Trading Psychological Numbers
A common method used by traders to identify Support and Resistance levels is by using psychological numbers that are commonly referred to as “Round Numbers”. Most people (including traders) have an easier time comprehending and understanding Round Numbers. Assume that another trader asks you where the S&P 500 is going to top out this year. Typically your response would be 1825.00 as opposed to 1823.80, because it is much easier to comprehend the Round Number of 25.00. This is a classic example of why trading psychological Numbers can provide excellent support and resistance levels.
Looking at the image above, you will see an image of the “Round Numbers Bars” Indicator for NinjaTrader (technically it is a bar type). These bars allow the user to select an interval at which to define the Round Numbers. In the image above, I am using 20 ticks as the setting for my Round Numbers. Since the chart is displaying the Euro Currency Futures, a setting of 20 ticks means that the round numbers occur at every price that is evenly divisible by 0.0020 (20 ticks in the Euro Currency Futures market).
These Round Number bars are similar to Range bars and Renko bars, but they will always open and close at a psychological number (support and resistance level). This makes it easy for you as a trader to identify these key support and resistance areas, making trading psychological numbers a more feasible task. Download our Free Indicator for NinjaTrader today using the link below.
Click the link below to download our Free Round Numbers Bars for NinjaTrader:Round Number Bars for NinjaTrader 7 (495 downloads)