How to Trade Boom 500 Successfully - Motivation Africa (2024)
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Boom 500 is one of the synthetic trading assets under the Deriv.com (formerly called Binary.com) platform; the other being Boom 1000. Boom 500 differs from its complementary pair (Boom 1000) in that the market has a tendency of a boom spike for every 500 tick it makes.
Trading Boom 500 is a worthwhile adventure which has left many traders in amazement. For some traders, the market is termed the ‘market of the poor’ since its leverage rate permit traders to use 0.2 (the default lot size offered by Deriv.com) for trades with an equity that is as low as $5; a feature that does not sail through in other Boom and Crash markets.
To other traders, the market is as unpredictable as the other Boom and Crash markets. The reason being that, the regular boom spikes leaves traders confused as to which strategy could work perfectly on it. After series of trials with different strategies, they end up wearied due to either consistent loss of money or a slow growth process. If this is the challenge you encounter when trading Boom 500, then, this article is for you.
First, I need you to understand that forex is a market with high volatility index. Hence, a single trader cannot determine the direction of the market.
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You cannot determine the direction of the market. What I mean is, no trader can comfortably say, at this point, a boom spike will take place. That is why, a particular strategy on how to catch the boom spikes will work today and fail by tomorrow even when all indications are in place. At the other end, no trader can also say he/she knows how long the market will sell.
This is why focusing on selling those bearish candles can offer a temporary solution but appears ineffective in the long run owing to the fact that focusing on selling the bearish candles always leave traders with using either outrageous lot sizes per trade or multiple positions to trade. This makes traders have open trades of many positions which, at the end of each trading day, may result in more than 10 trades in a day.
With very little information on how to trade Boom 500 successfully, many traders turn to trading aids (customized indicators and robots) which also work today and fail by tomorrow.
Table of Contents
To successfully trade Boom 500, the following must be integrated and understood.
⦁ A good risk management as it pertains to a good risk to reward ratio.
A good knowledge of risk management is the first step to a successful trade. This is because the surest strategy that never fails is ‘a good risk management’. To achieve this, one must have a good knowledge of his/her risk to reward ratio. For Boom 500, I usually suggest a risk to reward ratio of 1:3; risking 5 pips to get a reward of 15 pips. As much as this may not look attractive, it is the surest way to grow small accounts. Protecting your equity and growing it steadily should be a top priority. This is because, how much you make daily is not as important as how well you grow and understand the market. Once you keep growth as your focus, the return will naturally find itself to your bank account. Do not forget that It is always better to make $0.50 daily for a week than to lose $.20 in a day for a week.
⦁ A good entry and exit point
This will depend on so many factors. A proper understanding of your indicators (for indicator traders) or an astute knowledge of price action (for naked chart traders). This is because, market reactions or price movement always have a reason behind it, most of which may not be understood when it happens. Your focus should be on how to be prompt with your entries, make allowance for contingencies, have a good stop loss position and above all, secure your profits. Learn to outgrow losing your profits. To do this, develop exit strategies for every trade set up you place. In situations where you cannot determine an exit point, please stay out of the market to be on the safe side. Also, trade cautiously with a minimal lot size that will reduce your pain threshold if losses abound.
⦁ A big picture of the market:
A big picture of the Boom 500 market is not different from that of any other forex market. To achieve this, it is always safe to begins one’s analysis from a higher time frame. This is because, the higher time frame tells the real story of the market. Without the higher time frame analysis, no accurate prediction can be made. After seeing the real picture, break down the analysis to the lower time frames to get a wait or a strategic entry and/or exit. As seen in the chart above, the market can be seen to be on a long bearish trend. For many traders, this type of trend is mostly avoided due to the spikes which are so obvious in the lower time frames. After seeing the trend in the higher time frame chart, I broke down the analysis to lower time frame.
This made me know that although a symmetrical triangle is the story the market is sharing on H4, M30 tells me that a double bottom pattern has been formed and that I should expect the bulls to dominate the market for a while (I cannot state how long the bulls will dominate the market). Thus, with this knowledge gleaned from the market structure I know where to strategically place my trades using entry and exit strategies for double bottom chart pattern (if I wish to trade it).
