If you are looking for how to trade Boom and Crash indices successfully, then this article was written just for you. As a rule of thumb, there is no strategy that is 100% perfect, but I will try to share some tips that will guide you in your journey to become a successful trader.
Learn the Secret of Forex Trading, Click here to download a free e-book now
Table of Contents
First, what is Boom and Crash Indices?
If you are a newbie , you must have heard of Boom 500, Boom 1000, Crash 1000, and Crash 500. For the sake of clarity, Boom and Crash are ‘synthetic indices ‘ that is found only under the Deriv.com platform.
With Crash 1000 and Crash 500 Index, there’s an average drop in the price series that occurs at anytime within 1000 and 500 ticks respectively. With Boom 1000 and Boom 500 index, there’s an average of one spike in the price series that occurs at anytime within 1000 and 500 ticks respectively.
How to Trade Boom and Crash Indices Successfully
A number of traders (both expert and beginner) have had issues with the market structure of boom and crash. This is because, unlike the currency pair, boom and crash have been structured to either buy or sell using spikes at an even period of tick.
Don’t be left out, Open a free trading account now by clicking here
For instance, when trading either the boom (Boom 500 or Boom 1000) or crash (Crash 500 or 1000) assets, one will observe that the boom market sells by default while the crash assets buy by default. However, when boom markets buy, it buys with long bullish spikes while crash markets sell with long bearish spikes. This characteristic feature makes the boom and crash unique but, also scary for beginner traders (See Figure 1 to 4).
Like in every forex market, different trading strategies are employed by traders to make profits. This includes scalping, day trading, swing trading, and position trading. As a trader opts for a particular type of trading strategy, foundational factors influencing such a choice include a person’s trading style, trading psychology, exposure, and experience. All these foundational factors anchor on two basic characteristics: Personality and Knowledge.
Trading Boom and Crash, My Story
When I began trading boom and crash markets, I began my trading adventure as a scalper. In fact, in the first year of my trading experience, more than 95% of boom and crash traders that I have been privileged to meet were scalpers. As much as I knew that there were other trading strategies, scalping was the basic trading strategy I felt was suitable for trading boom and crash markets. This was further confirmed by the way the market was structured, and also on low risk to reward ratio when day or swing trading with very small lot sizes.
For instance, in currency pair trade, using a lot size of 0.01 for a $100 account is a good risk management decision. However, trading boom and crash with a lot size of 0.01 is a difficult adventure that will demand more than 100 pips before a trader gets a profit of $1. For that reason, Deriv.com upgraded the lowest lot size in Crash and Boom market from 0.10 to 0.20 to enable profit maximation.
Generally, scalping the Boom and Crash market tends to be the norm due to the market structure and psychology. For that reason, many traders tend to focus on just lower time frames; precisely, M1 to M15. This rather makes it difficult to convince traders to look away from the spikes (which are so obvious and influencing in lower time frames) and put their focus on the general big picture of the market (the market trend).
However, the boom and crash market can still be ‘day or swing traded‘ if a trader has a good knowledge of the market psychology, price action, and good risk management. In fact, the best way to make profit lies in day trading or swing trading. This is because either of these trading strategies always respect the price action. Figure 5 to 7 shows the price action chart as observed in Crash and Boom markets.
From the above setup, it is never wrong to begin trading boom and crash as a scalper but it will be wrong if you continue as a scalper. The aim of trading is not just in making profits but also in the personal development of one’s skill. Hence, as one sets out as a scalper, one should also endeavor to be part of the market’s big picture by improving to a day, swing, and position trading
Step 2: Develop a Winning Psychology
To be successful in Trading Boom and Crash you need to have a good trading strategy, psychology and risk management. Strategy itself is not enough, that is why most traders fail to succeed in the market even with a very good strategy.
How do you develop a winning Psychology for Boom and Crash Market?
