Please how do I place my first trade on Boom and Crash?, is a question that I have heard more than a thousand times in my few years of forex trading. That is because, nothing beats the excitement of knowing how to trade by yourself. Usually, people believe that if they know how to go about a thing, then they can succeed in that adventure. In the forex world, teaching you how to take a trade is quite a progressive adventure that usually begin with knowing how to take your first trade.
Learn the Secret of Forex Trading, Click here to download a free e-book now
Yes, you heard me! Knowing how to take the first trade is the beginning of every forex adventure. That is because, when you know how to take trade, then it is easy to learn how to navigate your way through the numerous forex assets. Interesting, this exercise is quite easy and can even be done when a good understanding of the market dynamics is understood; a peculiar situation for traders aiming to make a living with the boom and crash indices.
In 2019, Deriv (formerly known as Binary.com) introduced the boom and crash indices to provide traders with a unique trading experience. This involved simulating real market conditions with unique opportunities to capitalize on sudden spikes (booms) and drops (crashes) in market prices. While this relies solely on basic technical analysis, it also accommodates different trading approaches that are void of actual market events and liquidity risks – the fundamental aspect of trading.
For that reason, understanding the mechanics of Boom and Crash indices is very crucial due to its unique nature. While the potential for profit exists by reason of their volatility, knowing how to take the first trade is where the journey actually begins for everyone.
Table of Contents
How to Place your first Trade on Boom and Crash
1. Choose a Trading Platform
Deriv offers Boom and Crash indices in many of their trading platforms. So, choosing a trading platform is a crucial step for both novice and experienced traders due to how it could directly impact the trading experience and overall success. With a myriad of trading options available including DMT5, Deriv X, CTrader etc., understanding the key features and considerations of each can help a trader to select the platform that best aligns with their trading goals and style.
More so, Web-based platforms are also accessible through internet browsers including the https://charts.deriv.com/deriv. Here, technical analysis can be carried out with convenience and ease. while desktop platforms require installation on a computer, it also provide more advanced features, including extensive charting tools and research capabilities, making them suitable for active traders. Also, mobile platforms allow trading on-the-go, essential for those who need to manage trades anytime, anywhere. With these numerous trading platforms, Deriv has introduced flexibility for traders who aims to focus on trading the Boom and Crash indices.
2. Create an Account
In most situations, creating a trading account typically begins with opening a demo account. This serves as an essential stepping stone for traders, especially beginners.
A demo account allows traders to practice their skills in a simulated environment using virtual funds, providing a risk-free way to familiarize themselves with the different trading platform and market dynamics. This way, real markets are replicated for traders to build their confidence, learn to read charts, develop their trading style, experiment with and test various strategies and explore different tools without the fear of losing real money.
Creating the real account usually succeeds the demo trading. This transition marks an important step in a trader’s journey, as it involves moving from a risk-free environment to one where real capital is at stake. However, this can be both exciting and nerve-wracking since it requires discipline, patience, and a solid understanding of risk management principles. With careful planning and adherence to proven strategies, a trader will navigate this new phase successfully and work towards achieving their trading goals.
Typically, creating a real account requires verifying your identity and identity before funding the account with real money can be allowed.
This is to guide against various risks, including fraud, money laundering, and identity theft. By adhering to Know Your Customer (KYC) regulations, Deriv ensures that they can confirm a trader’s identity, which helps in maintaining the integrity of the financial system and protects both the broker and the trader
Don’t be left out, Open a free trading account now by clicking here
2. Fund Your Account
Funding your trading account is a critical step in taking the first trade. To do this, understanding the deposit requirements and options available is essential.
For Deriv, one of the key advantages is its low minimum deposit requirement, which makes it accessible for traders at all levels. For e-wallets such as AirTM, Web Money, Perfect Money, Neteller, and Skrill, a minimum deposit of about 5 USD is required. This low entry point allows beginners to start trading with minimal financial commitment, making it easier to test the waters without risking significant capital. More so, traders opting to use credit or debit cards and bank wire have a minimum deposit of $10. While this is still relatively affordable when compared to other brokers, there is no minimum deposit when using cryptocurrencies like Bitcoin, Ethereum, Litecoin, and Tether, thus, allowing for flexible funding options. Furthermore, other varieties of payment methods such as online banking and payment agents are also available.
Importantly, Deriv does not charge any fees for deposits. This helps in reducing overall trading costs. Once a real account is funded, a trader can begin trading the different boom and crash instruments. This flexibility and low barrier to entry make Deriv an attractive choice for both new and experienced traders looking to engage in the financial markets.
