Podcast:

How to use Round Numbers as a FX Trader

In this weekly video:

00:29 – How to profit from using Round Numbers

01:15 – Strong Buying and Selling horizontal levels

01:53 – A level ending in 00 or 50 – price will react at these levels

02:52 – I use these levels in a variety of different ways – with a trade example

04:25 – How you can use round numbers

05:04 – Using a round number to predict my profit target and to add safety to a stop loss

05:35 – Use these levels and do some back testing

06:02 – Many traders fail to look at the price

I'm going to explain how you can profit from the Forex market by using round numbers. It's really important so listen up. Let's get into it right now.

Hey Forex traders! Andrew Mitchem here, The Forex trading coach. Video and podcast number 231.

How to profit from using Round Numbers

Now this is a really important lesson and I would like to explain to you how I use round numbers and how you can use round numbers to your advantage and to help you profit as a Forex trader. See the things that I like to do in trading, I keep things simple. To me it's really important that as a professional trader and as a Forex teacher, I'm teaching people how to trade in an easy, simplified way that is practical. You see it's all well and good having all these systems and lines crossing over and different things going on, but if it's not practical and it's not something that you can do in real time, and you can do with enjoyment as in like you're not trading all of the time, than it doesn't really mean a lot. So let's talk about round numbers because they are very, very important.

Strong Buying and Selling horizontal levels

The reason I like them is I like psychological levels, reasons why people are buying and selling. I also love the use of horizontal lines on my charts. Now you might say why horizontal? Well, a horizontal line does not move. It's always fixed. It's not like a moving average or a MacD or RSI or one of those other, you know, sort of squiggly lines on your charts that are moving all the time.

A horizontal line is a horizontal line. I can see it, you can see it, it doesn't matter who your broker is, what your platform is. It's there for everybody to see if you know what you're looking for.

A level ending in 00 or 50 – price will react at these levels

So think of it this way, a round number, and I call a round number something that ends in a 00 or a 50, so the price of the pair might be 0.7000 or 7100 or 7150, something like that. Something ending in 00 or 50. Think as in like why the price is reacting at those levels, so go back to a scenario we all know, let's go to a shop.

We're buying something and the price is $100 or $101 let's say, but that doesn't happen does it? Because when you buy something from a shop the price will be $99 or $99.50 or $99.99, you know, something like that. Psychologically round numbers are there everyday in what we do, what we buy, so it's no different to trading Forex. Think of the 00s and the 50s.

I use these levels in a variety of different ways – with a trade example

I love to use those levels in a variety of different ways. To give you an example, just last night I took a trade on the New Zealand dollar, Swiss Franc on the four hour chart, you can go and find it on your charts. It was taken on the 29th of June, go and find it on your charts.

The price bounced through the 70 level, 0.7000 and it showed a really good set up and I could use that in a few ways, the price, and I was selling the New Zealand Swiss Franc. The price had already closed below the 70 level, the 70 cents level. It meant that I could then use that as an area to put my stop loss above that because in orde...