Identifying manipulation in Deriv synthetic indices can be tricky because, unlike traditional

financial markets (like Forex or stocks), synthetic indices are not driven by economic factors,
news events, or central bank policies. Instead, they are simulated markets generated through
algorithms, designed to mimic real market behavior. Even though there’s no external institutional
involvement, price movements in synthetic indices can still appear manipulated, especially when
mimicking real market tendencies such as liquidity grabs and stop hunts.

To identify potential manipulation in synthetic indices on Deriv, particularly using smart money
concepts, here's a detailed approach:

1. Liquidity Grabs (Stop Hunts)

In markets, large institutions often push prices to take out liquidity from traders’ stop-loss levels
before moving in the intended direction. In synthetic indices, this can manifest similarly, even
though there are no real institutions manipulating prices. This behavior is built into the
algorithm.

How to Identify:

 False Breakouts: Prices may appear to break key support or resistance levels, drawing in
breakout traders, only to reverse quickly and hit their stop losses. This is a classic
liquidity grab.
 Wicks at Key Levels: Long wicks in candles that touch areas where retail traders
commonly place their stop-loss orders (above resistance, below support) can indicate that
the algorithm is clearing out liquidity before moving in the opposite direction.

How to Use It:

 Wait for Confirmation: If you suspect a liquidity grab, wait for a false breakout and a
quick reversal signal before entering a trade. This shows that liquidity has been swept,
and the market is ready to move in the true direction.

Example:

 If the price breaks a resistance level with a large wick and quickly drops back below, it
could be a false breakout or liquidity grab. The smart move would be to wait for a retest
of that level before entering a trade.

2. Fakeouts Around Key Market Structure Levels

Manipulation can often be spotted when price action deliberately violates market structure (e.g.,
breaks a key high or low) only to reverse shortly afterward. This is common in synthetic indices
where price seeks to "trap" traders.

How to Identify:

 Price Violating Highs/Lows: Look for instances where price breaks a swing high/low
but does not continue in that direction and quickly reverses, showing signs that it was a
fakeout.
 Multiple Tests of a Zone: When the price tests a significant support or resistance
multiple times without a decisive break, it could be a setup for manipulation. The
algorithm may eventually push the price slightly beyond that zone before reversing.

How to Use It:

 Avoid Trading the First Break: Don’t immediately place trades when price breaks key
levels; instead, watch for price action confirming whether the level holds or reverses.

Example:

 When a support level has been tested several times, a sudden break might lure traders into
selling, but a quick reversal could indicate that the break was a fakeout meant to trap
traders.

3. Order Block Manipulation

In smart money trading, order blocks represent areas where institutional money enters the
market. While there are no actual institutions in synthetic indices, the concept still applies as the
algorithms simulate similar behaviors.

How to Identify:

 Unusual Spikes into Order Blocks: When price moves quickly into an order block and
then reverses, it may be a sign of manipulation. The algorithm pushes the price to sweep
liquidity in the form of retail stop-losses and pending orders.
 Price Rejection from Order Blocks: When price touches an order block and shows a
strong rejection (e.g., long wicks, engulfing candles), this could signal that the price is
being manipulated to clear liquidity before moving in the intended direction.

How to Use It:

 Wait for Rejection from Order Blocks: Instead of entering when price first touches an
order block, wait for a clear sign of rejection (like a pin bar or engulfing candle). This
 confirms that the market is rejecting the price and will likely move in the opposite
direction.

Example:

 Price hits a previous order block (from a major swing point) and shows a sudden large
wick followed by a reversal. This can indicate that the algorithm triggered stop-losses and
is now moving in the real direction.

4. Smart Money Divergence

Sometimes the algorithm simulates divergence between price action and momentum. This could
be seen as manipulation to confuse traders who are looking at momentum indicators like RSI or
MACD.

How to Identify:

 Price Moves Higher but Momentum Drops: If the price is making higher highs but
indicators like RSI or MACD are making lower highs, it could indicate that the price is
about to reverse.
 Hidden Divergence: If the price is making lower highs, but the indicator is making
higher highs, it may indicate that smart money is accumulating orders before a move in
the opposite direction.

How to Use It:

 Wait for Divergence Confirmation: Use divergence as a signal that the current trend is
weakening and that manipulation may be occurring. Combine it with other signals (e.g.,
liquidity grabs or order blocks) for confirmation before entering the trade.

