Over-weighting prices that end in zeros, both in your own decisions and in how you expect a market to behave.
People place orders at round numbers, which makes round numbers genuinely meaningful. Resting liquidity clusters there and price often reacts to it, so the bias is partly self-fulfilling.
The error is in your own risk. A stop placed at a round number because it looks tidy sits exactly where everyone else has theirs, which is the easiest place in the chart to be taken out. Profit targets chosen for their appearance rather than for a structural level do the same thing in reverse.
Use the round number as information about where others are, then place your own orders where your invalidation actually is, usually a little beyond the obvious spot.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.
Educational only, not advice. Spotted an error? Post in Site Feedback.