The first step in developing a winning psychology is to practice your strategy on a Demo account and understand the drawdown of your strategy before going over to your real account. When I started trading Boom and Crash, each time I lose a trade, especially if a series of spikes caught me, I will be scared of the market for days. And because of this, I will keep losing until I was able to develop a good trading psychology.
Like I told my mentees, don’t expect to win all the time, if you have like 10 wins out of 12 in a week, that is a very good week. For instance, before placing a trade, monitor your risk to reward ratio and place your take profit and the stop loss at the same time before clicking buy or sell on the market. If your take profit is 40 pips, your stop loss should be like 10% of your take profit level.
When your analysis is right, don’t be scared of losing a trade, that is while you have to test your strategy on a demo account before going out to your real account. Then, have a daily target for win/lose, once your real that target, leave the market for that day and review your trading history, monitor your chart and mark some point of interest that wait for the next day.
6 Things to do if you want to win in the Crash and Boom Market.
If you are currently struggling in the market, please don’t give up. I blow my account more than 3 times before I finally understand how the market works. Here is what you should learn from me:
1. Price Action is very Important.
I don’t know how to put this, but from now on before taking any trade, try and understand the market structure. If you understand the market structure, your success level will increase by 90%.
Read More: The Complete Guide to Price Action Trading Strategies
If you want to fully understand how to trade crash and boom indices successful, First, mark out all the higher high and Higher lows in the chart; study price action reaction at those point; (you can include a trend indicator e.g., moving average like EMA 48 or Bollinger band (default setting); analyze and trade with proper risk management.
For EMA , when price is above the EMA, the trend is up, when the price is below the EMA, the trend is down, in this situation, look for the nearest Double Bottom (to buy) or Double top (to sell).
For Bollinger Band, look for Buy Entry when the price touches the lower Bollinger band and a sell entry when the price touch the upper Bollinger band
2. Beware of Stop Loss hunt
When I started trading Boom and Crash newly, I was a victim of stop loss hunt. If I enter a sell trade on Crash 500 for instance at a double top, the market will push pass that point and I will be force to close in red, but after some minutes the market will reverse back to my entry point before deciding on the next direction. After understanding Stop loss hunt, I began to trade with patience especially when I have clearly study and understand the market structure.
3. Risk Management is Very Important
Know when to close a trade in blue or in red; This is a problem many newbie face; even as an experience and a profitable trader, I still close some trades in red; this is because sometimes, breakout can happen, and once you notice this especially from candlestick formation, minimize your loss and look for the next entry point.
4. Develop a target based trading strategy
To become in successful in trading Boom and Crash, you need to develop a strategy that is target based. That is, having a daily profit target and sticking to it. Your strategy should include lot size, conditions for entering a trade, condition for exiting a trade and how to recover when you close in red.
5. Practice and Patience is Key
Before trading on your real account, practice first in your demo (if you don’t have a demo account, click here to open one). I study all my strategy first on my demo account at least one full week, monitor the result before trading on my real account.
6. Take Trading as your business
Trade as if you are investing to make gain, not gambling; because jumping in to get few pips for quick profit can land you in red. Trade only based on Market structure, and your strategy.
You can use indicators such as moving averages, Bollinger Bands, and Relative Strength Index (RSI) to identify when the market is trending and when a spike may occur.
Boom and crash strategy is a methods use to trade synthetic indices in that makes profit. One can actually be profitable on it either on trading spike or normal trading. There are so boom and crash indices but mastering the one that wins is the best.
Unlike forex pairs, trading boom and crash relies purely on price action charts and technical analysis without any influence from news, current events, or policy changes. The boom and crash index is completely independent of the currency and commodity markets.
The most popular way to trade indices is via Contracts for Difference, or CFDs. These financial instruments allow traders to profit both from falling or rising prices; open a short (sell) position if you think the index will fall; open a long (buy) position, if you think an index will rise.
The Martingale strategy is well-liked by gamblers and frequently used in high-stakes gambling. Generally speaking, the idea is not too complicated. Following each loss, players raise their wager, and following a win, they return to their initial wager amount.
