Scalping system #9 (Trading by Psychological Levels)

what is "level" and 00-25-50-75-00?

can you explain more pls..

thanks..

If you don't know what those levels are then you have a lot of reading to go!! Try to attach the indicators and figure out what it is. Watch the screenshot.
Do you SEE the lines --> levels ;-)
Now you understand, your welcome.

Levels 00, 25, 50, 75, 00 are called "psychological levels", because traders would usually choose those levels to place stops and/or limits at. It seems logical, you won't look to set a trading order at some unusual number, like 34, 67, 81...

For example, if you were looking to choose a stop level of around 100 pips for EUR/USD (buy order) which is now trading at 1.2873, what number would you normally type in? I guess it would be something like 1.2775 or 1.2770. You would naturally go for round numbers, convenient numbers. These round numbers are psychological levels, easy levels, common levels. If you were to avoid those levels, you would set a stop at some 1.2778 or at 1.2782 level.

By knowing about those psychological levels in trading, you can take benefit from trading around them.
The most powerful psychological levels are 50 and 00 levels. (From the previous example with EUR/USD these would be 1.2750, 1.2800, 1.2850 and so on). If you look to place a trading stop, you should try to avoid those levels, instead look to place a stop few pips further away, behind the psychological levels, in order to stand a fair chance for a trade to prove that it was a losing trade, and you were not taken out by the momentum that swept you order away around the well known psychological level.
If you are, on the other hand, looking to take profits from a winning trade, try to squeeze your Take Profit order 3-4 pips earlier than the next coming powerful psychological level. This 3-4 pips sacrifice will make sure you get a reward before the market reacts on a new round number and makes a u-turn.

Regards,
Edward

Thanx edward because of the language barrier you can say it much better then myself.
It still is one of the most powerfull methods out there.
I just know 1 method that is more powerfull but you need to know more about trading. This method is for later.
I suggest to every new trader learn to take those 5 pips the rest comes later. For every newbie who can follow this method it is easy to take 5 pip. If you can catch 5 trades a day and use my MM then you make a lot of money in just 2 years. Don't get greedy take your time it will pay off, believe me. There was a time (2years) i was searching on this side to find the best method for me. Now i'm trading 5 figures each month. Never give up on trading but you need to met the right people to teach you. I've been teached, now i'm ready to teach you.

what is this more powerful method for the people who are more advanced already?
Thanks

Special thanks to Edward and Patrick for explain this method... u r great!! this site is wonderful!!

just two questions...
1- What do u think is the best time to trade this strategy? when london and Ny r open? or just new york? or just europpean section?...
2- Ur money management as i could understand is risk 5% with 20 pips... that´s right? and take 5...

I really apreciatte ur help...

Thanks again..

Anniefx

Hi Anniefx,

From what I've read, the risk is 5%, that's correct.
Regarding the best hours, I would suggest the opening of the london session and all the way through the New York session (dropping out the last hour or two of the NY session, if already in profit for the day). Let's hear from Patrick as well.

Regards,
Edward

More special thanks to Edward and Patrick.
Without reproducing what Anniefx has just said-some questions:

On the hour you have a look at the 5 minute and 1 hour charts.
If the price is say 1.4200(GBP) AND the 1 hour chart is green(buy) you then enter at 1.4225 looking to take 5 pips?

Stop loss of 20 pips?

5 trades a day? Thanks for the input Mark