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A round number is a magnet, not a floor

Mai Prasert

Close view of a hand writing in a notebook

Round numbers attract orders because they are easy to type. That crowding can pause a move. A pause is not the same as a defended swing. In the evening class we keep round figures in a side gutter of the page so they do not steal the middle of the chart.

A SET name that stalled at 48.00 three times last month has a history. A gold future that merely printed 2400.00 on the way through has a magnet. If you treat both as support, your stops will sit in the more obvious place and get taken for the usual reason: everyone else put them there too.

When we mark overnight levels we ask a blunt question: did trade actually turn here, or did the print just look tidy? Turning requires a rejection that left unused prices beyond the extreme. Tidiness requires only that the number ends in zeros.

Arun lets round numbers onto the wall chart only when they coincide with a prior unused high or low. Coincidence is allowed. Substitution is not. If 1,600 sits two ticks below a genuine swing, we mark the swing and note the round figure as a magnet beside it.

The practical habit is small. Write “R” for round and “S” for structure. If a page is mostly R, the trader is still decorating. Structure is slower to find and easier to defend because fewer people chose it for the look of the digits.

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