|
11+ years
experience
|
2
products
|
39
demo versions
|
|
1
jobs
|
0
signals
|
0
subscribers
|
Francis Dogbe
The Round Number Effect
Investors and traders have a very strong tendency to enter orders that coincide with round numbers. For example a trader may place an order on a specific stock when and if it falls to a $40 level. If multiple traders also place buy orders at $40 because it appears that the stock is a good buy at that level, the stock will encounter a large pool of buy orders. This often causes a large amount of buying activity and because buyers are outnumbering the sellers the value of the stock will rise rapidly.
In essence, the traders have generated what is called a “support level” at the $40 mark because multiple buy orders have accumulated at that price. This is what is referred to psychological support because it is not based on any prior price activity.
This phenomenon is common to all trading markets but is especially prevalent in the currency market. The reasoning behind this round number phenomenon in commodity, stock and forex trading is that part of humans that is attracted to round numbers. As long as people are involved in trading this phenomenon will be present.
Investors and traders have a very strong tendency to enter orders that coincide with round numbers. For example a trader may place an order on a specific stock when and if it falls to a $40 level. If multiple traders also place buy orders at $40 because it appears that the stock is a good buy at that level, the stock will encounter a large pool of buy orders. This often causes a large amount of buying activity and because buyers are outnumbering the sellers the value of the stock will rise rapidly.
In essence, the traders have generated what is called a “support level” at the $40 mark because multiple buy orders have accumulated at that price. This is what is referred to psychological support because it is not based on any prior price activity.
This phenomenon is common to all trading markets but is especially prevalent in the currency market. The reasoning behind this round number phenomenon in commodity, stock and forex trading is that part of humans that is attracted to round numbers. As long as people are involved in trading this phenomenon will be present.
Francis Dogbe
What could make us sell GBPUSD again? Very strong US data causing markets to change their perception of the pace of US rate hikes in the coming year could make the USD rally across the board. In contrast, if UK economic data, particularly services production, were to show a large contraction, markets may assume the BoE will need to ease more to help corporates. The markets are pricing in a small chance that Article 50 won't be triggered at all, and only a moderate chance it will be triggered this year. Should the government strongly indicate that Article 50 will be triggered this year, then this could mark a turnaround for GBP. Finally,any signs that the November Autumn statement may limit fiscal spending would be GBP bearish.
Francis Dogbe
So far not bad..:)
· 2
Daniel Krebs
2016.08.05
Nice graphs. Are they available on mql5 website or where did you produce them from?
Francis Dogbe
Please me help thank Mr. Daniel Stein (blueball) for good work-done on my system... I appreciate him alot. You can always count on him.
· 5
Francis Dogbe
My continues failure in Forex Trading is that i keep repeating the same mistake all the time. I have a good system by my human intervention destroy what i help built. :(
· 5
Francis Dogbe
Both sides suspended campaigning on whether Britain should leave the European Union after a lawmaker was attacked in her district...
· 3
161
Francis Dogbe
Assemble the components of this day with confidence, but not with arrogance. Reap the benefit of your own unique perceptive,always mindful that every other person's perceptive is just as valid.
· 1
Francis Dogbe
EUR/USD dropped to lower ground with the greenback doing most of the work. PMIs and two German surveys stand out. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD...
· 1
123