Levels and round numbers
Round figures like 1.1000 or 100,000 aren't special in any way, but orders pile up on them en masse — so price is drawn there.
Levels and round numbers — what it is?
Round levels are prices with an even value: 1.1000 on EUR/USD, 100,000 on bitcoin, 2000 on gold. There is nothing technically special about them.
People give them meaning. Stops and limit orders are placed en masse at round numbers simply because they're easy to name and remember.
As a result a round level becomes a cluster of orders — which is to say, liquidity. Price is drawn there not because the level is important, but because there's something there to fill size against.
Levels and round numbers — how it is built?
Mark the major round values as reference points, not as trading levels. They're useful in two places: as a likely target of a move, and as a place to expect a piercing before a reversal.
Levels and round numbers — common mistakes
Trading a bounce off a round number as a standalone signal.
Placing your stop right beyond a round level — in the same place as everyone else.
Marking every round value in a row: the major ones work, not every ten pips.
Forgetting that a take profit in front of a round level often fills, and one beyond it often doesn't.
Related to
Glossary
- round level
- a price with a round value, like 1.1000 or 100,000. Orders pile up around such levels.
- Bitcoin
- the first and largest cryptocurrency by capitalisation.
- limit order
- executed only when the stated price or better is reached. Used when you are waiting for price to come back into a zone.
- liquidity
- a cluster of pending orders and stops in a particular zone. The fuel for large capital to move.
- take-profit
- a level set in advance for locking in profit.