Top 4 Boom And Crash Spike Trading Strategies.
The Boom And Crash Market changes its pattern every now and then. At times, equally good strategies will give you different results and some strategies would just stop working at all. Therefore, you need to have more than just ONE strategy in hand to back you up.
In this article, I will share my Top FOUR trading strategies that I personally use to catch spikes in the Boom And Crash market. I have used these strategies in different trends & market situations. In order to utilize the strategies in the best possible way, make sure you don’t skip any part of the underlying strategy.
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1. The 3 Smoothed Moving Averages.
Honestly, if I have to choose my favorite indicator, I’d definitely pick The Moving Average Indicator. I mean why shouldn’t I? Just like forex, it works pretty great in the Boom & Crash market, and sometimes it rejects the price from the exact moving average level resulting in a huge spike.
So, how do you exactly use the moving average indicator to catch a spike or a series of spikes in the Boom & Crash indices? How do you know when to close and when to hold a position?
Over the years, I have tried so many moving averages and have found the best combination to be MA21, MA50 and MA200. Apply these 3 Smoothed Moving Averages on your Boom & Crash charts and here’s how you can use them.
When the Boom pairs are on an uptrend, you can expect spikes from MA21 in every timeframe with stop-loss right below the moving average. When the pair crosses MA21 in M1 timeframe, shift to M5 timeframe for your next entry from MA21 in M5, which will probably be MA200 in the M1 timeframe. Similarly, in the crash indices, expect spikes from MA21 when the pairs are following a dowtrend. Though works in smaller timeframes as well, moving averages work best in bigger timeframes such as H1, H4 and D1. Sometimes, it might not reject the price from the exact moving average level therefore, you should place your stop-loss on a little distance to give room for stop-loss hunting . Please note that you should not play rough with your stop-loss while trading merely on moving averages. Keep in mind that when the pair doesn’t give spike from moving average level, it could mean that there’s a strong momentum on the opposite side and it could go for hours without generating any spike.
2. Catch Spikes With RSI.
Relative Strength Index (RSI) is yet another great indicator that can be used to catch spikes in the Boom & Crash indices. To use RSI in an effective way, set your RSI levels in the settings. (Read this article for setting up your RSI levels in MT5 ).
Once you set up the RSI levels, follow this RSI strategy to catch spikes in both Boom and Crash indices.
Open the M1 timeframe in both Boom & Crash indices and in the Boom indices ( Boom 1000 & Boom 500), attempt for spike when the RSI comes down to 30. The level between 20-30 will most likely reject the price and results in a spike when the pairs are on an uptrend. In the Crash indices, expect rejection from RSI 70-80 level when the crash indices are following a downtrend. Please note that do not touch the pairs once the RSI break in level 90 because these pairs could be stubborn at times… You can also use the RSI rejection strategy in bigger timeframes such as m30, h1, h4 etc… When the RSI of the Boom indices comes down to level 50,40,30 or 20, you can attempt for a spike. In the crash indices, the level 50,60,70 or 80 rejection in bigger timeframes can result in a spike. Yet another RSI trading strategy is RSI Divergence Strategy. Unlike RSI Rejection, the RSI divergence could only be used in bigger timeframes such as h1 and h4. RSI Divergence is when the price makes higher highs and the RSI makes lower highs or when the price makes lower highs and the RSI higher highs. I recommend you read my article on RSI Divergence to master the strategy. Whenever you spot an RSI divergence in a Boom and Crash pair, it is an indication of trend reversal and you can expect a spike or a series of spikes in the pair.
3. Demand & Supply Zones.
In trading, a Demand Zone is a level where most of the traders are willing to buy the asset whereas a Supply Zone is a level where most of the traders are willing to sell the asset.
In terms of Boom & Crash indices, Supply & Demand zones can be used for medium or long-term positions and you can expect a series of spikes from the levels.
A demand zone is just like a strong support level where the price is most likely to get rejected. Once you make your chart, highlight the demand zone and place your order. Make sure to put a stop-loss based on your equity and trading style preferably some 10-20 points below the demand zone.
You can use the supply zone in crash indices where the price is expected to fall. Highlight the supply zone and make sure to hold one of the positions to get the most out of your trade.
4. Catch Boom & Crash Spikes Using The Ichimoku Cloud Indicator.
Yet another great trading facilitator, the Ichimoku cloud indicator automatically detect support and resistance levels on your chart. Go to the indicators window and add the Ichimoku Cloud indicator to your chart.
The next step is to wait for the price to arrive at an Ichimoku support level (In Boom Indices) and Ichimoku resistance level (In Crash Indices). When the price is about to touch the level, attempt for a spike with stop-loss right below the Support or Resistance level.
Please note that you should not play rough with stop-loss here especially in bigger timeframes as rejections normally occur from the exact level. If the support or resistance level is unable to reject the price, there is a chance of a strong price/action event that could continue for hours without even a single spike. Pro-tip: Trade with discipline!
Formulating Your Own Strategy For Boom & Crash.
Let’s be honest. Your own practice and conclusions will far outplay my techniques and strategies! That being said, you should play with the above strategies ( use your demo account ) to see what works for you and what doesn’t.
Primarily, you should start with testing each of the above Boom And Crash strategies and shortlist the ones with accurate results. Once you select the strategies that work for you, apply them altogether for best results. Let me explain…
For example, in the Boom 1000, if the price is approaching towards any Moving Average and there’s also a demand zone near the price, and the RSI is near 50, 30, or 20, that would mean that there’s a strong chance of rejection and we can expect a spike.
The chance of a spike in the price increases with the number of indications/evidence. Therefore, the more indications we have, the bigger the lot size we should go for!
Best of luck for your next pip hunt! If you have any questions regarding the Boom & Crash indices, you can ask in the comment section.
Fahad Zar.
Hi, I'm Fahad — A Certified Chartered Accountant & Digital Marketer. I have worked with various multinational organizations including JS Morlu & Automa8e. Currently, I'm working on a global sourcing and supply chain project. Feel free to reach out for collaboration!