If you are looking for a profitable strategy to use when trading boom and crash in twenty twenty five, then this is for you.

 

The number one reason why I like trading boom and crash is that they have one of the cleanest price actions that you will find on the market.

Today, I want to share with you a single strategy for trading boom and crash. This strategy uses the Fibonacci retracement tool, and I’m going to show you how to use it correctly.

This strategy works best on a higher time frame, like the one hour, four hour, or daily time frame.

If you’re really in a hurry, you might consider the fifteen or thirty-minute time frames, but I wouldn’t recommend those because there are a lot of spikes in those smaller time frames, making it hard for your stop losses to be accurate.

Once you’ve opened your chart, you’ll see that the market moves by making higher highs and higher lows. You want to catch a pullback. The best zone to place your trade is where the market is likely to reverse.

But how do you know that the market is going to reverse? That’s the biggest question everyone has. The answer lies in a single tool: the Fibonacci retracement.

Before using the Fibonacci tool, you need to identify the high highs and higher lows of the market. When the market is moving up, it makes impulsive moves and then pullbacks. You need to know exactly where the impulsive move starts and where it ends.

For example, if you look at the market, you will see an impulsive move followed by a pullback. Knowing where these points are is crucial for placing your trades.

To use the Fibonacci retracement, identify the very top and bottom of your impulsive move. Start from the bottom if you are in an uptrend and from the top if you are in a downtrend. Draw this on your chart, focusing only on this impulsive move.

Pay attention to the zone between fifty percent and thirty-eight percent of the Fibonacci retracement. This is often referred to as the golden zone and is where you will find high probability trades.

You can customize the Fibonacci tool by removing unnecessary zones for clarity. Make sure to leave the zero, hundred, fifty, and thirty-eight percent levels visible. This zone is where the market is likely to reverse.

When the market comes back into this zone, you should look for your trade. For example, if the market moves to the downside and then reverses back into this zone, you will want to look for sell trades.

Wait for the first red candle that forms in that zone to confirm your sell trade. Place your stop loss above the thirty-eight percent zone of your Fibonacci retracement, and your take profit should be at the lowest point where the reversal started. This gives you a high risk-to-reward ratio.

 

In a recent example, using this strategy resulted in a winning trade with a risk-to-reward ratio of 3.86 to one.

Now, let’s take another example. Identify the move, the top, and the bottom of that move. Check if the reversal comes into the fifty percent zone. If it does, this is where you want to place a trade.

Once the market comes to this zone and shows signs of reversing, you will want to buy. Place your stop loss below the thirty-eight percent level and your take profit right above. This trade can also yield a good risk-to-reward ratio.

Remember, for most moves, the market tends to come back into this zone before reversing. Avoid the mistake of placing trades without waiting for a clear change of candles inside the golden zone.

If you don’t see any change of candles in this zone, do not place that trade.

If you want to learn more about trading synthetic indices correctly, check out this blog here. You can also join our free Telegram channel for more tips.