Broker to Trading

A Turbo is a type of derivative which requires the value of an underlying market to stay above or below a barrier for the duration of the trade. Deriv offers Turbo trades on Synthetic Indices on its user friendly Deriv Trader platform.

This review examines this instrument from a range of perspectives. Deriv Trader is the first platform which appears when the trader logs into Deriv, and the trade may try out Turbos via a demo initially. Deriv Sign-Up

How do Turbos operate ?

A Turbo is a type of derivative that may be utilised in different ways. The core feature of a Turbo is a barrier (price level) which the trade has to stay above or below (neither touch nor exceed) for the time frame of the trade. The time frame is pre-specified. Turbos can be traded on Stocks and have specific characteristics for this purpose. Deriv however offers Turbos on Synthetic Indices with characteristics specific to the type of trading Deriv supports on its Deriv Trader platform.

Deriv Trader is a platform which supports a wide range of ways to trade multipliers and option like trades, including Vanilla Options. The core feature is that these are not leveraged trades, although multipliers have similarities with leveraged trades. Options are very different, and work around a payout for a successful trade. However in the case of all these products and unlike leveraged trading, if the trade is unsuccessful, then the Stake is lost.

How to start a Turbos trade

The trader creates a Deriv account and logs into the platform. Deriv Trader is the first platform which appears and from here the trader chooses a market from the rectangular box on the top left hand sector of the chart. The trader can choose a Synthetic Index, specifically one of the Volatility Indices. These simulate different levels of market volatility, with numbers defining increasing (higher) or decreasing (lower) levels of volatility (for example Volatility 10 vs Volatility 75).

Then the trader looks to the right hand side of the chart and on the top selects the trade type and chooses Turbos. The trade may select the trade parameters if they wish at this point. However the may prefer to analyse the market initially via the tools on the chart, which include different chart price types and a range of technical indicators with mainstays of this type of analysis as well as some more exotic indicators.

What parameters can the trader select for Turbos ?

First the trader needs to select the time frame for the trade. This is the time within which the trade has to stay above or below the barrier for the trader to receive a payout (i.e. the time frame for the trade). This can be chosen from very short term (ticks) to long term (days).

But there are two possible ways to choose, either a Duration or an End Time. So it depends on how the trader wishes to define the length of the trade. Perhaps they want to specify an end time or they wish to trade within a specified time.

If Duration is chosen, the trader selects from ticks to days. The minimum number of ticks and thus the shortest trade possible is an extremely short 5 ticks. A tick is around 1 second, so this around a 5 second trade. The longest trade time is 365 days. The contract expires at 23:59:59 of the day of expiration, if a time is not set.

If End Time is selected, the trader simply chooses a date and time to end the trade. Then the trader may choose Long or Short. If Long, there will be a barrier below which the trade has to stay above and if Short, there will be a barrier above which the trade has to stay below.

After this the trader can select the barrier. This may be chosen from a range of values given by the system. The barrier level affects the Payout per Point, as it is related to risk. So once the trade begins, the value of the market has to stay above or below this value. A Take Profit may also be optionally defined by the trader, this closes the trade when the profit reaches a specified amount. The system sets then the Payout per Point.

How does the payout work ?

For a payout, the trade must be successful. This means it must stay above or below the barrier for the duration of the trade (i.e. until the expiration time is reached, until a Take Profit is reached or until the trader ends the trade, if the barrier is not reached). The payout itself is the Payout per Point times the difference in points between the final price (the spot price of the last tick at expiry) and the barrier. Thus the trader is rewarded the more the final price is away from the barrier (the number of points).

The higher the Stake the higher the Payout per Point. However it is possible that the payout will be less than the Stake, as the Payout per Point, while it increases with the Stake, is set at less than the Stake (there needs to be more than one point difference).

So a profit can only be earned if the Payout is more than the Stake. Therefore it is important to the profitability of the trade how many points are between the final price and the barrier.

The trade can be ended early, up to 15 seconds before expiration. In this case the trader will receive the Contract Value, which is the value specified by the system. The trade cannot be ended early if the Duration is specified in ticks. However it is possible that the Contract Value can be less than the Stake so early closure could result in a loss.

What is the goal of this trade ?

The goal is ideally to try and have a trade which will firstly not exceed a barrier and secondly try and stay away from it for the duration of the trade, with a direction away from the barrier by the end of the trade sufficient to make a profit. That is, the trader is looking for a trade which is potentially directional, and if possible directionally volatile enough that it stays as far away from the barrier by the end of the trade as possible.

So during the trade the risk is that it could reverse or have a spike of a retracement into the barrier even if the speculated direction works out. Thus the trader can choose Indices based around their volatility levels, but they may also use technical indicators.

If the trader does not want to have a knock-out type barrier in their trade, they may try leveraged trading or trading with multipliers.

