Pairs arbitrage indices on Deriv MT5

Pairs Arbitrage Indices are the new derived crypto indices available on Deriv MT5 Standard Real accounts that track a systematic trading strategy based on the price relationship between Bitcoin (BTC) and Ethereum (ETH).

Instead of trading BTC or ETH directionally — hoping the overall crypto market rises or falls — these indices are built to reflect how a rules-based pairs trading strategy between BTC and ETH would perform over time.

In simple terms, they focus on the spread between BTC and ETH rather than the outright direction of either asset. When the price relationship between the two cryptocurrencies deviates from historical norms, the index adjusts its internal positioning to reflect a long/short strategy designed to capture potential mean reversion.

These indices allow traders to access a relative-value crypto strategy in a single instrument on Deriv MT5 — without manually opening and managing two separate positions.

Quick summary

• Pairs Arbitrage Indices track the price relationship between BTC and ETH.
• They are based on a systematic pairs trading (statistical arbitrage) strategy.
  Focus is on relative value, not overall crypto direction.
• Two instruments are available on Deriv MT5 Standard Real accounts:
  
  • BTCETH Arbitrage Index Long BTC
  • BTCETH Arbitrage Index Long ETH
• The index internally opens and closes long/short exposure based on spread behaviour.
• Traders only trade the index as a single instrument.
  

What is pairs trading in crypto markets?

Pairs trading — also known as statistical arbitrage — is a market-neutral strategy that seeks to profit from temporary pricing inefficiencies between two correlated assets.

BTC and ETH are widely regarded as the two most liquid and capitalised cryptocurrencies. Historically, they show periods of positive correlation, meaning they often move in the same general direction. However, their relative pricing relationship fluctuates.

Pairs trading focuses on this idea:

1. Two assets usually maintain a historical price relationship.
2. That relationship temporarily diverges.
3. The divergence may eventually revert toward its historical average (mean reversion).

Instead of predicting whether crypto markets will rise or fall, the strategy evaluates whether BTC is overvalued or undervalued relative to ETH, or vice versa.

This is the core logic embedded inside the Pairs Arbitrage Indices.

How do Pairs Arbitrage Indices work?

The indices monitor the BTC/ETH price ratio. Based on predefined, rules-based logic:

• If BTC becomes unusually expensive relative to ETH,
  → The strategy shifts toward Long ETH / Short BTC.
  
  
• If ETH becomes unusually expensive relative to BTC,
  → The strategy shifts toward Long BTC / Short ETH.

This approach is based on mean reversion, not trend-following.

Example

• BTC = $60,000
• ETH = $3,000
• Historical ratio = 20:1

If the ratio stretches significantly — for example, BTC rises faster and the ratio becomes 23:1 — the strategy may interpret BTC as relatively expensive.

The index would then reflect exposure equivalent to:

• Short BTC
• Long ETH

If the ratio later returns closer to 20:1, the divergence narrows and the strategy captures that spread movement.

The reverse applies if ETH becomes relatively expensive.

What does “The index closes the position” mean?

The Pairs Arbitrage Index is designed to simulate a structured long/short strategy internally. When the spread between BTC and ETH returns to its equilibrium range:

• The internal long/short exposure is closed.
• The index realises profit or loss from that spread movement.
• The index price updates to reflect that realised outcome.

How this affects you as a trader

You do not hold separate BTC and ETH positions.

You only hold a position in:

• BTCETH Arbitrage Index Long BTC, or
• BTCETH Arbitrage Index Long ETH.

When the index “closes its position,” it means the internal strategy resets — not that your MT5 trade automatically closes.

Your open position in the index remains active until:

• You manually close it, or
• Your stop loss or take profit is triggered.

The internal mechanics affect the index price, but they do not automatically close your trade unless your own risk parameters are hit.

This distinction is important:

• The index manages internal exposure.
• You manage your trading position on MT5.

Available instruments on Deriv MT5 Standard

As of launch on 6 February, the following instruments are available on Deriv MT5 Standard accounts:

BTCETH Arbitrage Index Long BTC

• Positions long BTC and short ETH when ETH is relatively expensive.
• Designed to benefit when BTC strengthens relative to ETH after divergence.

