Round numbers strategy

I found this strategy on google and i thought was interesting enough to post it:

"This is another very simple, but extremely efficient strategy. The round numbers (example EUR/USD 1.2800, USD/JPY 99.00) are natural levels of support and resistance. A lot of orders are placed around these levels. During the last few years the importance of the round numbers increased because they are used for options barriers levels and are protected. That is why when the market approaches such levels the price movement is countered by these order flows and small retracement usually happens. You should study carefully the price action around the round numbers and improve the strategy.
Rules for long position

 

1. The prices approach round number support.
2. Long position is initiated when:
   - the price hits the round number, or
   - the price breaks a few pips below the round number.
3. After the position is open an initial stop loss order is placed 2-3 pips below the low reached during the test of the round number or at fixed distance from the entry point.
4. A limit order is placed according to our Money management rules.

Rules for short position

 

1. The prices approach round number resistance.
2. Short position is initiated when:
   - the price hits the round number, or
   - the price breaks a few pips above the round number.
3. After the position is open an initial stop loss order is placed 2-3 pips above the high reached during the test of the round number or at fixed distance from the entry point.
4. A limit order is placed according to our Money management rules."

It doesn't say where the TP should be but i guess at the next round number.

Let's see if the price gets to the next round number.

This is the round numbers grid i use:

Anyone who has watched charts for any length of time knows that this system is fundamentally good. EUR/USD especially will respect these round numbers and can be traded nicely. However, the only thing I would suggest would be to take profit at the 50 rather than the round number, as they are support/resistance as well.

Yeah, round numbers can be a good setup but the way I do it is a bit more scalper-like I guess. I did it very often over the past year on the GBP/USD.

I wouldn't just take every round number though, I'd watch for ones that look like the move toward it is exhausted (ie. when price is ready to stall after a move toward the big double-zero figures) and enter within the "10 pip zone" (roughly) of it.

With some practice, it's fairly easy to tell if it's ready to break or not just by watching how price acts around that area but I know that's a bit of a subjective criteria.

And its risk reward ratio is pretty good.

Just don't bet on big rounds holding very often during times like news or the session opening breakouts (London or NY). Sometimes those work too but the probability usually isn't worth betting on unless there's other reasons that it looks likely to hold (like a trendline or horizontal S/R that looks obvious on higher time frames -- 1hr and up).

I'd also move your stop to break-even as soon as it's moved about 10 to 20 pips in your favor. Most times, this really isn't the kind of trade you would want to get caught under water in after the level breaks so be careful -- there's tons of other round numbers to come anyway.

I found more info related to this strategy on investopedia:http://www.investopedia.com/articles...topHunting.asp

I use the sweetspots gold indicator found on THIS FF thread. I use the PSYCHOLOGICAL PRICE LEVELS method that I found on another forum to scalp trade.

http://i44.tinypic.com/6qd084.gif

Can you tell us where the Psychological Price Levels method can be found?

http://forex-strategies-revealed.com...levels-trading

HERE U GO

Thank you very much. By the way, do you have a usable copy of the indicators posted there? I don't know how to make that huge long text into an indicator.

i didnt get u
sory

on the way
i am posting here 2 indy meyby thet what u wont

just saw u r post
indy been removed

Right-click and "save as", then move both mq4 files to your MT4 experts/indicator folder, close the platform and reopen and you'll find them under custom indicators.

The other two that aren't linked can be found in a zip file here:
http://kreslik.com/forums/
but I think you'll have to register on that site to be able to download.

If you trade with a bucket shop round numbers are also a good place for brokers to hunt stops. A way to beat this knucklheads at their own game is to cost in.

Divide your lot into 3's. Buy the first lot at the round number, the second lot 5 pips later and the third 10 pips later. If the price moves more than 15 pips past the round number you need to be out of this trade.

example: EURUSD approaches 1.3300. Buy 1/3 at 1.3300, another third at 1.3305 and a final 1/3 at 1.3310 with a stop at 1.3316/17.

The drawback to this modification is if price does not go to the second levels you will be in the trade at with only 1/3 a lot (but profitable).

From what i understand there are multiple uses of these round numbers:

1. Used by the traders to enter trades since these levels could provide support and resistance.

2. These levels are used as SL hunting or scalping (break out through the level)

3. S/R confluence with fibs levels, pivot levels, etc. for a confirmed bounce.

4. Used as targets for TP.

5. ....

Superscalper...
The following post was made by TRO over at kreslik.....

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Posted: Today at 2:09 am Post subject: SOME PEOPLE JUST DON'T GET IT http://kreslik.com/forums/templates/...icon_quote.gifhttp://kreslik.com/forums/templates/.../icon_down.gifhttp://kreslik.com/forums/templates/...es/icon_up.gif SOME PEOPLE JUST DON'T GET IT


Old Apr 11, 2009 1:37pm (6 hr ago)
Superscalper
Member

Member Since Feb 2009
36 Posts
Default
i didnt get u
sory

on the way
i am posting here 2 indy meyby thet what u wont
Attached Files
File Type: mq4 TRO_DTB_TAG.mq4 (2.9 KB, 15 views)
File Type: mq4 TRO_DYNAMIC_FIBS_SR_Trail.mq4 (16.0 KB, 10 views)


What part of PLEASE DON'T POST MY INDICATORS ANYWHERE don't you understand?

It's not that I am not sharing them. It's just if there's a bug, the people don't know where to let me know or get the fix.

POST THE LINK TO THE CODE. DO NOT POST THE CODE!!

Would someone please post a message to Superscalper and tell them to remove my code from Forex Factory... Thanks.


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please edit your post to remove the files/code per TROs request and show the link to them... Thanks

Another way to trade is to buy the FULL POSITION at the round number, exit 1/3 at +5, 1/3 at +10, then move your SL to B/E + 1 and see just how far it runs. If price retreats after +5, you can always exit at B/E.

http://i44.tinypic.com/2qx55dl.gif

Look at the chart. The lines are plotted every 5 pips, with the black lines at 00, 25, 50 and 75. Notice the big reversal moves after 3 or more like colored H1 candles in a row. Just take every trade and you're the "house". You have the edge.

Let's get an indicator based on this strategy:
http://www.investopedia.com/articles...topHunting.asp
That will draw thicker lines at "00" numbers and thinner lines 15 pips above and below the "00" numbers. we add a 200 ma on and here you go, we got the full strategy.
Also will be great if this indicator will work with 5th decimal pricing since my broker changed from 4 to 5.

Thank you ,

Constin

Place order 20 pips before "00" round number.
TP at round number.
SL 20 pips
I wonder how would that work

My first 2 tests hit the target but the spread is so wide on some pairs:

Interesting trade


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