Momentum indicators can be helpful for pointing towards changes in momentum while other indicators may point towards changes in direction and volatility as well as the potential for trends. This way the trader can try and decipher the volatile complexity of the chart with technical indicators.

However volatility and momentum might result in moves into the barriers as well as moves away from the barrier. The shorter the trade the less useful may be technical indicators. Getting away from a barrier with a trend may take longer than expected even if this works out as trends can show volatile complex moves throughout their existence. The trader may set a barrier relatively far from the trade, however they will find that the Payout per Point is relative to the risk of the trade (this is typical for these kinds of trades). The trader can try different variations on barrier distance and time to see how this factors into the trade outcome on a demo account.

Trends and barriers

A trend is a structured market events which has a beginning, middle and end. But the key component is they have a direction, up or down, that is they have a direction up or down, but with complexity in the way they navigate this direction. So a trend can be a way to try and predict direction. The problem is that by the time they are visible, trends can be approaching the end. The end of a trend would see direction changes.

A Turbo requires that a trade stays within a barrier from one perspective, that is below if Long and above if Short. So the trader is looking for a trade which can range or trend or move in such a way that it does not go below one value. Therefore a trend can be useful in that is will tend to keep the market's value away from the undesired direction and indeed can in a more stable fashion provide the wanted distance. This said, trend can destabilise and reverse which could crash the trade into the barrier.

Volatility and barriers

Volatility is a complex feature of markets. When selecting a Volatility Index the trader can choose from different levels of volatility. However as volatility is complex, different levels of volatility can result in more trading patterns as well. Short term trading can be highly subject to volatility as well. Volatility can be a boon for Turbos as it could help generate patterns and direction, but also a risk as it could push the market into the barrier.

Momentum and barriers

Momentum may be useful on shorter term trades, as it can indicate a directional move. However volatility can change the direction of momentum. Momentum can also be useful on longer term trades based on trends. Momentum can change but a momentum trade can be way to have some belief that the trade will move away from the barrier. However markets are complex and complex directional moves may be expected.

Support and resistance

A key element of analysis is support and resistance. These are levels at which the market fell back from (resistance) or moved up from (support) in the past. These levels may point to potential 'hidden' barriers in the market, relative to the chosen barrier.

Trade types on Deriv ?

Deriv has a number of different ways to trade on Deriv Trader, including Accumulators, which accumulate growth if the trade stays within barriers and Vanilla Options which specify ending conditions for a trade, i.e a Strike price which the trade has to be above or below. Additionally the MT5, cTrader and Deriv platforms offer leveraged trading with a wide range of Synthetic Indices, especially on MT5 and Deriv X.

What is the minimum deposit to use Deriv ?

There is a $5 minimum deposit, but the minimum can vary depending on the payment method used, which include Credit/Debit Cards, Bank Transfer, Skrill, Neteller, Fasapay, Perfect Money, WebMoney, Paysafecard, Jeton, Sticpay, Airtm, Pay Livre, OnlineNaira, Trustly, Beyonic, AstroPay, 1ForYou and Advcash (payment method availability depends on the trader's region).

Crypto accounts are available in some regions, covering Bitcoin, Ethereum, Litecoin, Tether and USD Coin. For Crypto accounts, Changelly, Banxa and XanPool are also available.

Comparative study analysis

Trading is about direction and in particular speculating on future direction of a market. However the trader may wish to confine the trade relative to a barrier level. Deriv Turbos offer a barrier level which the trade cannot touch or exceed in one direction but also provide a variable payout depending on how far the trade ends from the barrier, so it has some features of leveraged trading, as distance from the start state matters in leveraged trading.

This also applies to Vanilla Options and in both cases the distance from the barrier (or strike price) is crucial for the proftability of the trade. The Accumulators provide a payout but it is based on accumulating growth between barriers. In the case of the Accumulator, the payout is the stake plus the accumulated growth. However there are two barriers, so the potential for a barrier breach is greater.

Those who are interested in Synthetic Indices can find a wider range on MT5 and Deriv X, where more of these simulated markets can be found, simulating markets from trends to news events. On these platforms, traders can trade CFDs on reals markets and synthetic markets with leverage. Traders who want to copy trade may do so on MT5 and cTrader, but only for leveraged trading.

Barriers offer a way to potentially simplify a trade into a state where there is either a payout or a loss of stake, making very short term trading possible, but at the cost of a constrained trading environment.

Why trade Turbos on Deriv ?

Turbos provide a way to trade from the very short term to the long term with a variable payout depending on how far the trade ends from the barrier. Deriv has long experience offering barrier type options as well as Synthetic Indices, and Deriv itself has been in operation originally since 1999.

At Deriv the trader may trade from very small stake sizes to larger ones and there is a low minimum deposit of $5 for a live account. Trader who want to try other ways to trade including leveraged trading will find platforms including MT5 and cTrader. The trader can try out Turbos on a demo account without risking real money.