⦁ Understand the market psychology
Boom 500 market has a unique market psychology. For an appropriate understanding of the market, always look away from the spikes. Also, do not focus on the M1 bearish candles. The spikes and M1 bearish candles are your greatest distraction from the entire market view. The market aims to make you a scalper. But you can outgrow that stage. Focus rather, on understanding the market movement, a good analysis from the higher time frame, the leverage rate that makes it unique, how much liquidity and volatility the market has as distinct from other markets. This will help you understand what works and the reason for which you must base your trading decisions. It will inform you of the appropriate lot size to use per equity size and when to know if you are over-leveraging or over-trading.
⦁ Understand that you need time to grow in the knowledge of the market.
Rome was not built in a day. Even so, you cannot become an expert trader overnight. Give yourself time to grow in trading proficiency. It may not happen in four months but you can grow and become better in four months than you were months ago. To do this, develop your study life. Study books, watch videos, pay for seminars, listen to teachers, have a study group, develop a trading plan, develop a trading strategy and above all, stick to what works. What works in that you must understand yourself and what works for you and then grow in its process. For Boom 500, the market, by default, makes scalpers out of traders. However, with a good knowledge of the market structure and price action, you can successfully trade as a day and swing trader. I often tell traders that the best way to trade Boom 500 is to either day trade or swing trade the market. This will take a good chunk of your time to develop yourself in its processes but it is always worth the attempt. Remember, forex is not a get rich quick business. But, through forex, you can get richer than you think.
The numbers five, three and one stand for: Five currency pairs to learn and trade. Three strategies to become an expert on and use with your trades. One time to trade, the same time every day.
The numbers five, three and one stand for: Five currency pairs to learn and trade. Three strategies to become an expert on and use with your trades. One time to trade, the same time every day.
You can use indicators such as moving averages, Bollinger Bands, and Relative Strength Index (RSI) to identify when the market is trending and when a spike may occur. Monitor news and events: The Boom and Crash indices can be affected by global events and news.
EMA and RSI. The exponential moving average is a beloved indicator for 5-minute trades. Still, on Forex, a 5 min scalping strategy may include other tools to either confirm signals or find new ones. For this trading approach, we will add the RSI indicator.
The 9-EMA strategy is a technical analysis strategy that uses the 9-day exponential moving average (EMA) to generate buy and sell signals for trading securities. It uses 9-EMA to identify short-term market swings in the price of a security.
The 123-chart pattern is a three-wave formation, where every move reaches a pivot point. This is where the name of the pattern comes from, the 1-2-3 pivot points. 123 pattern works in both directions. In the first case, a bullish trend turns into a bearish one.
The strategy is very simple: count how many days, hours, or bars a run-up or a sell-off has transpired.Then on the third, fifth, or seventh bar, look for a bounce in the opposite direction. Too easy? Perhaps, but it's uncanny how often it happens.
Does stop loss work in boom and crash? Stop-loss is designed to stop the trading process automatically when a price movement gets out of hand. But the speed of the boom and crash market means SL orders can find it hard to respond quickly enough.
The EMA indicator is regarded as one of the best indicators for scalping since it responds more quickly to recent price changes than to older price changes. Traders use this technical indicator for obtaining buying and selling signals that stem from crossovers and divergences of the historical averages.
Scalpers usually work within very small timeframes of one minute to 15 minutes. However, the one- or two-minute timeframes tend to be favoured among scalpers.
In the Forex market, the highest levels of volume and liquidity tend to occur in the London (08:00 - 17:00 GMT/BST) and New York (13:00 - 22:00 GMT/BST) trading sessions, which make them particularly attractive for most Forex scalpers.
One of the most popular 1 minute scalping strategies is known as trend-following. Its name tells it all. It is a trading strategy that identifies an already-established trend and then follows it until it changes its direction.
