Comprehensive Guide To Range Break Indices Trading (2024)

How To Open an Account To Trade Range Break Indices

Opening a range break indices trading account with Deriv is a straightforward process. Follow these steps to get started:

 

Step 1: Visit the Deriv Website:
Go to the official Deriv MT5 sign-up page here.

Step 2: Sign Up

Click on the ‘Create free demo account' button on the page.
You can sign up using your email address, or you can use your Google or Facebook account for quicker registration.

Agree to the terms and conditions and click ‘Create free demo account‘.

Step 3: Verify Your Email:
After signing up, you will receive a verification email. Click on the link in the email to verify your address.

Step 4: Complete Your Profile:
Once your email is verified, log in to your new account and complete your profile by providing the required personal information, such as your name, date of birth, and address. 

Also set your preffered account base currency.

Step 5: Verify Your Identity
For security purposes, Deriv requires you to upload documents to verify your identity and address. This could include a government-issued ID (like a passport or driver’s license) and a utility bill or bank statement. You can choose to verify the account later if you donty have the document at hand.

Get step by step instructions on how to verify a Deriv account here.

Step 6: Open a Synthetic Indices Account
Click on the (1) ”Trader's Hub option” on the top left of your dashboard. Then click (2) ‘Real‘ > (3) ‘CFD's‘.

Then choose the Deriv Standard Account. This account gives you access to synthetic indices and forex CFD's.

Choose the jurisdiction for your account.

Afterward, you will be prompted to set a password specifically for your real Deriv MT5 synthetic indices account. This password is exclusively for logging into your trading account on Deriv MT5 and is separate from your main Deriv account password.

After creating your account you will be prompted to transfer funds from your main Deriv account to your DMT5 synthetic indices account.

 

Step 7: Download MT5 & login

After completing Deriv real account registration mt5 you will now see the Deriv synthetic account listed with your login ID.

You will also get an email with your login ID that you will use to log in to the Deriv synthetic account.

 

Download the mt5 application for your device and log in.

Step 8: Start Trading
Once your account is funded, you can start trading synthetic indices. Access the trading platform, select your preferred synthetic index, and begin trading.

You can get step by step instructions on how to open a synthetic indices account here.

Characteristics Of Range Break Indices

1. Predefined Price Range

Range break indices operate within a fixed price range, which defines the upper and lower boundaries of the index. The movements within this range are designed to be random but follow the typical behavior of financial markets. The key points include:

• Upper Boundary: The highest price point within the range.
• Lower Boundary: The lowest price point within the range.

2. Predictable Breakouts

One of the unique features of range break indices is their predictable breakouts. These indices are structured to break out of the predefined range at regular intervals, creating opportunities for traders to capitalize on these movements. The characteristics of these breakouts are:

• Intervals: Breakouts occur at known intervals, allowing traders to anticipate these events.
• Direction: Breakouts can occur in either direction—above the upper boundary or below the lower boundary.

 

 

3. Market Volatility Simulation

While the indices are synthetic, they are designed to emulate the volatility of real financial markets. This simulated volatility makes the trading experience realistic and offers dynamic trading opportunities. The aspects of volatility include:

• High Volatility: Within the range, the indices exhibit high volatility, making them suitable for traders who prefer fast-paced markets.
• Market Behavior: The indices mimic the price fluctuations and patterns seen in actual markets.

 

4. Transparency and Fairness

The design of range break indices ensures transparency and fairness in their price movements. This is achieved through the use of the RNG, which guarantees that all price changes are random and not influenced by external factors. The key benefits are:

• Fair Trading Environment: All traders have equal opportunities, as the price movements are unbiased and secure.
• Confidence: Traders can trust the integrity of the indices, knowing that the movements are free from manipulation.

 

 

Trading Strategies for Range Break Indices

1. Scalping

   • Quick Trades: Given the high volatility within the range, scalping can be an effective strategy. Traders can take advantage of small price movements to make quick profits.
   • Frequent Opportunities: The continuous price action within the range provides frequent trading opportunities for scalpers.

     

2. Breakout Trading

   • Predicting Breakouts: Traders can develop strategies to anticipate the predictable breakouts of the indices. By positioning themselves just before a breakout, they can capture significant price movements.
   • Risk Management: It’s crucial to have a solid risk management plan in place, as breakouts can sometimes lead to sharp price reversals.

3. Range Trading

   • Buying at Support, Selling at Resistance: Within the defined price range, traders can employ range trading strategies. This involves buying at the lower boundary (support) and selling at the upper boundary (resistance).
   • Consistent Profits: Range trading can offer consistent profits if the trader correctly identifies the support and resistance levels.

 

Pros of trading range break indices

 

• Predictable Breakouts: The indices break out at known intervals, allowing traders to anticipate movements.

• High Volatility: The high volatility experienced when price break out of the range can lead to significant profit opportunities, especially for short-term traders.

• 24/7 Availability: Trade any time, regardless of traditional market hours.

• Transparency: Prices are determined by a cryptographically secure random number generator, ensuring fairness.

• Diverse Trading Strategies: Traders can employ various strategies such as scalping, breakout trading, and range trading, depending on their preferences and market conditions.

• Clearly Defined Entry and Exit Points: Support and resistance levels provide clear zones for potential breakouts, making entry and exit points more easily identifiable compared to range-bound markets.

Cons of trading range break indices

• High Volatility: The very nature of range break indices is their volatility. This can be advantageous for catching breakouts, but it also amplifies potential losses if the market moves against you.
• Lack of External Factors: Unlike traditional financial instruments, range break indices are not influenced by economic events, company performance, or geopolitical factors, which may limit certain trading strategies.
• Learning Curve: Understanding the mechanics and developing strategies for range break indices can be complex, especially for beginners.