5. Market Structure Disrespect

Synthetic indices can sometimes disrespect traditional market structure rules. A clear uptrend or
downtrend may get interrupted unexpectedly, breaking highs or lows without continuing in the
direction, creating confusion for traders expecting a follow-through.

How to Identify:

 Failure of a Higher High in an Uptrend: When an uptrend suddenly fails to make a

higher high and starts reversing without any clear reason, it could be a sign of price
manipulation where the algorithm is trapping traders into a false trend continuation.
  Sudden Mid-Trend Reversals: When the price suddenly reverses within an established
trend without hitting any major support or resistance zones, it may indicate manipulation.

How to Use It:

 Don’t Assume Continuation: Always look for confirmation when a trend is expected to
continue. Check for strong rejection at key levels or fakeouts before re-entering the trend.

6. Time-Based Manipulation

Since synthetic indices operate 24/7, there can be certain times of the day when manipulation is
more likely. This could mirror how real financial markets behave during low-volume sessions
(like overnight in Forex).

How to Identify:

 Inconsistent Price Action at Odd Hours: During lower trading hours (like late nights or
weekends), the algorithm may create erratic price movements to catch traders off guard.
 Sudden Volatility Spikes: Watch out for unexpected spikes in volatility during times
when you’d expect the market to be quiet. These could be manipulation moves designed
to trigger stop-losses.

How to Use It:

 Avoid Trading During Low Volatility: Unless you have a solid setup, avoid trading
during low-volume times when manipulation is more common. Stick to periods of
consistent market flow (e.g., during regular trading hours or active periods).

Psychology Behind the Manipulation

The manipulation in synthetic indices can feel similar to what happens in real markets with
institutional involvement, as it's based on:

 Trapping Retail Traders: The algorithm simulates real market manipulation techniques,
like liquidity hunts, by taking advantage of predictable retail behaviors (such as placing
stop-losses at obvious support/resistance levels).
 Creating Liquidity: Just like in real markets, the synthetic index needs liquidity to move
price in one direction. Clearing liquidity at obvious levels allows the algorithm to mimic
the flow of supply and demand, similar to how smart money operates.
How to Use This to Your Advantage

 Be Patient: Don’t chase price movements. Let manipulation play out and wait for
confirmation signals before entering a trade.
 Watch for False Breakouts: When you see a breakout of a key level, don’t enter
immediately. Wait for a retest or a clear rejection before placing your trade.
 Use Liquidity Concepts: Recognize where liquidity is sitting in the market (at stop-loss
levels, swing highs/lows) and anticipate when the algorithm might sweep those areas.
 Combine Price Action and Smart Money Concepts: Look for order blocks, liquidity
grabs, and rejection signals to confirm your trades.

By understanding how manipulation works in synthetic indices and combining smart money
concepts with careful observation of price action, you can increase your chances of entering
trades with precision and avoid common traps that these algorithms are designed to set.

Market Structure Disrespect in Deriv synthetic indices occurs when the price action seems to
break away from traditional market structure rules, creating confusion for traders who rely on
clear patterns like higher highs in uptrends or lower lows in downtrends. This behavior, while
not truly driven by institutions (as it would be in real markets), is built into the algorithm,
mimicking manipulation tactics used in traditional markets to trap retail traders.

Let’s break this down into key concepts, the psychology behind it, and strategies to bypass it so
that you don’t get trapped.

1. What Is Market Structure?

Market structure refers to the patterns of higher highs and higher lows in an uptrend, and lower
lows and lower highs in a downtrend. Traders often rely on this to confirm the strength or
weakness of a trend and plan their entries or exits.

 Uptrend: Higher highs (HH) and higher lows (HL).

 Downtrend: Lower lows (LL) and lower highs (LH).

However, in synthetic indices, the price can violate these expectations in what seems like a
market structure disrespect. This can cause confusion for retail traders expecting continuation
patterns that don’t play out as anticipated.

2. Market Structure Disrespect in Synthetic Indices

Market structure disrespect happens when the price breaks a key level that should indicate a
continuation of the trend (like a higher high in an uptrend) but then fails to follow through.
Instead of continuing upward or downward as expected, the price reverses sharply, trapping
traders.

