broker, you can easily predict the future direction of the market.

Furthermore, trading the VIX 75 allows for flexibility. You can open a position and close it when you want. From a few seconds to a whole day, or even overnight. This flexibility allows you to deploy different trading strategies. Scalping, day trading, and swing trading can be used when trading the CFD.

How does Volatility trading work?

Volatility trading works by speculating on the swings of prices in the financial markets, instead of the direction (up or down) of the price itself. Here’s a breakdown of the key concepts:

Volatility:
Volatility refers to the degree of price fluctuation of an asset or market over time. High volatility indicates significant price swings, while low volatility suggests more stable prices.

Common Instruments in Volatility Trading:

1) VIX Options: Options contracts on the Chicago Board Options Exchange Volatility Index (VIX) are a popular tool for volatility trading. The VIX reflects market expectations of future volatility.

2) Volatility Futures Contracts: These contracts allow traders to speculate on the future value of the VIX index.

Factors Affecting Volatility:

1) Economic Events: Upcoming economic data releases, interest rate decisions by central banks, or geopolitical events like new trading laws or bans on certain items can increase market uncertainty and volatility.

2) Earnings Seasons: Periods when companies release their financial results can lead to higher volatility as investors react to the news.

3) News and Events: Unexpected news or events can trigger market swings and increased volatility.

Benefits of Trading VIX CFDs

VIX 75 CFDs (Contracts for Difference) offer several potential benefits to traders:

1. Leveraged Trading: VIX 75 CFDs brokers usually allow you to leverage your VIX 75 trade positions, meaning you can control larger positions with a smaller initial investment. This can potentially increase your profits.

2. Round-the-Clock Access: VIX CFDs are typically traded 24 hours a day, 5 days a week on the brokers platform, providing you the opportunity to enter or exit trade positions.

3. Market Flexibility: You can go long or short with VIX 75, which means you can make profit from both rising and falling VIX levels. If you the market is speculated to become more volatile, you can go long on VIX CFDs. Alternatively, if you speculate the market to become less volatile, you can go short.

4.Risk Management: VIX 75 CFDs can be used to hedge other positions in your portfolio. For example, if you are concerned about market volatility affecting your stock holdings, you can buy VIX 75 CFDs to offset potential losses from other financial assets in your portfolio.

5. Liquidity: VIX 75 CFDs are typically highly liquid, meaning you can easily buy and sell them without significant slippage in its price.

Is trading the VIX Risky?

Trading CFDs is generally risky. Since the VIX is a CFD, it definitely has its own risks. Some of these risks are generic while some are specific due to the nature of the VIX. Let us dive deeper into some of these risks.

Risk of leverage: Leverage is the reason there are many retail traders. It allows you to borrow money from your broker to trade your positions. However, it is a double-edged sword. While it has the potential for huge profits, it can cause devastating losses if abused.

To mitigate this risk, trade VIX 75 with the lowest of leverages. This way, there is a little chance that your account will enter a margin call or you losing all of your money.

Excess Volatility: VIX 75 is quite volatile and the price can change quickly. This alone makes trading the VIX risky. However, the possibility of gapping makes it even riskier. With volatility, the price moves quickly but gradually. Gapping, on the other hand, is when the price ‘jumps’ higher or lower without a gradual movement. Here is what gapping looks like

Can you see the colored boxes? Those are spots where gapping took place. Can you see how the price jumped those spots? This can trigger your stop-loss orders prematurely or skip your pending orders thereby increasing your risk.

Broker Risk: This a risk associated with the broker you choose. They could default on the deal or not execute it properly. To reduce this risk, only trade with FSCA regulated brokers.

Volatility 75 Trading Strategies

It is important you understand that the VIX is not an asset in itself. Therefore, it is not moved by demand and supply. Rather, it is moved by the psychological (fear and greed) behavior of sellers and buyers in the market. Because of this, it can be quite tricky to trade. Even for the most experienced of traders.

There are different strategies you can deploy to trade the VIX 75 successfully. Here are some of them.

The Bollinger Strategy: It involves the use of Bollinger Bands to find buying and selling opportunities. Essentially, the bands act like a sort of boundary. When the price reaches the upper boundary, you can buy. When it touches the lower boundary, you can sell.

This simple strategy can be combined with other strategies like candlestick patterns and market structure for greater effectiveness.

The Moving Average Strategy: This strategy combines a short-term and a long-term moving average. The short-term moving average is used to determine entry and exit. When it crosses the long-term moving average upward or downward, it means there is a change in the previous trend. With this, you can buy or sell based on the last prevailing trend.

How to Open An Account with a Volatility 75 Index Broker?

If you currently trade or plan to trade Volatility 75 Index through a broker platform, from we have noticed that certain habits that help traders maximise their trades, here are some:  

Monitor Market News and Events: You should stay informed about market news and events as these are important for a successful Volatility 75 Index trading. Pay attention to economic news/indicators, geopolitical developments, and corporate news that can impact market volatility. Use reliable news sources and consider subscribing to market analysis services to get detailed analysis.

Use Risk Management Tools: To protect your capital, implement effective risk management strategies when trading. Set strategies such as stop-loss orders to limit potential losses, manage your position size carefully, and consider diversifying your portfolio with other asset classes so they can absorb the shock in the event of a loss.

How to Open An Account with a Volatility 75 Index Broker?

The process of opening an account with a CFD broker is quite straightforward and doesn’t take more than a few days (24-48 hours normally), usually.

In this guide, we’ll be using the example of HF Markets to demonstrate how to open an account with such a broker. In general, the steps involved in opening an account with a broker that offers VIX CFD are the same.

