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The Volatility 75 Index, or simply the VIX, measures stock-market volatility. Often called the “fear index”, it measures how much volatility professional investors believe the S&P 500 index of leading US shares will experience over the next 30 days. Since the VIX has a strong negative correlation with the stock market, it has become a popular financial instrument among traders, who use it to hedge against falls in stocks and for purely speculative reasons.
Our guide to the VIX will explain what it is, how it is calculated, how traders use it as part of a risk-management strategy, the advantages and disadvantages of trading VIX CFDs, and which brokers are the best for VIX trading. Our team has thoroughly researched and tested over 180 CFD providers to provide the top VIX brokers for traders of all budgets and preferences.
According to our testing and research, these are the best brokers for trading the VIX volatility index for 2023.
The VIX is the most watched volatility index in the global markets. It measures expected volatility in the S&P 500 but is also a barometer for confidence in the wider US stock market. The VIX is calculated by tracking the underlying price of S&P 500 options, not the stock market itself, allowing it to estimate the 30-day volatility of the S&P 500.
When the VIX reading is above 30, it implies high expected volatility and investor fear about the market’s direction. By contrast, a reading below 30 suggests investors are generally confident about the market outlook. In March 2020, amid concern about the impact of the outbreak of the COVID-19 pandemic on the global economy, the VIX jumped to 82.69, its highest level ever, as stock markets crashed around the world.
During highly volatile periods, investors tend to dump stocks and buy “haven” assets considered more stable in times of uncertainty, such as US Treasury bonds or gold. High VIX readings are usually associated with poor stock market performance, which means it can be a useful tool for traders looking to hedge or short the market. The VIX can also be traded as a CFD, though not all brokers will offer it.
The VIX is part of the indices asset class of financial instruments offered by online CFD brokers. We have an experienced review team dedicated to evaluating CFD brokers, so you don’t have to. Our team of experts meticulously examines each broker in 7 different areas using over 200 individual metrics. We invest hundreds of hours annually researching and scrutinising brokers to ensure we only recommend the best.
Of these seven areas, we always prioritise regulation and costs. These are our priorities because traders want to know that their broker is trustworthy and isn’t overcharging them. Brokers are constantly altering the products they offer, and we keep our reviews updated with the latest data. You can find out more about our in-depth review process here.
HFM is a fantastic all-around broker with free deposits and withdrawals and low-cost trading accounts. HFM supports the MT4 and MT5 platforms in addition to its own new HFM trading app. It also has excellent trading tools to assist traders, such as free Autochartist.
Like most other brokers on this list, HFM offers VIX trading as an index CFD. The typical spread on the VIX at HFM is 0.14 – about average compared to other brokers – and maximum leverage is 100:1. We really like HFM’s Micro Account for beginners with its 5 USD minimum deposit and the VIX is available here too. The only limitation to trading the VIX on the Micro Account is that the maximum contract size is 7 lots, compared to 60 lots on the Premium and Zero accounts.
AvaTrade is for traders who want a trusted broker with low costs, free withdrawals, and a well-designed mobile trading app. While AvaTrade’s minimum deposit of 100 USD isn’t the lowest you can find, it’s still low enough for most beginners. Avatrade offers some of the best trading tools in the industry alongside a world-class selection of educational and market analysis materials.
AvaTrade offers the VIX as a Short-Term Futures ETN, with a typical spread of 1.5 – about average compared to other brokers on this list. Available on both MT4 and MT5, Avatrade’s VIX ETN features maximum leverage of 20:1 – lower than other brokers on this list – and it’s only available for USD accounts. As an ETN (similar to ETFs, but rather than holding a basket of stocks, ETNs are debt instruments with a maturity date), trading on the VIX at AvaTrade is only available Monday – Friday from 08:00 – 17:00 EST.
Pepperstone’s low-cost ECN trading service, fast trade execution, and range of third-party trading platforms have made it popular amongst experienced traders and serious beginners around the world. One of our favourite Forex brokers, Pepperstone also excels when it comes to commodity and index trading.
We like Pepperstone’s simple pricing structure for trading the VIX, with 1 lot equating to a $1 per point move in the index. With an average spread of 0.16 on the VIX Index CFD, Pepperstone’s costs are about average, though minimum spreads may be much lower. A high leverage of 100:1 is available, though this is lower than the 200:1 for most other indices at Pepperstone but still more than enough for most traders.
