What are Round Numbers?

Round numbers are numbers that end in zero numbers. For example in EURUSD some zero-number prices are 1.2810, 1.2920, 1.3030 etc. In another example the zero-number prices of GBPUSD are 1.5020, 1.5030, 1.5040 etc. Historically, zero-ending quotes had played a major psychological effect on Forex Traders. People have the tendency to give orders in round (zero-ending) numbers. The total effect is great and thus Round Numbers constantly offer some important Support & Resistance Levels. This phenomenon can be seen in every Financial Market and especially as concerns Forex. A simple explanation is that as humans we have the tendency to seek for simplicity in our actions.

 

What are Whole Numbers?

Whole numbers in Forex Trading involve double-zero ending quotes. For example some whole numbers in EURUSD are 1.2100, 1.2200, 1.2300 etc. Whole or double-zero numbers play a huge role in Forex Trading. Massive orders are placed before pairs reach whole numbers. Usually, when currency pairs are reaching round-numbers, their volume activity booms.

Whole Numbers Effect -An Example on Forex Trading

Day-Traders are highly respecting Whole Numbers. For example let’s suppose that a Trader has opened a long position on EURUSD at 1.2850 and targets 1.2910. As the whole number EURUSD price of 1.2900 is close, he will not probably wait until 1.2910. He will alter his take-profit order to 1.2898-1.2900, in a way that he can be sure that if EURUSD reaches 1.2900 his profit will be assured. Maybe if EURUSD brakes for some minutes 1.2900 and moves higher he may open a new position again by keeping a stop-loss at 1.2898.

 

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What are Middle-Numbers?

Some Forex traders respect highly not only whole numbers but middle-numbers of whole numbers. For example the middle-numbers of EURUSD are 1.2050, 1.2150, 1.2250 etc.

 

Example on USDJPY

Here is a MetaTrader Chart of USDJPY. We have pinpointed the Whole, Round and Middle Numbers for that particular period only. It is obvious that there is a correlation between these price levels and the actual Resistance levels.

Chart: USDJPY May 2013

Trading JPYUSD

 

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Read More: » What is the Stochastic | » What is Williams %R | » What is Pivot Point | » What is RSI | » What is MACD | » What is Fibonacci Retracement

 

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What are Round Numbers?