Here are the steps involved in opening an account for trading Volatility 75 Index CFDs:

Step 1) Choose a Regulated CFD Broker: The first step is to select a broker that you want to work with. The most important aspect of choosing a broker is to check whether it is safe. This means that it is a reputed broker that offers genuine services. The broker should also be regulated in the country of your residence.

So, South African traders should ensure that the broker is regulated by the FSCA. Apart from the FSCA, you should also check whether the broker is regulated by tier-1 financial regulators which are the FCA of the UK and the ASIC of Australia.

If your CFD broker is regulated with multiple regulators, including FSCA, then that broker is considered low risk for trading CFDs on VIX & other Indices.

For example, HF Markets (our example broker for this guide) is regulated by the FSCA and it is also regulated by the FCA of the UK. You can see that this information is available on their website and you can cross-check it with the regulator’s website.

So, we can consider HF Markets as a low-risk broker for depositing funds for trading CFDs. If your broker of choice is multi-regulated with ‘Tier-1’ & ‘Tier-2’ regulations, then you can safely choose that broker.

Further, there are other factors that you should consider before choosing a broker. We will not cover these in detail in this guide, but here are some factors that you should check.

You should check the overall fees charged by the broker (such as spread, commission for trading VIX, overnight fees, deposit fees, and inactivity fees). Other factors include customer support, instruments available, trading platform, trading conditions, and so on.

Step 2) Complete KYC Formalities: Brokers ask for your KYC details because they are legally required to do so. This helps in preventing cases of fraud and money laundering.

Before registering with any reputed broker, you will be asked to provide KYC details. These details will be in the form of identity proof, address proof, and government-issued photo ID to ascertain how you look.

In general, you are required to submit 2 documents, your Identity Proof, and second is your Address Proof. You cannot complete KYC without any of these documents.

For example, before registering with HF Markets, you will need to provide address proof.

After completing the KYC, the next step is to download the platform & deposit funds.

Step 3) Download Platform: In order to actually start trading, you will need a trading platform. Different brokers offer different trading platforms, however, the most popular with CFD traders is the MetaTrader 4.

For example, HF Markets offers both the MetaTrader 4 and the MetaTrader 5 platforms to its traders.

You can download the platform directly from the HF Markets website, from your client panel & login using the detail provided to you with your trading account.

If you do not want to download any software, then you can also use MetaTrader for the web directly through your web browser.

Some brokers like Plus500 offer their own ‘proprietary platforms and no third-party platforms like MetaTrader or cTrader. So, if you are not comfortable using a platform that is not MT4 or cTrader, then you must carefully verify that your CFD broker does indeed offer MetaTrader & cTrader for example.

A simple way to do that would be to ask your CFD broker via Live chat, and they will tell you whether they have your preferred platform available or not. You can usually also find the supported platforms listed on the broker’s website.

Step 4) Place Your Trade on VIX CFD: That’s it, this is where you begin to trade. Once you’ve set up your account, you are free to make trades through the trading platform. Select ‘VIX’ in order to place a long or short trade.

Depending on your trading order & price movement of the VIX, you will make a profit or a loss.

It is important to know that these are steps that have been covered in basic, whereas in actual trading, you must fully understand the risks involved & have a proper working strategy.

How to Choose the Best Volatility 75 Index Broker in South Africa

Holding an FSCA license is the topmost criterion for choosing a VIX 75 broker. We have covered how to verify this but there are other essential criteria to consider. Here are some of them

Does the broker have VIX?

Though forex brokers are regulated, there is no rule that makes it mandatory that they offer all CFDs. It is very possible that a broker does not have VIX 75. If this is the case, you cannot sign up with that broker. Checking the indices under your broker’s ‘Instruments’, ‘Products’, or ‘Markets’ section is how you verify if VIX is offered.

But there is a downside to this approach. The downside is that brokers have different names for VIX 75 index. If you check by yourself, you might miss it if your broker uses an unpopular name. For a better result, contact your broker’s customer support and ask if they offer Volatility 75.

Does the Trading Platform Have Helpful Tools?

Volatility analysis often relies heavily on technical indicators. Look for platforms with advanced charting tools and volatility-specific indicators like the VIX futures chart or the CBOE Volatility Index (VIX) itself.

Ensure the platform offers order types suitable for VIX trading strategies and risk management features such as stop-loss orders, take-profit orders, and trailing stop orders.

Because all brokers do not provide in-depth research on the VIX or market volatility. Look for brokers offering dedicated research and education materials or analysis tools specifically focused on the VIX.

Are the trading fees high or low?

Spreads, swaps, and commissions are the fees you incur from trading. Check with your broker for the pricing of VIX. Confirm if there are extra commissions, and what the overnight charges are. Furthermore, you should compare this factor for different brokers. For example, FXCM’s spread for VIX is 5 pips which is way higher than that of other brokers in this review. HF Markets has the lowest at 0.14 pips.

Furthermore, some forex brokers have fees that change with trading platforms. That is, the spread for VIX 75 might vary on MT4, MT5, and the broker’s proprietary platform. Usually, the fees are the lowest on the broker’s proprietary trading platform. You should consider this factor before carefully before choosing a VIX 75 broker.

Which Brokers Has Volatility 75 Index in South Africa?

IC Markets, Plus500, HF Markets, Pepperstone, and FXCM are brokers that support the volatility 75 index in South Africa. Do not forget to trade with regulated brokers only.

FAQs on Best Volatility 75 Index Brokers in South Africa