The movement of these indices are automated and based on randomly generated numbers by a programmed third party which makes it difficult to manipulate its movement pattern. The Boom and Crash Indices are very different from the rest of the forex pairs and commodities traded today.
Probably the greatest single trade in history occurred in the early 1990s when George Soros shorted the British Pound, making over $1 billion on the trade. Most of the greatest trades in history are highly leveraged, currency exploitation trades.
If you decide to become a day trader, it's important to understand that day trading isn't a get-rich-quick scheme. You will lose money along the way, and not all your trading strategies will pay off as you expect.
Short-sell trading: Here, traders simply believe that the market is bearish and act accordingly. You borrow shares from a broker and sell them in the open market. You wait until the price falls enough for you to buy the stocks back at a lower rate. The difference acquired by this process is the profit.
The Boom 500 Spike Indicator gives you the best and most accurate entries on the Boom 500 Index. This powerful, dynamic indicator will help you trade with increased confidence and greater accuracy.
It is very easy to flip $10 account to $1000 With 1 minute boom and crash Scalping strategy using moving average and the Stochastic Oscillator. As a trader, you need to wait for certain conditions to manifest before rushing into a trade. Additionally, use risk mitigation measures such as take profit and stop loss.
A crash is usually attributable to the burst of a price bubble and is due to a massive sell-off that occurs when a majority of market participants try to sell their assets at the same time.
The strategy is very simple: count how many days, hours, or bars a run-up or a sell-off has transpired.Then on the third, fifth, or seventh bar, look for a bounce in the opposite direction. Too easy? Perhaps, but it's uncanny how often it happens.
The number 5 stands for choosing 5 currency pairs that a trader would like to trade. The number 3 stands for developing 3 strategies with multiple combinations of trading styles, technical indicators and risk management measures. The number 1 guides traders to choose the most suitable time for trading.
The numbers five, three and one stand for: Five currency pairs to learn and trade. Three strategies to become an expert on and use with your trades. One time to trade, the same time every day.
From our experience, mean reversion strategies tend to be the most profitable. One of the reasons for that is that the market moves sideways more of the time than it trends. Even when it trends, it moves in waves that often oscillate around its moving average.
One of the simplest and most effective trading strategies in the world, is simply trading price action signals from horizontal levels on a price chart.
What is the best strategy in trading? The most popular type of trading strategies are swing trading strategies for beginners and day trading strategies for more advanced traders. Trading the higher time frame as a beginner helps to learn more about the market which can then be used to help trade lower time frames.
Basically, determine the average difference between data points.If my data starts to exceed some multiple of that value consecutively then most likely there is a spike occurring.
While boom and crash indices can be a lucrative trading instrument, they also come with some risks. Because they are designed to be traded over a short period, they can be highly volatile, and prices can change rapidly.
What is a Boom and Crash Strategy? A Boom and Crash Strategy is a set of rules or processes that will guide you on how and when to enter the Forex market, when to exit, the lot size to use and the risk management profile.
The EMA indicator is regarded as one of the best indicators for scalping since it responds more quickly to recent price changes than to older price changes.
The best forex scalping strategies involve leveraged trading. Using leverage in forex is a technique that enables traders to borrow capital from a broker in order to gain more exposure to the forex market, only using a small percentage of the full asset value as a deposit.
When asked what type of work was most difficult to master (out of 32 different trades), the two groups of respondents (the average age of which was 43 years old) were in agreement again — electrical work was the hardest to master, followed by carpentry, HVAC, and cabinets/countertops.
The United States is the world's 2nd-largest trading nation, behind only China, with over $7.0 trillion in exports and imports of goods and services in 2022. The U.S. has trade relations with more than 200 countries, territories, and regional associations around the globe.
George Soros. George Soros, aka "the man who broke the Bank of England," was born a Jew in Hungary in 1930, survived the Holocaust, and fled the country then. ...
Day Trading Is More Familiar Than Derivatives, But Nearly as Risky. While derivatives trading is alien to the average investor, the concept of buying stocks, selling them at a profit and harvesting the gains is not — and if you're good, you can get to $100,000.
