Scalping Round Numbers

Here is a quick strategy to utilize near round numbers in the forex market (and likely other markets as well) to hopefully extract a profit.

A round number occurs every 100 pips. 139.00 and 141.00 are examples of a round number in the EURJPY ; 1.3600 or 1.4100 are examples in the EURUSD.

These levels often have lots of orders at or near them, so they act like a magnet. Once the price gets close, it is will very often move through the level.

Initial Requirements

Only trade this strategy in pairs that have an average daily movement of 80 pips or more. With that much movement it is much easier to make a profit. If the pair is only moving 50 pips a day it’s harder for the price to move us into the money and keep us there.

Current forex stats can be found here: Daily Forex Stats

If trading the actual forex market, the spread that is being provided by the broker should be about 1 pip or smaller (2 at the absolute max). If the spread is bigger than this and the strategy may not be worth trading.

Basic Strategy

Locate a round number that is in the vicinity of the current price, but that hasn’t been touched in a least a few days.

If the price is moving up towards the level, enter when the price gets 10 pips below the round number. We are looking for the price to pop through the round number.

Only enter if the price is moving higher with some momentum when it reaches the 10 pip (away) mark.

If trading the actual forex market, exit 5 pips above the round number. Therefore, your target is about 15 pips. Keep risk to about 5 pips so your profit is larger than the potential loss.

The strategy is typically traded off a 5-minute chart.

If the signal occurs outside of major market hours (US and Europe) then you will need to give the trade more time to become profitable, potentially a couple hours. If the signal occurs while the US or Europe are open, then the trade should progress a little quicker–taking less than an hour and possibly only 15 minutes or so.

The trade below occurred in the EURJPY (5-minute chart).

The price is moving toward the 139.00 level (a round number), and has some momentum when it gets 10 pips away.

There are two potential entry points, both in white boxes. The first entry occurs when the price reaches 138.90, but then the price pulls back after our entry. The trade is still valid though.

Following a mostly sideways pullback the price reaches 138.90 again, signaling another long entry. This time the price picks up speed and moves toward the round number.

For the first entry the price took about an hour and 15 minutes to move solidly into the money. The second entry moved into the money very quickly–10 to 15 minutes.

If trading traditional markets, get out about 5 pips above the round number. This strategy is just for capturing the movement which is often associated with a round number.

If trading binary options, choose an expiry time that allows the market enough time to move into the money, but not enough time for it likely reverse on you.

The same method applies if the price is falling toward a round number. Enter as the price is moving down, approximately 10 pips above the level. We are expecting the price to move down through the round number. If trading the actual forex market, get out about 5 pips below the round number (about 15 pip profit). Limit risk to about 5 pips.

Final Word

Round numbers have a tendency to attract orders. So when the price gets close to a round number, it will very often move through it, even if only briefly. Trade this occurrence by buying as the price approaches a round number from below, or selling as the price approaches a round number from above.

Don’t ignore other factors though. A buy signal is better if the trend is up, and a sell signal is better when the trend is down. The more momentum there is when you enter the trade the better. If the price is ripping higher when it gets 10 pips away from the round number, the momentum could quickly carry you into the money.