What Are Boom And Crash Indices?

by Fahad Zar
6 minutes read

If you have finally realized that fundamental analysis is not your cup of tea and have looked for alternatives to trading stocks, currencies & commodities. You must have come up with boom & crash indices; the new hot for traders with a good game of technical analysis.

Unlike Forex pairs, boom and crash indices are purely technical trading pairs that you can trade merely with price action & accurate charts without fearing news events like monetary policies, consumer price index, etc etc…

Being a new thing to a lot of traders out there, there is a lack of knowledge and even misconceptions on the web regarding the boom & crash indices. Here’s what you need to know before trading the boom and crash indices.

What Are The Boom & Crash Indices?

Boom 1000, Boom 500, Crash 1000, and Crash 500 are synthetic indices offered by Deriv that you can trade to make a huge chunk of returns in no time. As the names suggest, a spike or a huge one-minute candle move occurs in both boom and crash that sometimes, could be as much bigger as 40-60 points (pips).

Synthetic indices are markets that are simulated. Though they behave like real monetary markets, their behavior is created from the use of randomly generated numbers. Boom 1000 along with Crash 1000, Boom 500, and Crash 500 are also synthetic indices.

That simply means, synthetic indices purely behave technically and no fundamental factor (news) can influence the market. That being said, you can take a fair share of the market by performing technical, AKA chart analysis.

How Does The Boom & Crash Work?

Boom and Crash indices behave differently from normal trading pairs for the following reasons.

1. Boom & Crash Indices Do Not Have Fundamentals

The boom and crash indices are not pegged with any currency or commodity and are totally independent. They are randomly generated numbers that follow a pure technical pattern. That being said, no news event, country, or institution can influence the boom & crash indices.

2. Sudden Boom/Drop In The Price

Yet another unique aspect of the Boom & Crash indices is the sudden hike or drop in the price that can sometimes be as bigger as 50+ points (pips).

In Boom indices, an upside spike results due to price rejections whereas in the Crash indices, a significant drop occurs upon rejection of the price from a certain level. This makes the Boom & Crash indices unique from other trading pairs and intrigues a lot of traders out there.

3. The Stop-Loss Issue

In Boom & Crash indices, you cannot expect the position to close at your Stop-Loss/Take-Profit. The position will close at the end of the spike and that’s why many traders don’t trade against spikes as it can give a decent loss within seconds.

Boom And Crash Indices Lot Size

The Boom and Crash indices are very different from forex pairs and therefore you should have a good understanding of the lot sizes before you start trading the Boom & Crash. Here’s what you need to know about the Boom & Crash lot sizes

  • The minimum lot size is 0.20 for all Boom & Crash pairs. The 0.2 lot size means every ONE point (pip) move will result in a $0.20 profit/loss.
  • The maximum lot size is 50 for all Boom & Crash pairs. The 50-lot size means every ONE point (pip) move will result in a $50 profit/loss.
  • Basically, the number of lot size in Boom & Crash indices is equal to dollar value. For example, if your lot size is 1, you will make or lose $1 with ONE point move in the market. Similarly, a 5-lot size will result in a $5 profit/loss per ONE-point move.

That being said, you can use this formula to calculate pips or lot size for Boom & Crash indices:

Pip Value = Point Value * Volume * Contract Size

Are Boom & Crash Indices Manipulated?

The boom and crash indices are stubborn and once they start moving in a direction, they just don’t come back easily which is why most new Boom and Crash traders associate them with manipulation.

Thing is that the Boom & Crash indices respect the rules of price action and technical analysis and you should only trade reversals only if you can justify it with strong confirmations. Here’s my detailed article on whether the Boom & Crash indices are manipulated.

That’s it! This piece should give you a basic understanding of the Boom & Crash indices. If you have any questions regarding the Boom & Crash, you can leave a comment below.

Happy Trading!

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6 comments

Gabriel March 25, 2022 - 12:57 pm

Thank u for your help

Reply
Fahad zar March 27, 2022 - 11:34 am

You are welcome, Gabriel. Happy Trading 🙂

Reply
Mohasoa October 21, 2022 - 11:57 am

Hello please make an article about crash 300

Lot size,pips ..Like what you did with crash 1000 and boom 1000

Reply
Fahad Zar October 22, 2022 - 12:04 am

Thank you for pointing it out. I will soon share the strategies for the crash 300 index. Stay tuned!

Reply
saeed ahmad February 25, 2023 - 8:10 pm

aoa bro
plx write about Lot size ,pips in detail and how to calculate it

Reply
Fahad Zar February 25, 2023 - 8:43 pm

Walaikumassalam.

Sure, I will write a detailed article on how to calculate the lot size for the Boom & Crash Indices.

Reply

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