Forex Round Number Trade

Entry Logic

• Entry triggers on a reaction to a major round number (e.g., 1.1000, 1.2000).
• Confirmation requires a reversal candle on the 1-hour chart.
• Timeframe is the 1-hour chart.
• Location is a key psychological level.
• Market condition can be either trending or ranging.

Exit Logic

• Profit target is 50 pips.
• No scaling out.
• Trailing stop is not used.
• Exit on signal failure if the price closes beyond the round number.
• Exit on an opposite signal from a strong reversal at the next round number.
• Exit on time expiration after 8 hours.
• Exit on momentum loss if the price stalls for more than 2 hours.

Stop Loss Structure

• Hard stop is placed 25 pips beyond the round number.
• No soft stop is used.
• Maximum dollar loss is 1% of account equity.
• Maximum percent loss is 1% of account equity.
• Structural stop is placed beyond the round number.

Risk Management Framework

• Risk per trade is 0.5% of the account.
• Maximum daily loss limit is 1.5% of the account.
• Maximum weekly loss limit is 4% of the account.
• Maximum drawdown allowed is 12%.
• Risk-reward ratio requirement is a minimum of 1:2.

Position Sizing Model

• Sizing is based on a fixed fractional model (0.5% of account per trade).
• No volatility adjustment is used.
• Conviction sizing is not used.
• No scaling in.
• No scaling out.

Trade Filtering

• Avoid trading at minor round numbers (e.g., 1.1050).
• Requires a clear reaction to the major round number.
• Instrument can be any major forex pair.
• Can be traded at any time.
• Avoid trading in very low-volatility environments.

Context Framework

• Trend direction is not a primary factor, but trading with the trend is preferred.
• The focus is on the psychological importance of the round number.
• Moving averages are not used.
• Location is a key psychological level.
• Higher timeframe (daily) should show the significance of the round number.

Trade Management Rules

• This is a short-term, intraday strategy.
• Take profits at the target.
• Do not add to the position.
• Be disciplined and exit if the trade is not working.

Time Rules

• Optimal trading window is during the London and New York sessions.
• Avoid trading during the Asian session due to lower volatility.
• Round numbers are always in play.

Setup Classification

• A+ setup: Reaction to a major round number that is also a major support/resistance level.
• A setup: Reaction to a major round number.
• B setup: Reaction to a minor round number.
• C setup: Fading a breakout of a round number.

Market Selection Criteria

• Instrument can be any major forex pair.
• Requires moderate volatility.
• Liquidity should be high.

Statistical Edge Metrics

• Expected win rate is 60%.
• Average win is 1.5R.
• Average loss is 1R.
• Profit factor is 1.9.
• Expectancy per trade is +0.35R.

Failure Conditions

• Strategy fails when a round number is decisively broken.
• Avoid trading when there is strong momentum against your position.

Psychological Rules

• Have confidence in the psychological power of round numbers.
• Do not get shaken out by small fluctuations around the level.

Advanced Components

• No advanced filters are used.
• The focus is on the psychological aspect of trading.
• Multi-timeframe alignment can be helpful to gauge the importance of the round number.

Location

• Strongest at major, long-term round numbers.
• Weakest at minor, short-term round numbers.
• The significance of the round number determines the probability of success.