Boom & Crash Indices Trading Tips

Boom & Crash are synthetic indices that are well known for their spikes. While trading the Boom & Crash indices is a great way to grow a small equity account, the risk associated is also huge. The market can sometimes give you nightmares especially if it’s in the opposite trend. Here are my tips for trading the Boom & Crash indices successfully.

I have been trading the Boom & Crash indices for over a year now and have learned some useful tips that I want to share with you today. I have learned these tips the hard way so you don’t have to!

Disclaimer: Trading Futures, Forex, CFDs, and Stocks involves a risk of loss. Please consider carefully if such trading is appropriate for you. Past performance is not indicative of future results. Articles and content on this website are for educational purposes only and do not constitute investment recommendations or advice.

Here is the list of my top 7 tips for trading the boom & crash indices.

1. Place Your Stop-loss Wisely

Ideally, you should consider the following THREE things before placing your stop-loss.

1. Spread: (Difference between the buy (offer) and sell (bid) prices quoted for an asset). For instance; if you have shorted (sold) an asset and the exact stop-loss point is 10300, you should consider spread while putting a stop-loss. A wise stop-loss, in this case, would be 10299.500 or even better, 10299.
2. Stop-loss Hunting is real: Stops are put right below/above support & resistance levels or demand and supply zones. Sometimes, the market breaks in fiercely just to hunt stop losses to kick out risk-averse traders and reward the brave ones! Put your stop-loss at a distance from your level or better, and wait for the perfect entry point to avoid being the victim.
3. Risk/Reward Ratio: Think about this; if you are trading for a spike with a standard lot size of 1 and the average spike is 15 points (pips), then you shouldn’t risk more than 7.5 points (risk 50% of your reward). However, if you’re planning to trade a longer timeframe, which could potentially earn you some 100-200 pips, then it’s OK to risk 50-100 points. Bottom line: set your stop-loss as per your expected reward.

2. No Chart, No Trade

Creating and analyzing charts on a daily basis is a daunting task but worth it. Before you start your trading session, make sure you fully understand the bigger and clearer picture of the pair.

That means, draw your support & resistance levels, demand, and supply zones, find different patterns and trends in different timeframes, use your favorite indicators, have a cup of coffee and you are good to go.

3. Don’t Just Trade For Spikes

Like any other forex trading pair, boom & crash indices follow a technical pattern and respect the rules of price action. Therefore, try to go for longer trades instead of focusing on the thrill of spikes. Your last position could have easily earned you 200 pips, should you hold it!

4. Know When To Go Big With Boom & Crash

The amazing thing about boom & crash is that the spikes can be predicted with darn good accuracy. Your prediction could be based on support & resistance levels, demand & supply zones, simple or exponential moving averages, or any of your favorite indicators.

Sometimes, you can catch a spike with stop-loss as close as ONE or TWO pips. That being said, you should use maximum lot size on trades with high probability and tight stop-loss.

5. Time To Take A Break From Boom & Crash

The boom & crash indices are based on a lucrative concept and are addictive. Once you start trading them, you just cannot hold your breath to catch another spike. While the market may respect your strategy most of the time, it gets stubborn at times and that’s when you should take a break instead of attempting to recover your losses.

If it’s not following your strategy on a certain day, it isn’t worth trying. In the meantime, you can check out the position of other pairs like volatility indices, jump indices, and step indices. Or even better, give yourself a treat and wait for the market to create liquidity & kick out the impatient ones.

6. The Market Isn’t Going Anywhere

This one is extremely important. Don’t take a trade just because you have to!

Spikes occur on a regular basis since the inception of the boom & crash market. If you miss one, there are hundreds more to catch so you need not worry. Sometimes, the fear of missing out on spikes or the regret of long beautiful spikes affect your entry points thus resulting in severe losses.

While it is more of a psychological issue, it adversely affects your decisions and you should learn to keep calm no matter what. To conclude, follow your strategy and don’t let your emotions or the tricky market seven you out!

7. Don’t Let The Reds Scare You

The thing with boom & crash indices is that when you are trading for spikes, the trade starts in loss and the loss continues to grow with each M1 Candle.

Watching that gradual reduction in your equity can be disturbing especially when your position size is big and sometimes you may close your positions in panic or place your stop-loss too close to avoid further losses.

Now let’s think about it for a minute. While the loss keeps adding up slowly, the spike can make all the reds blue in the span of a second. I have had instances where my positions would be in $300+ loss and the next minute, that same trade setup would give me double the profit.

In order to make money in the market, stay patient and brave. However, do not take unnecessary risks. Best of luck with your next trading session!

Is something you’d want me to add to the list? You can leave a comment below.