3. Learn Basic Trading Concepts
Understanding basic trading concepts is crucial for any trader looking to navigate the financial markets effectively. Key concepts such as support and resistance, fair value gaps, candlestick patterns, and technical indicators serve as foundational elements that empower traders to make informed decisions.
Support refers to a price level where a downtrend may pause due to increased buying interest, acting like a “floor” that prevents prices from falling further. Conversely, resistance is a price level where an uptrend may stall due to selling pressure, resembling a “ceiling” that caps price increases. Recognizing these levels helps traders identify potential entry and exit points. For instance, traders often buy near support levels and sell near resistance levels, anticipating price reversals at these critical junctures. Moreover, when prices break through these levels, it can signal a change in market sentiment, prompting traders to adjust their strategies accordingly.
PICTURE 1: A Picture showing Support and Resistance levels in Crash 1000
Source: Trading View
Similarly, candlestick patternsare another essential tool for traders. Each candlestick represents price movement over a specific period and provides insights into market sentiment. Patterns such as pin bars, engulfing patterns, and dojis can indicate potential reversals or continuations of trends. Understanding these patterns allows traders to gauge market psychology and make more informed predictions about future price movements.
PICTURE 2: A Picture showing Engulfing candlestick pattern(the circled part with arrow) in Boom 500
Source: Trading View
4. Select Your Trading Strategy
Usually, I recommend that in taking trades, scalping or trend following strategies should be used.
- Trend Following: This involves identifying the prevailing trend is crucial in Boom and Crash trading. Traders should look for signs of strong upward or downward momentum before entering trades in the direction of the trend. Utilizing indicators like the Moving Average Convergence Divergence (MACD) or the Relative Strength Index (RSI) can help confirm trends and provide additional entry signals.
- Scalping: Many traders engage in scalping, aiming to make quick profits from small price movements. This strategy involves entering and exiting trades rapidly, often within minutes. While it can be lucrative, scalping requires a keen understanding of market dynamics and quick decision-making skills due to the high volatility of Boom and Crash indices.
5. Set Entry and Exit Points
Setting entry and exit points in Boom and Crash indices trading is a critical aspect of developing a successful first trading technique. With the rapid price movements, it is easy for traders to have clear plans for when to enter and exit trades to maximize profits and minimize losses.
Using technical techniques such as fair value gaps, support and resistance levels is crucial.
PICTURE 3: A Picture showing Entry Points using Fair Value Gaps in Boom 500
Source: Trading View
A support level indicates where the pricegap often arises from imbalances in supply and demand, where either buying or selling pressure dominates, leading to rapid price movements. Fair value gaps are typically identified through a specific three-candle pattern on a chart, where the middle candle shows a strong price movement that creates a gap between its high and the low of the surrounding candles.
These gaps serve as potential areas of interest for traders because they often act as magnets, drawing the price back towards them to “fill” the gap. When the price returns to these levels, it indicates that the market is correcting itself, allowing traders to capitalize on the movement. Understanding fair value gaps can enhance trading strategies by helping traders identify entry and exit points based on anticipated price behavior around these levels. Consequently, recognizing and utilizing fair value gaps can be a powerful tool in predicting future price movements and making informed trading decisions. However, traders should remain flexible and adjust their entry and exit points based on changing market conditions
6. Place Your Trade
Once you have identified a favorable setup based on your analysis, execute your trade by selecting the appropriate buy or sell option depending on whether you anticipate a boom or crash. More so, monitor the trade. Keep an eye on open positions and be prepared to adjustthem based on market movements.
Key Considerations When Placing your first Trade on Boom and Crash
Always use proper risk management techniques, such as limiting the amount of capital risked on each trade (typically 1-2% of your total capital) to avoid significant losses. Place trade only when you see a clear opportunity according to your chosen strategy.
By following these steps, you can effectively place your first trade on Boom and Crash market while minimizing risks associated with this high-volatility trading environment.
Risk Disclaimer
Deriv offers complex derivatives, such as options and contracts for difference (“CFDs”). These products may not be suitable for all clients, and trading them puts you at risk. Please make sure that you understand the following risks before trading Deriv products: a) you may lose some or all of the money you invest in the trade, b) if your trade involves currency conversion, exchange rates will affect your profit and loss. You should never trade with borrowed money or with money that you cannot afford to lose.