Mentally Significant Figures

[hagadol]

Mentally Sugnificant Figures

Does anything significant happen, where a price approaches a landark figure, from a numerical point of view.

For instance the DJIA dropping below 10000 or the or the S & P dropping below 1000.

I assume many have stops placed on or around these numbers.

 

[rossored]

Sometimes, not always

If you're thinking about trading these levels, you can either a) trade the breakout/breakdown and cross your fingers or b) wait for it to go through the level, pullback and hit it from the other side, and then enter your trade.

Either way, nothing is for sure : 10k offered absolutely no resistance on the way up, for example. The price went through it like it wasnt even there. Today, however, its offered good support, so you can guess that it will do so for the time being....probably.

 

[StockBaron]

Centuries, Decades and half-decades have been found to provide significance in trading levels, but not anywhere near as significant as most recent Support & Resistance levels.

 

[TBS]

We all talk in round numbers - if you buy something for £9.50 if becomes 'a tenner' when discussing the purchase in general terms.

Same in trading, all traders talk in round numbers, they become psychologically important - at the moment mini spoos are having a problem with 1100 - no reason why, it is just another number. But the price action around it becomes significant, especially the longer that it hovers around the level.

 

[TWI]

Always good to place limit and stop orders off the big figure I have found

 

[BBB]

Round numbers are a good place to take your profit. You can be sure prices will be driven there.

Also - and this is very important, the 'evens' (round nos) and 5's are where option strikes are. Big option players aint gunna let price close past these levels come expiry (After TBS found with his RMBS play last month )