Examples of Market Structure Disrespect:

 Breaking Higher Highs but Failing to Continue: The price breaks a previous higher
high (in an uptrend), leading traders to believe the uptrend is continuing, but then quickly
reverses and forms a lower low.
 Breaking Lower Lows and Reversing: In a downtrend, price makes a new lower low
but instead of continuing downwards, it sharply reverses back up, violating the
downtrend expectation.

These false signals are deliberately designed by the algorithm to mimic the kind of manipulation
real-world institutional traders use to trap retail traders.

3. Psychology Behind Market Structure Disrespect

The key psychology behind this is trader expectation and how the market can take advantage of
it. Here’s what happens from a retail trader’s perspective and a smart money/algorithm
perspective:

 Retail Trader’s Perspective:

o Retail traders are taught to follow market structure rules, meaning they expect a
higher high to indicate a continuing uptrend, or a lower low to signal a downtrend.
o When the market disrespects these expectations, retail traders are caught off
guard. Many will place trades when they see price break a key level, assuming the
trend will continue, but this can lead to stop-loss hunts and fakeouts.
 Smart Money/Algorithm Perspective:
o The algorithm simulates real-world behavior by pushing the price beyond key
levels to trigger the stop-losses or limit orders of retail traders. This is a tactic to
create liquidity. Once the liquidity is captured, the price quickly reverses, leaving
retail traders trapped.
o The algorithm knows that retail traders place their stop-losses just above or below
obvious market structure points (like swing highs or lows), so it intentionally
pushes the price through these areas to trigger those stops.

4. How to Bypass Market Structure Disrespect

To avoid getting trapped by market structure disrespect, it’s important to understand how to
recognize the traps and wait for confirmation signals before entering a trade.
Strategies to Bypass Market Structure Disrespect:

1. Don’t Rely on the First Break of Structure:

o When the price breaks a higher high (in an uptrend) or a lower low (in a
downtrend), avoid jumping into the trade immediately. Instead, wait to see if the
break holds. Many times, the first break is a false one, designed to trigger orders
and stop-losses.
o Solution: Wait for a retest of the broken level or a confirmation of price direction
before entering. For instance, after a higher high breaks, wait for price to come
back and test the level (without breaking lower). If it holds, then the trend is
likely to continue.
2. Watch for Liquidity Sweeps:
o If the price action seems to break structure but is accompanied by a sudden spike
(or wick) and then a reversal, it could be a liquidity sweep. This happens when
the algorithm clears out stop-losses above a resistance or below a support level.
o Solution: Use liquidity concepts. If you see a spike into a key level followed by
a quick reversal (e.g., a long wick on a candle), it’s a sign that the market just
cleared liquidity. Wait for a confirmation signal (like a pin bar or engulfing
candle) before taking your trade in the opposite direction of the spike.
3. Use Multiple Timeframes:
o Sometimes, market structure disrespect can appear on lower timeframes (like 5M
or 15M) but align better on higher timeframes (H1, H4). This discrepancy can
confuse traders if they only focus on one timeframe.
o Solution: Before placing a trade based on market structure, check higher
timeframes to see if the overall trend aligns. For instance, a false break on the
15M chart might just be a retest of a key level on the 1H chart.
4. Look for Institutional Order Flow (Smart Money Concepts):
o In synthetic indices, just like in forex, price action is often manipulated to create
liquidity pools (like order blocks or areas of supply and demand). If the price
disrespects market structure near these zones, it might indicate manipulation.
o Solution: Identify key order blocks or supply/demand zones on the chart. If the
price disrespects structure around these areas, it could be a trap. Instead, look for
price to test these zones again and show a strong rejection (like an engulfing
candle or pin bar) before entering.
5. Use Volume or Volatility Indicators:
o Synthetic indices don’t have real trading volume, but you can use volatility
indicators to gauge whether a move is legitimate or manipulated.
o Solution: If the price breaks structure during a low volatility period (small
candles, little movement), it could be a false break. Wait for increased volatility to
confirm that the break is real. Look for sharp price movements with decisive
momentum before entering.
6. Avoid Trading Obvious Retail Levels:
o Smart money (or in this case, the algorithm) often targets obvious levels where
retail traders have placed their orders. If a support or resistance level is too
obvious, it is more likely to be manipulated.
 o Solution: Avoid placing your trades at the exact obvious swing highs/lows or
support/resistance. Instead, place your stop-loss orders in protected areas (like
inside order blocks or demand/supply zones) where the algorithm is less likely to
hunt.

