Forex Trading: How to Play the BIG figures


Forex Trading: Big figures (ending 00) often represent critical levels in the forex markets. Many market participants place their stop orders at big figures which can create market volatility to be exploited by short term traders.

Round numbers act as psychological support and resistance in many financial markets, and particularly so in forex. Prices are often drawn towards big figures with the big figure frequently tested a number of times before finally breaking through.

At Forex Trading-Pips we play BIG figures in the following two ways:

1. We ride price action up / down to the big figure, taking profits at the round number.

2. We fade the big figures subject to our counter trend trade filter rules (detailed below).

Example Trade Setup

Take a look at the Euro currency setup on the chart below made during the early morning Asia session (01/24/12). Euro currency finally broke through the psychological 1.3000 level to the upside Monday morning US session (01/23/12), later pulling back to retest 1.3000 BIG figure.

One of the ‘rules’ of support and resistance is that support once broken becomes resistance and resistance once broken becomes support. In this case, 1.3000 is our new ‘temporary’ support level and we wish to buy at the round number and any test immediately below it. Our orders this morning were as follows:

1. Buy unit 1 at 1.3000, Stop Loss at 1.2980, Profit Target 1.3005

2. Buy unit 2 at 1.2995, Stop Loss at 1.2980, Profit Target 1.3005

3. Buy unit 3 at 1.2990, Stop Loss at 1.2980, Profit Target 1.3005.

These levels are shown on the chart below: blue line is our entry, red line is our stop loss, green line is our profit target.


Forex Trading Euro BIG figure 1.3000

Forex Trading Euro BIG figure 1.3000

Counter Trend Trade Filters: We apply the following trade filters to all counter trend trade setups

No counter trend trades after

1. Daily Inside Bar

2. Daily NR7

3. Daily Doji

The above 3 conditions typically precede breakout moves and we do not wish to be caught out on the wrong side of a breakout: we instead trade volatility breakout strategies on these days.
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