BTCETH Arbitrage Index Long ETH

• Positions long ETH and short BTC when BTC is relatively expensive.
• Designed to benefit when ETH strengthens relative to BTC after divergence.

Each index follows predefined logic. Traders cannot alter the internal strategy parameters — they simply trade the instrument’s price movement.

How the index price is formed

The index price reflects the performance of the underlying systematic long/short structure.

Conceptually:

1. Spread widens beyond threshold.
2. Internal long/short exposure activates.
3. Spread narrows.
4. Strategy closes exposure.
5. Profit or loss is embedded into the index value.

The index behaves as a continuously calculated synthetic instrument based on this process. It is not a direct price feed of BTC or ETH — it is a derived index based on their relationship.

What sets Pairs Arbitrage Indices apart?

1. Relative value focus

Traditional crypto trading is directional:

• Buy BTC and hope it rises.
• Short ETH and hope it falls.

Pairs Arbitrage Indices instead focus on relative mispricing between BTC and ETH.

2. Market-neutral orientation

Because the strategy balances a long and short exposure internally, it reduces dependency on broad market direction. While not risk-free, this structure can dampen exposure to full-market rallies or crashes.

3. Rules-based methodology

The logic is systematic and predefined. There is no discretionary decision-making inside the index.

4. Built on highly liquid assets

BTC and ETH remain the two largest cryptocurrencies by market capitalisation as of 2025, providing a strong structural foundation for relative-value strategies.

Competitive advantages for traders

• Diversification beyond trend-following.
• Exposure to a structured arbitrage-style methodology.
• Single instrument access instead of dual-position management.
• Ability to apply standard MT5 tools:
  
  • Stop loss
  • Take profit
  • Lot sizing
  • Chart analysis‍

Who are Pairs Arbitrage Indices suitable for?

Pairs Arbitrage Indices may appeal to:

• Traders seeking BTC/ETH exposure with reduced reliance on overall market direction.
• Systematic and quantitative traders interested in arbitrage logic.
• Crypto traders looking to diversify strategy types.
• Beginners wanting structured exposure without complex manual hedging.

Benefits of trading Pairs Arbitrage Indices

• Potential opportunities in both rising and falling markets.
• Single position provides balanced BTC and ETH exposure.
• Spread-based strategy reduces reliance on trend forecasting.
• Clear, rule-driven framework reduces emotional trading.
• Accessible through Deriv MT5 Standard accounts.
  

Risks and considerations

It’s important to remember that no strategy eliminates risk. There are a few key considerations to ensure that you properly manage your risks:

1. Prolonged divergence risk

If BTC and ETH continue diverging for an extended period, the strategy may experience drawdown.

2. Correlation breakdown

Pairs trading assumes some level of relationship between assets. If structural market conditions change, spread behaviour may not revert as expected.

3. Volatility events

Major crypto news or liquidity shocks can temporarily distort spread behaviour.

4. Standard trading risks

Leverage, lot size, and poor risk management can amplify losses.

Always apply:

• Stop loss orders
• Position sizing discipline
• Risk management planning

How to trade Pairs Arbitrage Indices on Deriv MT5

1. Log in to your Deriv MT5 Standard Real account.
2. Open Market Watch.
3. Search for:
   
   • BTCETH Arbitrage Index Long BTC, or
   • BTCETH Arbitrage Index Long ETH
     
4. Open the chart.
5. Select “New Order.”
6. Set lot size, stop loss, and take profit.
7. Monitor price behaviour.
   

Practical tips for getting started 

• Start practicing with a demo account before committing capital.
• Monitor BTC and ETH macro news events.
• Observe how the index behaves during strong trends versus range-bound markets.
• Avoid overtrading short-term noise.
• Focus on structured risk management rather than prediction.

Conclusion

Pairs Arbitrage Indices on Deriv MT5  introduce a structured way to trade the relationship between Bitcoin and Ethereum rather than their outright direction.

By embedding a systematic long/short spread strategy into a single instrument, these indices provide access to relative-value trading without requiring traders to manage two positions manually.

Launched on real accounts on 6 February, they represent an additional approach for traders seeking diversification, systematic methodology, and exposure to BTC and ETH through a spread-based framework.

As with any leveraged product, understanding the mechanics, risks, and strategy logic is essential before trading live.