Do round numbers really have an influence or is it just a mirage ?

It is often mentionned that we should not place our stop losses or take profit targets at exactly round numbers. Is it a reality or founded ?

I have seen systems developed that trade specifically using psychological levels. It's hard from a programming perspective as "psychological" levels in forex are different from ones in stocks. That said, I have seen systems using this as the primary input that perform very well.

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Shaun Overton
OneStepRemoved.com
MetaTrader Programming & Strategy Development

How can we say if a given level has this "little something out of the ordinary" in terms of psychological influence ? How do you assess such levels ?

It depends on the market. In stocks, it's probably individual point values. In forex, it's every 100 pips.

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Shaun Overton
OneStepRemoved.com
MetaTrader Programming & Strategy Development

As a day trader of stocks I can say that there is definitely a round number factor. I personally make decisions about .10 before or after a whole dollar amount. This is because sometimes there is an overwhelming amount of people who are anticipating the reaction of a whole number and wish to get in early before it touches that level resulting in price never even touching the whole number level.