Psychological Round Numbers

Pipsaholic · Aug 13, 2011

Hi,

I have found round numbers works well for support and resistance points, but can these be used within your overall plan as price projections as well is this wise?

Thanks.

NVP · Aug 19, 2011

Hey Pips

have you found a system yet ?

N

Pipsaholic · Aug 20, 2011

I am making my own

I have learned I have

Splitlink · Aug 20, 2011

Pipsaholic said:
I am making my own I have learned I have

That's called "having an edge". Now you have to find out whether it is a sharp or blunt one.

The 5000 level was a round enough level on Footsie, yesterday, but, having found it, what do you do? Buy or sell? Those who made money will say that they knew and that the others got it wrong. I go along with Black Swan on this, once you have decided on your entry and entered, you are in a different ball game. For right or wrong, historical readings do not matter anymore, until the next entry. Now, you have to handle this trade as best you can.

Honiya · Aug 23, 2011

Pipsaholic said:
Hi,

I have found round numbers works well for support and resistance points, but can these be used within your overall plan as price projections as well is this wise?

Thanks.

I do not have any genuine information about this thing... But if some one out here knows or have any knowledge about it... He or she can share that with us... Thank you

Pipsaholic · Aug 24, 2011

The way I understand it is the institutional traders target retailers as they know they put stops at round number levels so may not be a wise move to put stops there do something different.

NVP · Sep 12, 2011

sure 0000's act as anchors and are also popular targets in Forex (check out boris at bk forex)

its like all ideas in trading...

everything works some of the time

just find me something that works all the time

N

Splitlink · Sep 12, 2011

Round numbers -- how much stop would you have on those, if you entered? I think that the risk that you are happy with is all important. Round numbers are fine if they happen when you believe your stop can be not too far away. In my case, I am unhappy when my trade is showing a loss, therefore, round number, or not, I'd close it.

Jimmy Lulz · Sep 12, 2011

Splitlink said:
Round numbers -- how much stop would you have on those, if you entered? I think that the risk that you are happy with is all important. Round numbers are fine if they happen when you believe your stop can be not too far away. In my case, I am unhappy when my trade is showing a loss, therefore, round number, or not, I'd close it.

Let the market action determine where your stop goes.

Splitlink · Sep 12, 2011

Jimmy Lulz said:
Let the market action determine where your stop goes.

Then I'll decide whether to use the round number, or not.

The stop spot comes first. for me. A trade worth taking means a low risk stop. If I am not happy with my stop distance, I won't take the trade.

neil · Sep 12, 2011

Splitlink said:
Then I'll decide whether to use the round number, or not.

The stop spot comes first. for me. A trade worth taking means a low risk stop. If I am not happy with my stop distance, I won't take the trade.

In other words, know what you are likely to lose before activating your trade

wackypete2 · Sep 12, 2011

Splitlink said:
Round numbers -- how much stop would you have on those, if you entered?

Pick a stop and round it off when you get around to it. But be sure to do it right, not in a round-a-bout way. It will make you a better trader all around.

Peter

forker · Sep 12, 2011

Without context of an strategy, it is difficult to comment. Has price already penetrated the level? Has price tested the level recently? Is 20,50,100 pips enough room?

There are several ways to trade support and the obvious ones have a tendency to kill. I'd suggest observing price at these levels until the different approaches become clear. you can't just set a stop and hope for an outcome.

Adamus · Sep 14, 2011

These are all great comments. I'd add the following:

Make an assessment of future trend direction by examining price action into the round number. Is there a good trend, a poor trend or a trading range? Is it accelerating into the 00 or decelerating? Does the trend into the 00 show deep pull-backs? So is a continuation in order, or a reversal?

Also as a corollary to stop position, you have to know what you're aiming for. There's no point in taking a trade with a bad risk:reward ratio unless you are certain your hit rate (% profitable trades) can support it.

So you have to get lots of experience sim trading or back testing your approach.

Psychological Round Numbers

Pipsaholic

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NVP

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Pipsaholic

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Splitlink

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Honiya

Newbie

Pipsaholic

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NVP

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Splitlink

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Jimmy Lulz

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Splitlink

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neil

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wackypete2

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forker

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Adamus

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