Volatility 75 Index Strategy For Scalping 📈

Introduction

The V75 (Volatility 75) Index is a popular trading instrument among traders due to its high volatility, offering numerous opportunities for scalping strategies. Scalping, a short-term trading strategy, involves making multiple trades within a day to capitalize on small price movements. This article will guide you through a proven V75 scalping strategy designed to help you maximize your profits.

What is The V75 Index (VIX 75)?

The volatility 75 (V75) index is a type of synthetic index that falls under volatility indices. V75 reflects or copies the behaviour and movement of real-world financial markets with a constant volatility of 75%.

This is different from forex pairs which have varying volatility at different times.

It is highly volatile, making it ideal for traders looking to capitalize on rapid price movements. Traders need to be quick and precise when scalping the V75 Index, as the price can change significantly in a short period.

Which Brokers Offer The V75 Index?

Only one broker offers the V75 Index, and that is Deriv. Deriv exclusively provides the V75 Index because it developed the unique algorithm that generates the numbers driving synthetic indices. As a result, no other broker can offer the V75 Index.

Where Can I Trade v75 Index?

You can only trade the V75 scalping trading strategy on DMT5 which is Deriv's version of the popular MT5 platform. If you do not have a DMT5 account you can open one by clicking the button below.

Open DMT5 Account

This post also shows you how to open a synthetic indices account step-by-step.

V75 Scalping Trading Strategy Overview

Trading Type: Scalping

Timeframes: 5 minutes (M5), 15 minutes (M15), 30 minutes (M30) and 1 hour (H1)

Trade Execution Timeframe: 5 minutes (M5)

Signal Detection Timeframe: 15 minutes (M15)

Confirmation Timeframe: 30 minutes (M30) and 1 hour (H1)

Indicators: Bollinger Band, Relative Strength Index (RSI), Stochastic Oscillator and MACD

Below is a table showing the function(s) of all indicators to be used in the v75 scalping trading strategy:

INDICATOR	FUNCTION
Bollinger Band	Measures Volatility
Relative Strength Index (RSI)	Measures Market Exhaustion
Stochastic Oscillator	Measures Momentum
MACD	Direction and Momentum

Steps to Taking a Trade Using The V75 Scalping Trading Strategy

1. Set up all indicators on your DMT5 app. Please ensure all parameters are 100% correct and check again to confirm.

2. To detect a potential trading signal for further analysis, switch your chart to M15 (15 minutes timeframe).

Sell Signal Using The V75 Scalping Trading Strategy

✓ Stochastic Oscillator (Blue Line) must reach the 80 level

✓ RSI (Black Line) must reach the 70 level

✓ MACD histogram forms a peak

✓ The price must touch the upper Bollinger Band

✓ Candlestick rejections forms

✓ Check again to be sure

Another example of a sell trade using the V75 strategy.

Buy Signal Using The V75 Scalping Trading Strategy

✓ Stochastic Oscillator (Blue Line) must reach the 20 level

✓ RSI (Black Line) must reach the 30 level

✓ MACD histogram forms a trough

✓ The price must touch the lower Bollinger Band

✓ Candlestick rejections forms

✓ Check again to be sure

Another example.

3. When all the conditions for sell or buy are met on M15, draw a straight line to mark out the anticipated reversal point.

4. After drawing a line on M15, move to M5 for further confirmation of The V75 Scalping Trading Strategy .

Take the following actions if you see any of the following on M5:

Scenario 1 All the conditions met on M15 are also met M5 Action: Mark as HIGH POTENTIAL SET UP

Scenario 2 All the conditions met on M15 are not met on M5 Action: DISCARD TRADE IMMEDIATELY AND WAIT FOR ANOTHER SIGNAL ON M15

Scenario 3 All the conditions of the V75 Scalping Trading Strategy met on M15 are about to be met on M5 Action:

WAIT PATIENTLY FOR COMPLETE SIGNAL FORMATION ON M5 BEFORE ENTERING

5. In the case of Scenario 1, you must carry out the following simple analysis before entering your trade:

– Switch to M30 and H1 timeframes to check if the price is moving in a direction opposite to your short-term prediction. If it is, DON’T ENTER ATRADE. This is because a strong fake reversal might occur which will most likely hit your stop loss.

Example: The conditions for SELL have been met on M15 and confirmed on M5. But when you checked M30 and H1, you noticed that the BUYING POWER is high. This means price might not respect the signal and move along with the trend instead.

To detect the trend direction on both M30 and H1, you will check the crossover on the Stochastic Oscillator and MACD histogram formation.

BUY BIAS: Stochastic Blue line crosses the Red and moves upward, while the MACD predicts an upward movement.

SELL BIAS: Stochastic Blue line crosses the Red and moves downward, while the MACD predicts a downward movement. 6. If all these conditions are met, you can safely enter your trade on M5.

How To Enter A Trade Using The V75 Scalping Trading Strategy

1. All trades should be executed and monitored on M5 only.

2. Before entering a trade, decide on the lot size to use depending on the size of your account. Make sure you understand risk management.

3. The V75 scalping trading strategy, does not use the Instant Execution option, instead, it uses Stop Orders (SELL STOP or BUY STOP). This will prevent premature entry.

4. When all your signals have formed on all timeframes, switch to M5 and place a STOP ORDER a few PIPS below (For a SELL TRADE) or above (For a BUY TRADE).

5. Stop loss should be placed a few pips above the highest or lowest candlestick (depending on the type of trade). Note that there is always a possibility of a retest before the final movement.

WARNING: ALWAYS SET STOP-LOSS AND DON’T USE A LOT SIZE THAT IS BIGGER FOR YOUR ACCOUNT SIZE!

How To Exit A Trade Using The V75 Scalping Trading Strategy

There are methods you can use to determine when the movement is done.

1. The Bollinger Band

✓ Price reaches the middle band or

✓ Price reaches the last band

2. The Stochastic Oscillator

✓ The blue Stoch line touches the opposite level e.g. For a SELL trade, the line moves from 80 level and approaches 20.

Vice versa for BUY.

3. Constant PIP target per trade

✓ I personally target 100 pips per trade irrespective of the movement. This is 1000.0000 points per trade based on observation.

✓ You must monitor 1 and 2 to determine when not to opt-out of a trade prematurely.

Rules of The V75 Scalping Trading Strategy

1. Don't be greedy. Make use of stop-loss and appropriate lot size.

2. Your total opened positions should be equivalent to your normal lot size depending on your capital.

3. Have a daily profit target to eliminate greed or overtrading. 4. If a signal is incomplete, don’t trade it.

5. If you are not confident with the strategy, don’t trade it.

6. Make sure you read articles on all indicators during your back-testing period.

7. Don’t trade an amount you can’t afford to lose.

8. Be confident in yourself as a trader.

9. If you are a new trader and you are not familiar with any of the terms mentioned above, please Google them

10. Trading is risky irrespective of the strategy. Follow these tips for better chances of making a profit. Below are screenshots showing some of the results of using this strategy.

Another one.

And another.

Risk Management

Risk management is crucial in scalping due to the high frequency of trades. Here are some tips:

1. Limit Your Risk: Do not risk more than 1-2% of your trading capital on a single trade.
2. Use a Trading Plan: Have a clear trading plan with predefined entry and exit points.
3. Keep Emotions in Check: Avoid emotional trading by sticking to your strategy and not chasing losses.

This strategy has the potential to give you good profits that you can withdraw and enjoy!

You can also check out these other tips for trading synthetic indices profitably. Leave your thoughts about this strategy below in the comments.