An excellent all-around broker, IC Markets was founded in 2007 in Australia and holds licences from some of the strictest regulators in the world. IC Markets is well-known for its low trading costs, choice of trading platforms, and wide range of trading tools. It also has some of the best education available from any broker.
Instead of an index, IC Markets offer the VIX as a Futures CFD. All of IC Markets Futures CFDs are priced directly from the underlying futures markets, with commissions, financing charges and dividend adjustments all built into the spread itself. Be aware that IC Markets Futures CFDs are set to expire two working days before the contract expires on the underlying market. Futures CFDs are complex CFDs, so make sure you understand how they function before attempting to trade them.
🏦 Min. Deposit | USD 0 |
🛡️ Regulated By | ASIC, BaFin, DFSA, CFTC |
💵 Trading Cost | USD USD 6 |
⚖️ Max. Leverage | 200:1 |
💹 Copy Trading | Yes |
🖥️ Platforms | MT4, L2 Dealer, ProRealTime |
💱 Instruments | Bonds, Commodities, Cryptocurrencies, Digital 100s, Stock CFDs, ETFs, Forex, Indices, Interest Rates |
IG is one of the world’s largest CFD brokers, with 320,000 clients and over 19,200 CFDs to trade. IG has two low-cost trading accounts with no minimum deposit requirements and low costs. Instruments available to trade include commodities, indices, cryptocurrencies, over 16,000 shares and ETFs, options, interest rates and bonds. All CFDs can be accessed on IG’s award-winning app and web trader platform.
With such a large CFD line-up, it’s unsurprising that IG offers the VIX as a tradeable index CFD. Leverage is much lower than other brokers, at 5:1, and the spread rarely varies from 0.2 – relatively high compared to other brokers on this list. Note that IG prices the VIX index differently from the rest of its index markets. IG creates a price between the two nearest futures contracts on the underlying market, as these tend to be the most liquid markets.
A trustworthy global online broker, Admirals is regulated in the UK, Australia, the EU, South Africa and Jordan. Admirals offers support for the MT4 and MT5 trading platforms and has low trading costs on four live accounts with a minimum deposit of 100 USD.
Admirals only offers the VIX as a 10 USD Futures Contract CFD with a rolling 30-day expiration date. Spreads are low, averaging 0.1, but leverage is limited to 10:1. As is mostly the case with Futures CFDs, the VIX is only available on the MT5 platform. Futures CFDs are complex CFDs and it is recommended that you educate yourself on how they function before trading them.
🏦 Min. Deposit | USD 50 |
🛡️ Regulated By | FCA, ASIC, CySEC, BMA |
💵 Trading Cost | USD USD 13 |
⚖️ Max. Leverage | 400:1 |
💹 Copy Trading | Yes |
🖥️ Platforms | MT4, TradeStation |
💱 Instruments | Bonds, Commodities, Cryptocurrencies, Energies, Stock CFDs, Forex, Indices, Metals |
A well-regulated broker, FXCM has a single account has a minimum deposit of 50 USD but will appeal to high-volume traders who appreciate a wide platform choice and an extensive suite of advanced trading tools. Clients with a notional trading volume of more than 10 million USD per month are eligible for rebates, dedicated customer support, free VPS services, and free access to multiple APIs.
Like IC Markets, FXCM offers the VIX CFD as a Futures Contract with a rolling 30-day expiration. Futures are complex CFD instruments and we recommend that you educate yourself on how Futures work before attempting to trade with them. The target spread of the VIX at FXCM is 0.6 pips and the maximum number of contracts per trade is 5,000.
Unlike indices, such as the S&P 500 or FTSE, which are groups of company shares, the VIX is a volatility index. The VIX tends to rise with increased market instability. Conversely, if the VIX falls, it signifies stable markets and an increase in the S&P 500.
Traders often use the VIX to hedge their portfolios against market downturns. For example, if you go long on shares in a US company but want to offset potential losses if the market takes a downturn, you would buy the VIX. Taking a long position on the VIX could potentially balance out drawdowns you may experience and hedge your market exposure. Because the VIX exhibits a negative correlation with other asset classes, it can reduce your overall risk and increase returns.
