Important Round Numbers?

I often read round numbers are important when trading. The question I have is, what is considered a round number?

Obviously a number like 1.0000 would be considered important on EURGBP and 0.9000. What about 0.8900 or 0.8990?

We looking at any number in 100 point increments?

Apologies if this is a silly question but just wondering what numbers should I be paying more attention to that usual?

I look at anything ending in 00, 50, 20 & 80.

Look at 500 number are very strong and 20, 80 are used by banks.

This thread is possibly the most pertinent one in Forex Factory. Here's looking forward to more input.

I heard that 1000 and 5000 numbers are stronger but may take weeks and months to reach those levels on some pairs other may be quicker like the JPY pairs.

Usually price either stabs through 00 numbers pulls back and goes on 65-70% of the time or pin bars through and reverses 25-30% of the time.

you might want to do a search for carol osler if you want something more than mere anecdotal made-up statements.

Here is a good article at bkforexadvisors about "The Psychology of Trading Round Numbers". It will help you to understand the importance of round number.

Source: http://www.bkforexadvisors.com/boris...round-numbers/

Pretty much every 100 pips can be considered a round number, sometimes every 50 pips also, but I see this as too close and not important...100s are more relevant in my opinion...

The reason behind this is based on 2 facts:

1- Mind Psychology of round figures
2- Existing Options on round figures

Logical significance should be as follows:

1.0000 is more significant and strong than 0.9000...

0.9000 is more significant than and strong than 0.9500...

0.9500 is more significant and strong than 0.9400, 0.9300, 0.9200, 0.9100, 0.9600, 0.9700, 0.9800 & 0.9900...


Regards,

Nader

another such thread: 1.


One thing about round numbers
that I get concerned about,
is how much one can trust them enough to build on them
with drawing devices etc.
Or, should I simply break down in halves the space between round numbers with 'almost'-round numbers.
According to the post linked above, there's more justification for the former.

So, maybe I could prefer fibonacci retracements off round-number horizontal lines that generalize/band a small area,
use round-number hz lines as support-resistance and draw in exact anchoring where PA deems it should work okay,
and do even more detailed involvement of round numbers with exacting PA.

Perhaps, the levelling of round numbers is such that a larger time frame is made more useful
and gives credence to the mirage of a hyper-bouncing PA being represented by any horizontal line.

1.0000 is more significant bit this is common knowledge. Common knowledge is exploited so 1.0000 is much trickier to trade than 0.9450 IMHO.

Agree to that.

I posted one paper some time ago by her exaplaining the psychology and price action on RN's.

eurotrash beat me to it in the link by ha-pattern. possibly where i got it from. i thought i heard of her from darkstar but apparently not.... so it's scottyb or euro that must be the culprit. but then again, perhaps it was you all along.

Agree to some extent, but not all the way...In many cases, very strong round figures must be ranged with +/- a certain amount....For example, if you are looking to trade the round figure 1.0000, you should consider trading the whole range 0.9950 to 1.0050 instead of the absolute 1.0000...It depends largely on the chart and how price is going to the 1.0000 and from where and on some other technicals...It also depends largely on volatility in the market at the time...

For example, in a low volatility price action and an oversold situation where the price is moving higher, it's highly unlikely that price will hit the exact 1.0000, the higher probability is hitting 0.9950-0.9980 instead...While in a high volatility situation, the price can shoot above the 1.0000 by a 100 or 150 pips before sharply pulling back and selling off some 400 or 500 pips...

There is a lot to do with options on the round figure as well and who is on each side with those options as well as their type and expiry...Some big banks might have large unhedged written options at a strike of 1.0000 where it would be in their interest to sharply sell the currency pair and lose $1 billion instead of leaving the price move above 1.0000 just before expiry and lose $5 or $6 billions if the options holders exercise their in-the-money options...

It's not an absolute science mate...


Regards,

Nader

Just wondering if the 20 and 80 numbers I hear are very significant in your experience they do hold support and resistance lines well in trends.