Boom and crash brokers are brokers that offer Boom index and Crash index for trading. While this trading instrument promises quick returns, it’s essential to understand the pitfalls before investing. The index is fully synthetic so one downside is that you dont get all the fun from trading the market news or doing fundamental analysis. However it is more exciting.
This guide explains the fundamentals of boom and crash trading, explores boom and crash indices, and offers insightful trading tips. Continue reading to learn how to start trading boom and crash indices today.
Best Boom and Crash Brokers 2024 South Africa
Deriv is the only broker offering this in South Africa at the moment.
Read the Deriv Review
What is Boom and Crash Trading?
A boom and crash trade refers to the sudden rise in the price of an asset followed by an immediate fall. The goal is to enter the trade as the price rises and exit before it starts plummeting. Boom and crash trading leverages the philosophy that “what goes up must come down.” Traders aim to maximize returns on the spike without getting burned by the crash.
To book profits, traders need to correctly predict the price movements of stimulated assets exhibiting frequent boom and crash cycles. The cycles closely replicate the volatility of actual financial markets. Traders must speculate whether an asset will boom or crash within a specific period, similar to binary options trading.
What are the Boom Index and the Crash Index?
Boom and crash indices are a set of volatility metrics that simulate market conditions and help traders speculate on price movements. These synthetic indices are created using mathematical formulas to replicate market volatility and price dynamics. Currently, Deriv is the only broker offering boom and crash indices, along with Volatility 75 or jump indices. Deriv is probably the biggest authority on synthetic trading currently..
Deriv uses random number generators, an encrypted piece of computer software, to generate boom and crash indices. Traders and brokers can neither access future predictions nor manipulate the results, ensuring complete transparency and fair trading opportunities.
Further, traders can study boom and crash indices to gain exposure to price fluctuations. These indices are based on traditional trading indices like commodities, forex, and crypto and provide fast-paced trading opportunities. Bom and crash trading is incredibly volatile, and in the hands of an intelligent trader, it can be highly profitable.
What are the Different Types of Boom and Crash Indices?
Typically, there are six types of boom and crash indices on Deriv. The list includes:
- Boom 300
- Boom 500
- Boom 1000
- Crash 300
- Crash 500
- Crash 1000
As their names suggest, boom and crash 300 indices have one spike in the price series every 300 ticks. 500 indices have one spike in the price series every 500 ticks, and 1000 indices have one spike in the price series every 1000 ticks.
The only difference between boom and crash indices is that the former has upward-pointing spikes while the latter has downward-pointing spikes. If you’re wondering, “Which broker has boom and crash index?” we can only recommend Deriv due to its diverse assets, accessible transactions, and responsive customer support.
Pros and Cons of Boom and Crash Trading
These are the primary benefits and drawbacks of boom and crash trading.
| Advantages | Disadvantages |
| Potential for generating high profits | Volatile market |
| Diverse market opportunities | Requires knowledge and experience |
| Quick turn-around | Short profit-making window |
| Ideal for forex trading | Big risk since requires perfect timing |
| Indices available round the clock |
Understanding Boom and Crash Lot Size
Boom and crash indices have different lot sizes than forex pairs. The minimum and maximum lot sizes of boom and crash indices are 0.2 and 50, respectively. This means that for every point the indices move, the prices move by $0.20 and $50, respectively.
Each boom and crash lot size is valued at $1. Therefore, when trading with a single lot, you will gain or lose $1 when the market moves by one point. Similarly, if your lot size is 10, you will gain or lose $10 when the market moves by one point.
Why Trade Boom and Crash Indices?
Boom and crash trading has a high reward potential, making it ideal for traders with a high-risk appetite. Boom/crash indices offer extremely low spreads, sometimes as low as one pip, which is perfect for forex trading.
Additionally, traders get exposed to rapid price fluctuations due to the fast-paced trading environment. So, if you enjoy making a quick profit and don’t mind the risks, boom and crash trading is for you.
Boom and crash trading is very similar to binary options trading as it allows getting high profits from sudden up and down moves in prices, while in traditional forex you have to wait for pip by pip moves of currencies that arent that volatile.
How to Trade Boom and Crash Indices on Deriv?
You need a trading account to trade boom and crash indices in Deriv MT5. Here’s a step-by-step guide to creating your Deriv trading account.
Step 1: Create a Demo Account on Deriv
To start trading synthetic indices, you need to create a Deriv account.
- Visit the website and click on “Open Demo Account”
- Enter your email address and wait for a confirmation email
- Open the email and click on the verification link to finish setting up your account
Step 2: Open a Real Account
While the demo account offers the perfect practice opportunity, you need a real trading account for synthetic indices.
- From the demo account, navigate to the drop-down arrow beside your account balance and click the “Real” button
- Click the “Add” button and select the default account currency
- Provide the requested details to complete the registration process
Be careful while choosing the default currency, as all future transactions will be based on your selection. We recommend selecting a convenient currency, as you can’t change it after the first deposit.
Ensure that the supplied details can be verified later. Deriv will ask you to upload relevant documents for their Know Your Customer (KYC) initiative. These documents must corroborate the details you’ve provided during registration.
Step 3: Open a Deriv MT5 Synthetic Indices Trading Account
You need a dedicated DMT5 synthetic trading account for boom and crash trading.
- Expand the “Real” tab and click the “Add” button next to the synthetic account
- Create a password for your synthetic account
Please keep in mind that your synthetic trading account password is different from your main account’s. Once the synthetic account is active, it is listed in your main account. You will receive an email with your login ID for logging into your synthetic trading account.
Step 4: Download the Deriv MT5 Platform
You need to download DMT5 to trade boom and crash indices
- Once you click the synthetic account, you will be automatically redirected to a page with Metatrader 5 download links
- After downloading and installing DMT5, login to your trading account
- Transfer funds to your account to start trading
Frequently Asked Questions
What is “Boom and Crash indices”?
Boom and crash indices are volatile synthetic indices that help traders gain exposure to price fluctuation. A sudden price spike followed by a reciprocating drop is the defining characteristic of boom and crash indices. The volatile nature of boom and crash trading means that no indicator can predict the beginning of a boom or a crash.
Which brokers offer Boom 500 and Crash 500 indices?
Deriv is the only broker offering Boom 500 and Crash 500 trading. The platform trades in several markets, including forex, commodities, crypto, and indices.
How do you find the best Boom 1000 index brokers?
Likewise, Deriv is the only Boom 1000 broker. The platform is licensed by several reputable financial regulators worldwide, provides a low-risk and fair trading environment, and offers a user-friendly interface.
Can boom and crash indices be manipulated?
Boom and crash are volatile synthetic indices, and once they start moving in a direction, they take a while to turn around. This is why most traders associate boom and crash indices with manipulation. In reality, boom and crash indices follow price action patterns and are automated by third-party random number generators. Therefore, they are protected from manipulation.
Should I trade boom and crash indices?
Although boom and crash indices can be lucrative, traders must have sufficient experience and expertise to navigate volatile markets effectively. Hence, beginners should be extremely careful to avoid significant losses.