A one-minute scalping strategy is a great technique for beginners to implement. It involves opening a position, gaining some pips, and then closing the position shortly afterwards. It's widely regarded by professional traders as one of the best trading strategies, and it's also one of the easiest to master.
Don't use leverage: This should be the most important golden rule for any investor who is entering fresh into the world of stock trading, never use borrowed money to invest in stocks.
According to FINRA rules, you're considered a pattern day trader if you execute four or more "day trades" within five business days—provided that the number of day trades represents more than 6 percent of your total trades in the margin account for that same five business day period.
It dates back to 1943 and states that commissions, markups, and markdowns of more than 5% are prohibited on standard trades, including over-the-counter and stock exchange listings, cash sales, and riskless transactions.
80% of your portfolio's returns in the market may be traced to 20% of your investments. 80% of your portfolio's losses may be traced to 20% of your investments. 80% of your trading profits in the US market might be coming from 20% of positions (aka amount of assets owned).
The fifty percent principle is a rule of thumb that anticipates the size of a technical correction. The fifty percent principle states that when a stock or other asset begins to fall after a period of rapid gains, it will lose at least 50% of its most recent gains before the price begins advancing again.
One of the most popular risk management techniques is the 1% risk rule. This rule means that you must never risk more than 1% of your account value on a single trade. You can use all your capital or more (via MTF) on a trade but you must take steps to prevent losses of more than 1% in one trade.
In order to day trade on WeBull without $25k, you will have to either open a cash account with WeBull, or limit the number of day trades that you make within a 5-day period. Theoretically, you could open a cash account and a margin account with Webull.
This is one of the simplest and greatest tactics to win your games in crash gambling. This entails picking an automatic-cashout figure such as 1.5x and continually receiving your rewards at that value. You might, for example, increase your cashout multiplier to a whopping 5x.
The movement of these indices are automated and based on randomly generated numbers by a programmed third party which makes it difficult to manipulate its movement pattern.
One of the main reasons professional traders don't use hard stop losses is because they use mental stops instead. The advantage of this is that you don't have to 'give away' where your stop loss is by placing it in the market.
Thus, for seasoned traders, the interval between 9:30 to 10:30a.m.ET is one of the best hours of the day as it offers the biggest moves in the shortest amount of time. You should also consider that different indices are traded at different times, depending on the individual exchange.
Most of the traders use the percentage rule to set the value of the stop-loss order. Usually, the one who wants to avoid a high risk of losses set the stop-loss order to 10% of the buy price.
Scalpers like to try and scalp between five and 10 pips from each trade they make and to repeat this process over and over throughout the day. Pip is short for "percentage in point" and is the smallest exchange price movement a currency pair can take.
The main aim is to obtain small incremental gains that add up to a large profit, rather than big gains from a small number of trades, as in the case of swing trading or position trading. This method involves holding trades for just a few seconds or minutes, at the most.
First, scalping refers to a situation where a trader holds a financial asset for less than 5 minutes. In most cases, a scalper can hold a trade for even two minutes. Day traders, on the other hand, can hold trades for several hours.
Traders who use this style of trading are known as scalpers, and they can place 10 to 100+ trades in one day in order to make even tiniest profit. Scalping attracts traders because it exposes them to less risk and offers greater number of trading opportunities.
First off, both SMA and EMA are the best indicators for 1 minute scalping. The Simple Moving Average (SMA) tracks the average closing price of the last number of periods. For example, a 50-day SMA will display the average closing price of 50 trading days, where all of them are given equal weight in the indicator.
Scalpers tend to follow the most major pairs which are traded, and their most preferred pairs are EUR/USD, USD/CHF, GBP/USD, and USD/JPY. Scalpers prefer these pairs because they move slowly in the market and have the highest amount of trading according to volume.
A Bollinger Band chart is effective at showing the volatility of the forex market, which is useful for scalpers as their trades tend to be so rapid, usually within a maximum of 5 minutes for each position.
The difference in time frame: while scalpers trade in an exceptionally short time frame, typically 1 to 2 minutes in the market, day traders trade the market with a long time frame, usually 1 to 2 hours in the market.
