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Round number level

A price ending in round figures that attracts orders simply because humans think in round numbers.

Whole numbers, hundreds and thousands attract limit orders, stop orders and options strikes. Traders set targets at round figures far more often than at arbitrary prices, which concentrates real orders there.

The effect shows up in order book data as clustering, and it is one of the few technical-analysis claims with reasonable academic support: order placement is measurably biased toward round prices. Whether that bias is tradeable after costs is a separate question.

In options-heavy markets the effect is reinforced by strike-price concentration, which can pin price near a round number into expiry. Outside of that mechanism, treat round numbers as places where reactions are slightly more likely, not as reliable levels.

Related: strike-price, support, resistance, order-book

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Support, resistance and the flip between themA price path bouncing three times off a horizontal support line and turning back three times at a resistance line, then breaking above it and settling back onto the same level.RESISTANCESUPPORT62.0056.00breaks aboveold resistance,now supportIllustrative price path: the level stays the same, its role changes.
Support, resistance and the flip. Support is a price where buyers keep stepping in and the fall stops; resistance is a price where sellers keep stepping in and the rise stops. Once price closes above an old ceiling, that same level often acts as the new floor.

Educational only, not advice. Spotted an error? Post in Site Feedback.