Scalping Round Numbers

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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.

Scalping Round Numbers

Here is a quick strategy to utilize near round numbers in the forex market (and likely other markets as well) to hopefully extract a profit.

A round number occurs every 100 pips. 139.00 and 141.00 are examples of a round number in the EURJPY ; 1.3600 or 1.4100 are examples in the EURUSD.

These levels often have lots of orders at or near them, so they act like a magnet. Once the price gets close, it is will very often move through the level.

Initial Requirements

Only trade this strategy in pairs that have an average daily movement of 80 pips or more. With that much movement it is much easier to make a profit. If the pair is only moving 50 pips a day it’s harder for the price to move us into the money and keep us there.

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Current forex stats can be found here: Daily Forex Stats

If trading the actual forex market, the spread that is being provided by the broker should be about 1 pip or smaller (2 at the absolute max). If the spread is bigger than this and the strategy may not be worth trading.

Basic Strategy

Locate a round number that is in the vicinity of the current price, but that hasn’t been touched in a least a few days.

If the price is moving up towards the level, enter when the price gets 10 pips below the round number. We are looking for the price to pop through the round number.

Only enter if the price is moving higher with some momentum when it reaches the 10 pip (away) mark.

If trading the actual forex market, exit 5 pips above the round number. Therefore, your target is about 15 pips. Keep risk to about 5 pips so your profit is larger than the potential loss.

The strategy is typically traded off a 5-minute chart.

If the signal occurs outside of major market hours (US and Europe) then you will need to give the trade more time to become profitable, potentially a couple hours. If the signal occurs while the US or Europe are open, then the trade should progress a little quicker–taking less than an hour and possibly only 15 minutes or so.

The trade below occurred in the EURJPY (5-minute chart).

The price is moving toward the 139.00 level (a round number), and has some momentum when it gets 10 pips away.

There are two potential entry points, both in white boxes. The first entry occurs when the price reaches 138.90, but then the price pulls back after our entry. The trade is still valid though.

Following a mostly sideways pullback the price reaches 138.90 again, signaling another long entry. This time the price picks up speed and moves toward the round number.

For the first entry the price took about an hour and 15 minutes to move solidly into the money. The second entry moved into the money very quickly–10 to 15 minutes.

If trading traditional markets, get out about 5 pips above the round number. This strategy is just for capturing the movement which is often associated with a round number.

If trading binary options, choose an expiry time that allows the market enough time to move into the money, but not enough time for it likely reverse on you.

The same method applies if the price is falling toward a round number. Enter as the price is moving down, approximately 10 pips above the level. We are expecting the price to move down through the round number. If trading the actual forex market, get out about 5 pips below the round number (about 15 pip profit). Limit risk to about 5 pips.

Final Word

Round numbers have a tendency to attract orders. So when the price gets close to a round number, it will very often move through it, even if only briefly. Trade this occurrence by buying as the price approaches a round number from below, or selling as the price approaches a round number from above.

Don’t ignore other factors though. A buy signal is better if the trend is up, and a sell signal is better when the trend is down. The more momentum there is when you enter the trade the better. If the price is ripping higher when it gets 10 pips away from the round number, the momentum could quickly carry you into the money.

202 # Round numbers strategy

Submit by Joy22

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.

– 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

The prices approach round number resistance.

Short position is initiated when:
– the price hits the round number, or
– the price breaks a few pips above the round number.

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.

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.

Taking Advantage of the Hunt
The “stop hunting with the big specs” is an exceedingly simple setup, requiring nothing more than a price chart and one indicator. Here is the setup in a nutshell: On a one-hour chart, mark lines 15 points of either side of the round number. For example, if the EUR/USD is approaching the 1.2500 figure, the trader would mark off 1.2485 and 1.2515 on the chart. This 30-point area is known as the “trade zone”, much like the 20-yard line on the football field is known as the “redzone”. Both names communicate the same idea – namely that the participants have a high probability of scoring once they enter that area.

The idea behind this setup is straightforward. Once prices approach the round-number level, speculators will try to target the stops clustered in that region. Because FX is a decentralized market, no one knows the exact amount of stops at any particular “00” level, but traders hope that the size is large enough to trigger further liquidation of positions – a cascade of stop orders that will push price farther in that direction than it would move under normal conditions. Therefore, in the case of long setup, if the price in the EUR/USD was climbing toward the 1.2500 level, the trader would go long the pair with two units as soon as it crossed the 1.2485 threshold. The stop on the trade would be 15 points back of the entry because this is a strict momentum trade. If prices do not immediately follow through, chances are the setup failed. The profit target on the first unit would be the amount of initial risk or approximately 1.2500, at which point the trader would move the stop on the second unit to breakeven to lock in profit. The target on the second unit would be two times initial risk or 1.2515, allowing the trader to exit on a momentum burst. Aside from watching these key chart levels, there is only one other rule that a trader must follow in order to optimize the probability of success. Because this setup is basically a derivative of momentum trading, it should be traded only in the direction of the larger trend. There are numerous ways to ascertain direction using technical analysis, but the 200-period (SMA) on the hourly charts may be particularly effective in this case. By using a longer term average on the short-term charts, you can stay on the right side of the price action without being subject to near-term whipsaw moves.

Round Numbers Strategy

Note that on June 8, 2006 the EUR/USD is trading well below its 200 SMA, indicating that the pair is in a strong downtrend (Figure 1). As prices approach the 1.2700 level from the downside, the trader would initiate a short the moment price crosses the 1.2715 level, putting a stop 15 points above the entry at 1.2730. In this particular example, the downside momentum is extremely strong as traders gun stops at the 1.2700 level within the hour. The first half of the trade is exited at 1.2700 for a 15-point profit and the second half is exited at 1.2685 generating 45 points of reward for only 30 points of risk.

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