Some traders also speculate on the direction of the VIX itself rather than using it as a hedge. Depending on their outlook for market volatility, they may take long or short positions in VIX futures or options CFDs.
Before you trade the VIX, you need to understand how volatility trading differs from standard CFD trading. Volatility is a measure of the movement of an asset’s price (in this case, the expected movement of the S&P 500 index over the next 30 days) rather than a measure of the price itself. So with volatility trading, rather than focusing on the direction of change, you are speculating on how much the market will move and how frequently that movement will occur.
As mentioned, the VIX and S&P 500 are strongly negatively correlated. That means that when the VIX increases, the S&P 500 is likely falling, and when the VIX falls, the S&P 500 is likely rising.
When you open a position on the VIX, you can either take a long or a short position. If you take a long position, you believe that volatility will increase; if you take a short position, you believe it will decrease. Although there is a strong negative correlation between the VIX and the S&P 500, volatility traders are not interested in whether the price of the S&P 500 will rise or fall, as they can profit from both price movements.
Going long on the VIX
Traders often choose a long position on the VIX during times of financial instability, when there is a lot of uncertainty and fear in the market. For example, if you had taken a long (buy) position on the VIX at the beginning of the Covid pandemic, when it hit 82.7 per cent volatility, you would have made a substantial profit.
Going short on the VIX
Traders take short positions during times of low volatility and generally when they expect the S&P500 to rise in value. Low-interest rates and economic growth usually result in the steady growth of the S&P500’s share prices, so traders short-sell the VIX expecting that volatility will remain low during these conditions. However, it can be risky to short-sell the VIX, as losses can be significant if volatility spikes.
Benefits of Trading VIX CFDs
Trading the VIX allows traders to generate profits from the expected volatility of the S&P 500 index. It also has many other benefits:
Disadvantages and risks of trading the VIX 75 via CFDs
While there are significant benefits to using CFDs to trade the VIX 75, there are also considerable risks that any trader should be aware of before trading these complex financial products.
Brokers play a role in facilitating trading on the VIX. They act as intermediaries between traders and the exchange, executing trades on behalf of their clients. The broker provides traders with the platforms, tools, and resources needed to analyse market trends, place trades, and manage their trading accounts.
Brokers also offer traders leverage to benefit from larger trading positions with only a small amount of capital. The broker may provide other services, such as educational resources and customer support.
When choosing a broker to trade the VIX, there are several important considerations to keep in mind:
The VIX can also be used as a risk management tool. Because the VIX provides information on levels of implied volatility, it can help determine trade sizes. During periods of higher volatility (high VIX levels), it is prudent to reduce your lot sizes, whereas, during periods of lower volatility (lower VIX levels), you can increase your lot sizes.
Trading Forex and CFDs is unsuitable for all investors as it carries a high degree of risk of losing your capital: 75-90% of retail investors lose money trading these products. Forex and CFD transactions involve high risk due to the following factors: Leverage, market volatility, slippage arising from a lack of liquidity, inadequate trading knowledge or experience, and a lack of regulatory protection. Traders should not deposit any money that is not considered disposable income. Regardless of how much research you have done or how confident you are in your trade, there is always a substantial risk of loss. (Learn more about these risks from the UK’s regulator, the FCA, or the Australian regulator, ASIC).
Our State of the Market Report and Directory of CFD Brokers to Avoid are the result of extensive research on over 180 Forex brokers. These resources help traders find the best Forex brokers – and steer them away from the worst ones. These resources have been compiled using over 200 data points on each broker and over 3000 hours of research. Our team conducts all research independently: Testing brokers, gathering information from broker representatives and sifting through legal documents. Learn more about how we rank brokers.
Chris joined the company in 2019 after ten years experience in research, editorial and design for political and financial publications. His background has given him a deep knowledge of international financial markets and the geopolitics that affects them. Chris has a keen eye for editing and a voracious appetite for financial and political current affairs. He ensures that our content across all sites meets the standards of quality and transparency that our readers expect.
Alison joined the team as a writer in 2021. She has a medical degree with a focus on physiotherapy and a bachelor’s in psychology. However, her interest in forex trading and her love for writing led her to switch careers, and she now has over eight years experience in research and content development. She has tested and reviewed 100+ brokers and has a great understanding of the Forex trading world.
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