Trading Psychology of Round Numbers

The tendency for markets to respect Round Numbers, is one of that peculiar Trading Psychology.

This Trading Psychology is most helpful and in trading and should be kept in mind by the technically oriented traders.

Traders mind forces to take entries or exits at round numbers such as 10,20,25,50,75,100 (and multiples of 1000).

These round numbers therefore will often act as "Psychological" support and resistance. Most of the Indices (Nifty, Dow Jones, etc) show a tendency to stall at multiples of 1000. Also, we can find very high open interest at these levels.

Applications

• Avoid placing orders right at these obvious round numbers.
• In an uptrend dip, place a buy order just above an important round number.
• In a downtrend crest, place a sell order just below an Important round number.

General rule:- Avoid placing stop losses at obvious round numbers.

So those are the "Trading Psychology of Round Numbers" - I believe you have found them as a reminder and helpful.