George Soros. We start out list of the best Forex traders in the world by looking at one of the most legendary figures in Forex trading history, George Soros. ...
Swing trading is often considered better for beginners compared to scalp trading or day trading. Swing trading requires less skill and trading expertise.
Forex scalping strategy “20 pips per day” enables a trader to gain 20 pips daily, i.e. at least 400 pips a week. According to this strategy the given currency pair must move actively during the day and also be as volatile as possible. The GBP/USD and USD/CAD pairs are deemed to be the most suitable.
A scalper bot is an automated program that performs scalping—purchasing limited-edition goods (such as event tickets) to resell at a higher cost. Because bots can complete the checkout process in a fraction of the time it takes a human user, they can buy thousands of goods the moment they go on sale.
The Fibonacci retracement levels are 23.6%, 38.2%, 61.8%, and 78.6%. While not officially a Fibonacci ratio, 50% is also used. The indicator is useful because it can be drawn between any two significant price points, such as a high and a low. The indicator will then create the levels between those two points.
Triangles are among the most popular chart patterns used in technical analysis since they occur frequently compared to other patterns. The three most common types of triangles are symmetrical triangles, ascending triangles, and descending triangles.
Scalping is one of the most popular strategies. It involves selling almost immediately after a trade becomes profitable. The price target is whatever figure means that you'll make money on the trade. Fading involves shorting stocks after rapid moves upward.
Go long 10 pips above the 20-period EMA. For an aggressive trade, place a stop at the swing low on the five-minute chart. For a conservative trade, place a stop 20 pips below the 20-period EMA. Sell half of the position at entry plus the amount risked; move the stop on the second half to breakeven.
One of the most popular risk management techniques is the 1% risk rule. This rule means that you must never risk more than 1% of your account value on a single trade. You can use all your capital or more (via MTF) on a trade but you must take steps to prevent losses of more than 1% in one trade.
The head and shoulders patterns are statistically the most accurate of the price action patterns, reaching their projected target almost 85% of the time. The regular head and shoulders pattern is defined by two swing highs (the shoulders) with a higher high (the head) between them.
The Head & Shoulders pattern is considered one of the most powerful reversal patterns in the forex market. This pattern got the name because it actually reminds us of a head with two shoulders on the sides.
The scalping strategy is fast. It's not uncommon for several trades to be made within a few seconds. Scalping is one of the best day-trading strategies for confident traders who can make quick decisions and act on them without dwelling.
Breakout trading is the strategy of entering a given trend as early as possible, ready for the price to 'break out' of its range. Breakout trading is commonly used by day traders and swing traders, as it takes advantage of short to medium-term market movements.
The two-hour-a-day trading plan involves executing transactions during the first and last hours of the trading day. Volume tends to jump during these two hours of the day. Setting limit orders allows you to profit from swings during these key trading hours.
In terms of money, that means not giving up very much profit potential. For example, a part-time trader may find that they can make $500 per day on average, trading during only the best two to three hours of the day.
Day traders need liquidity and volatility, and the stock market offers those most frequently in the hours after it opens, from 9:30 a.m. to about noon ET, and then in the last hour of trading before the close at 4 p.m. ET.
Probably the greatest single trade in history occurred in the early 1990s when George Soros shorted the British Pound, making over $1 billion on the trade. Most of the greatest trades in history are highly leveraged, currency exploitation trades.
Approximately 1-20% of day traders make money day trading. Just a tiny fraction of day traders make any significant amount of money. That means that between 80 to 99% of them fail. We have looked at plenty of research and very few traders can brag about making any significant amount of money day trading.
You should be striving for a win rate of between 50% and 70%, and try to trade at risk/reward ratios of 1.0 for a higher win rate (60% to 70%), and between . 60 and . 65 for lower win rates (40% to 50%).
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Introduction: My name is Manual Maggio, I am a thankful, tender, adventurous, delightful, fantastic, proud, graceful person who loves writing and wants to share my knowledge and understanding with you.
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