The Easiest Trading Edge Nobody Talks About
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#639: The Easiest Trading Edge Nobody Talks About
In this video:
00:23 – Round numbers will help your trading results.
00:50 – Traders ignore the most important part of the chart.
01:43 – What is a Round Number?
02:28 – Support and Resistance levels.
02:58 – How to use Round Numbers in your trading.
05:30 – Check out my new Masterclass.
05:59 – Blueberry Markets as a Forex Broker.
06:35 – How to contact me for trading help.
Round numbers. What are they? How can you use them and why are they so important? Let’s talk about that and more right now.
Hi there, Traders! Andrew Mitchem here at The Forex Trading Coach with this week’s video and podcast number 639.
Round numbers will help your trading results.
So I want to talk to you about round numbers because it’s something that I find most people don’t use and don’t understand. And you don’t see the importance of it, probably because they don’t look at the price axis.
You see, most people, when they get into trading, they’re worried about this line moving over that line and a moving average crossing over or MACD changing from overbought to oversold.
And they get very caught up in indicators.
Traders ignore the most important part of the chart.
And the issue becomes that most people ignore what is probably the most important part of the chart. It’s the right-hand side axis. It’s the price axis.
You wouldn’t go out there in normal life buying something without considering the price. So why is it that when you suddenly want to become a trader, you take this crossover of a moving average, but you never look at the price? Why is that?
Well, it’s because most people get so fixated with all these lovely squiggly lines and things, or they hear news events and they suddenly want to become fundamental traders, that they fail to look at the actual price.
Go and look at the price on your charts and you’ll see that price changes over and bounces at those levels so many times.
So most people ignore round numbers.
What is a Round Number?
What is a round number? So I classify a round number as a price level that ends in a 00 or a 50. The 00s are more important and have more weight in my opinion, but 50s are also important. So think of, let’s say, $100 or $100.50 or 101, 101.50, 102, that type of thing.
So think of those types of 50s and zeros. Anything ending in a 50 or 0, they are the most important round numbers.
And so those levels are important to us as traders because those levels act as natural areas of support and resistance.
Support and Resistance levels.
So think of support and resistance as floors and ceilings. When the price comes up to a resistance level, it hits that ceiling and it will likely bounce and fall away.
Now how do you know that that’s a resistance level?
Well, you can look at your charts and see a previous bounce at that level, but you can also look at the other side of your chart and go, “Oh, that’s bounced at a round number.”
And so those levels suddenly become really important for you.
There are so many ways you can use them. I’ll give you some examples.
How to use Round Numbers in your trading.
Let’s say you are buying at the close of a candle, but that candle had already gone up and hit a round number and then rejected that level. I personally would not be taking a buy trade at that point because the price has already proven to have hit that level, rejected it, and fallen away.
So that’s one way of using a round number. It helps protect a trade that might end up being a losing trade.
Secondly, if the price has come down and bounced at a round number and the candle low is at a round number and then turned around, that could be a good reason for that level to be a support level. It could be why the price is turning around because it’s bounced at that round number.
Another way you can use round numbers is to help protect your stop loss.
Let’s again say that we’re buying a currency, and we have the ability to put our stop loss below a round number. It means that the price might move up, it may come back, it may test that round number. Your stop loss, by the way, is below the round number on a buy trade.
The price may come and test that round number and then head back up again. So your stop loss below a round number on a buy trade will help protect the trade.
The other way of looking at a round number to your advantage is, again, if we’re saying that we’re buying a currency pair, it’s moving up and it’s moving up nicely. Make sure if there’s a round number at or near your profit target that you need for your strategy, you just bring your profit target down to below that round number.
Again, the price may go up and let’s say your profit target, if you don’t understand round numbers, just happens to be above that round number. The price may come up to test that round number and then drop away and you think, “Oh, it’s just a few pips from hitting profit and the market’s changed. Why does it always do that?”
Whereas I would look at that and go, “Okay, I’m accepting that I’m just reducing my reward-to-risk slightly. I’m bringing my profit target down to below that round number, but I’m giving myself a higher probability chance of that trade hitting my profit target.”
And where it goes afterwards, I don’t care. It could burst through the round number, but more likely it’s going to hit that level and bounce back down again. But I don’t care because I’m out of the trade for profit.
So round numbers. Use them. Please look at the right-hand side of your charts. After you finish listening to this video and podcast, go and look at your charts and see where the price changes around. So many times it happens at round numbers.
Lastly, 2 things.
Check out my new Masterclass.
1. Have a look at my new masterclass. It’s on demand. It’s only around 15 minutes. It’s just been uploaded last week. Great content, really valuable information to help you as a trader, to explain how we trade and how we can help you to trade. If you’re interested in some quality coaching that’s been around for over 17 years with clients in 111 countries, there is probably nothing else more proven out there than the strategy.
Blueberry Markets as a Forex Broker.
2. If you are out there looking for a high-quality forex broker, I can highly recommend Blueberry Markets. I’m actually in discussion right now, today, with Blueberry Markets. They are looking at a promotion between themselves and myself to give you the option to join us at The Forex Trading Coach for a discounted rate. They’re going to foot the bill for the difference, and you can open an account with Blueberry Markets and trade with us.
More details will be announced in early July.
So once again, this is Andrew Mitchem here at The Forex Trading Coach.
Look at round numbers, please. It will massively help you.
How to contact me for trading help.
If you need any more help, leave a comment below or ask me a question. You can email me directly at Andrew@TheForexTradingCoach.com and I’ll get back to you personally.
I hope it helps.
Bye for now.
Episode Title: #639: The Easiest Trading Edge Nobody Talks About
Find out more about Blueberry Markets – Click Here
Find out more about my Online Video Forex Course
Book a Call with Andrew or one of his team now
Click Here to Attend my Free Masterclass
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