Skew Step Indices: A new take on asymmetrical trading

Skew Step Indices are algorithmically generated synthetic indices on Deriv that combine uneven step sizes with asymmetric movement probabilities to create structured yet unpredictable price behaviour. Designed to simulate certain characteristics of real financial markets without exposure to external news or events, they offer traders a controlled environment where probability-driven moves shape both risk and opportunity.

Unlike classic Step and Multi-Step Indices, Skew Step Indices introduce directional bias and occasional sharp reversals. This makes them suitable for traders who want more than uniform price action while still benefiting from transparent, rule-based market mechanics. This guide explains how Skew Step Indices work, how they differ from other synthetic indices, and how traders can use their probability structure to build effective strategies on Deriv.

Quick summary

• Skew Step Indices are synthetic indices exclusive to Deriv, defined by uneven step sizes and asymmetric probability distributions.
• Most price movements are small and frequent, while larger moves occur less often but with greater impact.
• Four indices are available: Skew Step 5 Up, Skew Step 5 Down, Skew Step 4 Up, and Skew Step 4 Down.
• Their probability-driven design supports strategies such as range trading, spike fading, and volatility-based setups.
• Skew Step Indices are available 24/7 on Deriv MT5 and cTrader, with demo trading and backtesting supported.
  

What are Skew Step Indices?

Skew Step Indices are a new group of derived indices created by Deriv to deliver probability-skewed price movement within a transparent, algorithmic framework. They retain the step-based structure of traditional Step Indices while introducing asymmetry in both direction and magnitude of price changes.

Key characteristics of Skew Step Indices: 

• Variable step sizes: Most ticks result in small price changes, while larger jumps occur less frequently.
• Asymmetric probability: One directional outcome is statistically more likely than the other, creating a built-in directional bias.
  Algorithmic generation: All price movements are produced by random number algorithms using predefined probability distributions, independent of economic data or market news.
  

This design allows traders to anticipate typical behaviour while remaining exposed to occasional high-impact moves.

Skew Step Indices vs Step and Multi-Step Indices

Comparison of synthetic index structures

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Classic Step Indices prioritise predictability, while Multi-Step Indices add variation without bias. Skew Step Indices differ by embedding probability asymmetry, which directly influences volatility behaviour and strategy selection.

How Skew Step Indices work

Each tick in a Skew Step Index is generated through two probability-based decisions:

1. Step size selection: The algorithm selects a price increment from a predefined set.
   Directional outcome: The move is assigned a direction based on an asymmetric probability distribution.
   

As a result, traders observe:

• Long sequences of small, predictable moves in one direction
• Occasional large moves in the opposite direction
• Overall volatility shaped by the interaction between frequency and magnitude of moves
  

Example: Skew Step 5 Up

• Approximately 90% of ticks produce small upward movements
  
• Around 10% result in sharp downward moves
  

This structure explains why calm trading conditions can be interrupted by sudden reversals, creating both risk and opportunity.

Skew Step Indices lineup and probability distributions

Deriv currently offers four Skew Step Indices, each with distinct volatility characteristics.

Skew Step Index 5 Up 

• 90% chance of small upward moves
• 10% chance of a sharp drop
• Volatility: 19.36%

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Skew Step Index 5 Down

• 90% chance of small downward moves
• 10% chance of a sharp rise
• Volatility: 19.36%

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Skew Step Index 4 Up

• 80% chance of small upward moves
• 20% chance of a sharp drop
• Volatility: 14.30%

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Skew Step Index 4 Down

• 0% chance of small downward moves
• 20% chance of a sharp rise
• Volatility: 14.30%

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How are they different from step and multi-step indices?

Step Indices have fixed step sizes and symmetrical probabilities. Multi-Step Indices mix up step sizes but keep probabilities even. Skew Step Indices? They do both-different step sizes and uneven probabilities. That means price movements are more unpredictable, bringing a whole new level of excitement and opportunity to synthetic trading.

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Understanding volatility is key here. Skew Step Indices offer a middle ground between Step and Multi-Step Indices. The volatility comparison plot below shows how they stack up.
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Volatility behaviour and trading experience

Volatility in Skew Step Indices is not constant. It emerges from the contrast between frequent small moves and rare large moves, rather than from continuous wide price swings.

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Because large moves occur infrequently but decisively, volatility tends to cluster around rare events rather than being evenly distributed over time.

Why trade Skew Step Indices?

Skew Step Indices appeal to traders who want probability-informed markets with dynamic behaviour:

• Broader strategy application: Probability skew supports range trading during normal conditions and reversal strategies after rare moves.
  
• Realistic price behaviour: Sudden jumps introduce uncertainty similar to live markets without external risk factors.
  
• Full transparency: Published probability distributions allow traders to plan risk parameters precisely.
  
• Continuous access: Trading is available 24/7, including weekends and holidays, exclusively on Deriv.
  

How to trade Skew Step Indices on Deriv

1. Open a Deriv account
   
   • Register for a real account or practise risk-free using a demo account.
     
2. Choose a trading platform
   
   • Trade on Deriv MT5 for advanced technical analysis and automated strategies, or use cTrader for a streamlined interface.
     
3. Locate Skew Step Indices
   
   • Search for “Skew Step” in the market watch to view all available variants.
     
4. Analyse the chart
   
   • Apply indicators such as RSI, moving averages, or Bollinger Bands to identify momentum and volatility shifts.
     
5. Test and execute strategies
   
   • Use historical data and demo trading to evaluate performance before trading live.
     

Strategy considerations for Skew Step Indices

• Range trading: Effective during extended sequences of small, frequent moves.
• Spike fading: Rare large moves often lead to short-term corrections due to probability reversion.
• Momentum continuation: Some traders choose to follow the rare move when it breaks established price structure.
• Risk management: Smaller position sizes and wider stop-loss levels help manage exposure to sudden volatility. Read more about risk management and position sizing in our helpful position sizing guide. 

Skew Step Indices provide a structured yet dynamic way to engage with synthetic markets. By combining defined probabilities with variable volatility, they allow traders to explore disciplined strategies in a transparent, always-available trading environment on Deriv. 

Get started with trading Skew Step Indices with a free demo account and build your trading strategy around these indices without risking your funds.