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 (a binary.com brand) platform.

With Crash 1000(500) Index, there’s an average drop in the price series that occurs at anytime within 1000(500) ticks.

With Boom 1000 (500) index, there’s an average of one spike in the price series that occurs at anytime within 1000(500) ticks.

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.

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

Develop a Strategy

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 (spikes in boom buy and crash sell situations), and also on the 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 of the market from 0.10 to 0.20 to enable profit maximation. In as much as I know that it is a suicidal adventure to trade a 0.20 lot on a $100 account, the market structure is the basic platform for which the default lot was set to 0.20 to enable traders to have a return of $1 for every 5 pips and vice versa.

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.