Synthetics vs real assets

Synthetic assets and real assets offer different trading experiences and risks. This article compares synthetics vs real assets, explains their key differences, and helps traders understand which type of instrument may better suit their trading approach when trading with Weltrade.

So, what’s the deal with synthetic indices?

Ever wondered what all this “synthetic indices signals” talk is about?

Let’s break it down.

Synthetic indices are trading instruments whose prices are generated by random number generator - yep, literally math and code doing their thing.

Unlike forex, crypto, metals, or stocks, which exist in the real world and whose prices reflect real supply and demand, synthetic price feeds are created entirely by us.

Sounds sketchy? We get it. Even seasoned traders raise their eyebrows when they hear the term. The first thing that pops into their heads is usually:

“Wait, it’s not real? Why would anyone trade that?”

Fair point. Synthetics aren’t tied to the real-world economy. They’re machines spitting out prices based on logic and formulas.

But here’s the twist: that’s exactly what makes them amazing.

No dead hours. No waiting for London or New York to open.

The logic is controlled, meaning we can cater every trader’s needs.

Here’s a fun fact:

Synthetic prices are generated by a machine - so no fear, no hype, no manipulation from external events.

“Real” assets? Their prices are affected by people’s emotions, tweets (looking at you, Trump), and big players dumping huge orders to spook others. Sometimes it’s really like an angry mob that drives the prices.

With synthetics, it’s just logic and randomness - clean and stable.

Each synthetic index gets a new price once per second.

Compare that with real assets that can change tens of times per second, and you’ll see why sometimes your trade enters at a totally different price. That’s called slippage.

With “real” assets, slippage is often caused by so-called market depth execution (when execution price depends on your trading volume): it’s just a part of the natural order of things in the market.

With synthetics - there’s no market outside of our company. It means that there can be no slippage related to market depth.

Honestly? Yeah, it kinda feels like it sometimes.

But even real-world exchanges offer wild stuff from time to time - like hurricane futures, rainfall futures, even movie box office futures were discussed with a regulator once (try googling “unusual and exotic futures” and you’ll find more).

So maybe we’re not that weird after all.

Worried that we control the feed and might mess with it?

Totally valid concern. But here’s the kicker - with “real” assets brokers have to interfere with the feed they get too. We’ve written a full breakdown here on that if you’re curious.

The difference is, with synthetics we don’t need to interfere. The feed is already optimized for what we want to offer.

With a random number generator instead of a liquidity provider, we can give you faster, cleaner execution and better trading experiences. That’s why we built synthetics.

Hope you’ll enjoy them as much as we do.