5. Psychology Behind Market Structure Disrespect

The psychology behind this behavior is to confuse retail traders and make them doubt their
understanding of price action. The algorithm mimics the tactics used by real-world institutions to
trap retail traders:

 Liquidity Creation: By disrespecting market structure, the algorithm is able to sweep

stop-loss orders from retail traders, generating liquidity to move the market.
 Creating Confusion and Doubt: When market structure breaks and reverses
unexpectedly, retail traders are forced to second-guess their analysis. This creates
emotional trading, where traders may either revenge trade (chasing losses) or hesitate to
take good trades out of fear.
 Retail Trap: The more obvious the market structure level is (like a clean double top or
bottom), the more likely it is that retail traders will enter trades at those levels. The
algorithm then uses these obvious entries to manipulate the market and trap them.

6. Summary: How to Avoid Getting Trapped

 Wait for Retests: Don’t trust the first break of structure. Wait for the market to retest the
level to confirm its validity.
 Use Higher Timeframes: Check the overall trend on higher timeframes to avoid false
breaks on lower timeframes.
 Look for Liquidity Sweeps: Pay attention to sudden spikes or wicks around key levels;
they might indicate manipulation to clear liquidity.
 Avoid Obvious Levels: Don’t place trades at overly obvious support/resistance or
highs/lows that many retail traders are watching.
 Wait for Confirmation: Always wait for price action confirmation (like a strong
rejection or a reversal pattern) before entering trades after a structure break.

By understanding how market structure disrespect works in synthetic indices and applying smart
money concepts, you can protect yourself from getting trapped and trade more effectively.

Order block manipulation in Deriv synthetic indices follows a similar concept to manipulation in
traditional markets, where the price appears to respect an order block (an area of institutional
interest), only to reverse unexpectedly, trapping retail traders. The algorithms behind these
synthetic indices mimic the actions of "smart money" or institutional traders, making order block
manipulation a frequent challenge for retail traders.
1. What Is an Order Block?

An order block refers to an area on the chart where large institutional orders have been placed.
This is often where institutions accumulate or distribute their positions. They typically leave
behind significant price movement, followed by a retracement or consolidation, before the price
continues in the direction of the institutional order.

 Bullish order block: An area where institutions accumulated buy orders.

 Bearish order block: An area where institutions accumulated sell orders.

In synthetic indices, order blocks are zones where price is likely to reverse or make significant
moves after interacting with them. However, the challenge comes when price manipulates these
order blocks, sweeping through them before continuing in the expected direction.

2. Order Block Manipulation

Order block manipulation happens when the price approaches an order block, giving the
impression it will respect the zone and reverse (or continue), but instead, the price fakes out,
triggering stop-losses before continuing in the original direction.

For example:

 Price approaches a bullish order block.

 Retail traders place long (buy) positions with stop-losses just below the order block,
expecting the price to bounce off the level.
 The price wicks below the order block, hitting stop-losses and creating what’s known as
a liquidity sweep.
 After clearing the stop-losses, the price reverses sharply in the anticipated bullish
direction, leaving retail traders behind.

3. Psychology Behind Order Block Manipulation

The main psychology behind order block manipulation revolves around liquidity and stop-loss
hunting. Synthetic indices are programmed to simulate institutional behavior, which seeks
liquidity to fuel market movements.

Here's the breakdown of the psychology:

 Liquidity Hunt: Retail traders tend to place stop-loss orders just outside the order block
zone, thinking it’s a safe area. The algorithm recognizes this concentration of liquidity
and pushes the price slightly beyond the order block to trigger stop-losses, gathering
liquidity.
  Retail Trap: Retail traders, seeing the order block initially respected, place trades too
early or too close. When price sweeps through the zone, their stop-losses are hit, and they
miss out on the eventual correct move. This creates frustration and emotional trading,
often leading to revenge trades.
 False Security: Many retail traders assume that once price reaches an order block, it will
reverse immediately. However, the synthetic indices algorithm is designed to trick traders
into believing a reversal is happening, only to manipulate price briefly before continuing
in the correct direction.

