Trader Techniques That Will Instantly Improve Your Edge in Markets


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Method One: Round Number Theory

 

What exactly is the Round Number Theory trading method? It's a psychological technique based on the observation that asset prices often pivot around round numbers. You may already be familiar with this concept.

 

People are drawn to round numbers, so large trading volumes tend to gravitate around these figures – like $100, $1000, $50, 1.00, and soon. In this example, we'll examine the oil market and discuss a few key principles that can benefit you, whether you're a market newcomer, an experienced trader, or just someone looking to sharpen their edge.

 

While I prefer a straightforward approach, in this case, I'll detail the entire process starting from March 1st, when oil first reached a new local high in 2022. As shown in the chart below, the oil price soared to between $116 and $125, depending on the trading platform, in just one day. This dramatic increase was fueled by speculative forces. It's crucial to be cautious with such abrupt market movements, as they often reverse just as quickly. And that leads us to our first trading technique: the Round Number Theory.



After the initial impulse, demand slowly and organically started to climb. As you can see from the chart, the market hovered around $100, used as the basis point for our trade.


You can utilize this technique in stocks, cryptos, commodities, and more situations. I am sure with time, if you journal and track the data as I have done, you will start to see its effectiveness.

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Trader Technique:

Risk Management

Elevator Stoploss


The trailing elevator stop strategy is most effective on higher timeframes, such as daily, 3-day, and weekly candle closes. It's essential to wait for the candle to close before adjusting a stop-loss, which can be either mental or placed in the books, depending on your position and volume size. Patience and thorough asset screening are crucial in this approach, as the goal is to identify trends and capture a more significant portion of the price movement.

 

While the trailing elevator stop may not always be 100% successful, it does help address the common issue of prematurely closing winning positions, like in the case of oil, and missing out on potential gains.

 

We hope you found this information valuable. Feel free to explore our recently launched trading suite and use coupon code EMP22 for a special offer. Have a fantastic day, and thank you for reading.

 

Best regards,

Emporos

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