A day trader might make 100 to a few hundred trades in a day, depending on the strategy and how frequently attractive opportunities appear. With so many trades, it's important that day traders keep costs low — our online broker comparison tool can help narrow the options.
Don't use leverage: This should be the most important golden rule for any investor who is entering fresh into the world of stock trading, never use borrowed money to invest in stocks.
There can be many reasons why you are not profitable. It could be discipline issues, psychological factors hurting your trading, or simply having no edge in the markets. Without a trading plan, you will never know what is the cause. But when you have a trading plan you follow religiously, there will only be 2 outcomes.
The Boom Hunter Pro Indicator is a long and short-entry monitoring oscillator used by traders worldwide. Since it uses the entire concept of the Center of Gravity (COG) oscillator, traders can easily understand and use it.
One of the most common requirements for trading the stock market as a day trader is the $25,000 rule. You need a minimum of $25,000 equity to day trade a margin account because the Financial Industry Regulatory Authority (FINRA) mandates it. The regulatory body calls it the 'Pattern Day Trading Rule'.
To increase your chances of profitability, you want to trade when you have the potential to make 3 times more than you are risking. If you give yourself a 3:1 reward-to-risk ratio, you have a significantly greater chance of ending up profitable in the long run.
Why Do I Have to Maintain Minimum Equity of $25,000? Day trading can be extremely risky—both for the day trader and for the brokerage firm that clears the day trader's transactions. Even if you end the day with no open positions, the trades you made while day trading most likely have not yet settled.
The October effect refers to the psychological anticipation that financial declines and stock market crashes are more likely to occur during this month than any other month. The Bank Panic of 1907, the Stock Market Crash of 1929, and Black Monday 1987 all happened during the month of October.
Gold, silver and bonds are the classics that traditionally stay stable or rise when the markets crash. We'll look at gold and silver first. In theory, gold and silver hold their value over time. This makes them attractive when the stock market is volatile, and the increased demand drives the prices up.
Thus, the minimum lotsize permissible for trading Boom and Crash is 0.20 while the maximum lotsize is 50. The lot size in Boom & Crash indices has been designed in such a manner that 1 lotsize becomes equivalent to one dollar value.
boom and crash scalping strategy is a process of finding opportunity and take a short profit in trading boom and crash indices. Boom and Crash Scalping is a trading strategy that involves taking advantage of the short-term fluctuations in price movements in the Boom and Crash indices offered by some online brokers.
From our experience, mean reversion strategies tend to be the most profitable. One of the reasons for that is that the market moves sideways more of the time than it trends. Even when it trends, it moves in waves that often oscillate around its moving average.
Therefore, with a $10,000 account and a 3% maximum risk per trade, you should leverage only up to 30 mini lots even though you may have the ability to trade more.
The minimum equity requirement for a pattern day trader is $25,000 (or 25% of the total market value of securities, whichever is higher) while that for a non-pattern day trader is $2,000.
A one-minute scalping strategy is a great technique for beginners to implement. It involves opening a position, gaining some pips, and then closing the position shortly afterwards. It's widely regarded by professional traders as one of the best trading strategies, and it's also one of the easiest to master.
The 1% rule demands that traders never risk more than 1% of their total account value on a single trade. In a $10,000 account, that doesn't mean you can only invest $100. It means you shouldn't lose more than $100 on a single trade.
Successful traders focus on risk management first and foremost. Risk management involves limiting your losses and protecting your trading capital. One common rule of thumb is to never risk more than 2% of your trading account on any single trade.
Captured by the fear of losing money, traders often turn to third-party solutions for their problems rather than looking inward for solutions. This means looking for a better mentor, better indicators, a better system, etc. The fact is that when you're trading, no trading systems are 100% winner-proof.
Introduction: My name is Velia Krajcik, I am a handsome, clean, lucky, gleaming, magnificent, proud, glorious person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