4. How to Bypass Order Block Manipulation

Here are strategies to avoid getting trapped by order block manipulation and how to trade them
correctly:

1. Don’t Rush to Enter the First Touch

 Many retail traders make the mistake of entering a trade as soon as price touches the
order block. This is risky because the first touch often results in a fakeout or liquidity
sweep.
 Solution: Wait for confirmation. After the price taps into an order block, wait for a
rejection candle or a clear reversal pattern (like an engulfing candle) before entering the
trade. This way, you avoid getting caught in the initial liquidity grab.

2. Wait for a Liquidity Sweep

 A common form of order block manipulation is when price sweeps just beyond the order
block, collecting liquidity before reversing.
 Solution: Expect a liquidity sweep before the price moves in the intended direction. If
you see a long wick that clears the stop-losses of retail traders (but the price quickly
recovers), this is a strong indication that smart money has swept liquidity, and you can
enter with more confidence.

3. Place Stop-Losses Wisely

 Placing your stop-loss too close to the order block is risky because the price is likely to
hunt stop-losses before reversing.
 Solution: Instead of placing your stop-loss directly outside the order block, give it more
breathing room by placing it beyond the expected liquidity sweep. For instance, if price
sweeps 10 pips beyond the order block, you could place your stop-loss 15-20 pips beyond
the block to avoid being taken out by the manipulation.

4. Use Multi-Timeframe Analysis

  Order block manipulation often appears on lower timeframes (like 5M or 15M), while
higher timeframes (like 1H or 4H) give a clearer picture of the overall direction.
 Solution: Before taking a trade based on an order block, check the higher timeframe
trend. If price is moving in the direction of the order block on a higher timeframe (and
you see a liquidity sweep on the lower timeframe), this is a strong indication that the
manipulation has ended and the price will move in the intended direction.

5. Identify Confluence with Key Levels

 An order block is more likely to hold if it coincides with other key levels like
support/resistance zones, trendlines, or Fibonacci retracement levels.
 Solution: Don’t trade order blocks in isolation. Look for confluence with other technical
indicators. If an order block is aligned with a significant support/resistance level or a
trendline, it is more likely to hold, reducing the chance of manipulation.

6. Understand the Timing of Manipulation

 Often, price manipulation occurs during periods of low liquidity (like during quiet market
hours), when it’s easier for the algorithm to sweep stop-losses without major resistance.
 Solution: Trade during high volatility times (e.g., when synthetic indices experience
more movement) to avoid being manipulated in quiet, low-volume periods. If you notice
the price is being manipulated during a quieter session, it’s often best to wait for the
market to pick up before entering.

5. Examples of Order Block Manipulation and How to Trade It

Example 1: Bullish Order Block Manipulation

1. Scenario: Price approaches a bullish order block in an uptrend, and many retail traders
expect the price to bounce off the order block.
2. Manipulation: The algorithm pushes price below the order block briefly (liquidity
sweep), triggering stop-losses set just under the order block.
3. Smart Trading Response: Instead of entering immediately, wait for the price to return
above the order block and show a strong rejection candle (like a bullish engulfing
candle). Once this happens, you can place a long trade, confident that the liquidity grab
has occurred.

Example 2: Bearish Order Block Manipulation

1. Scenario: Price approaches a bearish order block in a downtrend. Retail traders short the
market at the first touch of the order block.
2. Manipulation: The algorithm pushes price slightly above the order block, triggering
retail traders' stop-losses before the price reverses downward.
 3. Smart Trading Response: Instead of shorting immediately, wait for the liquidity sweep
above the order block. Once price closes back inside the order block and shows a clear
rejection (such as a bearish engulfing candle), it’s a better opportunity to enter a short
position.

6. Key Takeaways on Bypassing Order Block Manipulation

 Wait for Confirmation: Avoid entering the market on the first touch of an order block.
Wait for a liquidity sweep or a clear reversal signal.
 Recognize Liquidity Sweeps: Price manipulation often involves clearing liquidity just
beyond an order block. Use this as a signal to enter after the sweep.
 Don’t Place Stops Too Close: Give your stop-losses more room beyond the order block
to avoid being caught in liquidity sweeps.
 Combine with Other Tools: Use confluence with support/resistance levels, trendlines,
and other indicators to improve the reliability of your trades.
 Multi-Timeframe Analysis: Check higher timeframes to confirm the direction of the
market before trading an order block on a lower timeframe.

By understanding and anticipating order block manipulation, you can avoid the traps set by the
algorithms in synthetic indices and make more confident, profitable trades.