$50. $100. $500 flat. Price doesn't need a reason to react to a round number, and often it doesn't get one.
“A round number only works as a level when enough other traders are watching it. Stack it with volume or a prior reaction before you trust the number on its own.”Jason Parker · Founder
There's no order flow reason a stock should stall at exactly $100 instead of $99.85. It happens anyway, often enough that plenty of scalpers watch these levels on purpose. Whole dollar amounts, and round numbers within a stock's typical range, tend to attract resting orders because a lot of traders park them there. Round numbers are easy to remember and easy to type into an order ticket, and that alone is enough to turn one into a level.
| Entry | A rejection candle at the round number on its first approach, entered back away from the level |
| Exit | A modest, fixed target well short of the next round number, don't ask this setup to do more than it's built for |
| Stop | Just past the round number itself, if price closes through it the level didn't hold |
An illustrative example built to show the setup’s shape. Not historical price data, and not tied to any specific ticker.
Treating every round number like it's meaningful. A stock trading at $340 blows through $340 without a pause on plenty of days, because the level only works when other traders are watching it, and not every round number gets that attention. Stack this with volume or a prior reaction at the same level before trusting the number on its own.
None of this works without the framework underneath it. Read risk management next, or run your own numbers in the position-size calculator.
Common questions about trading this setup, answered straight.
A rejection candle at the round number on its first approach, entered back away from the level, not a blind fade the instant price touches it.
The stop sits just past the round number itself, since a close through it means the level didn't hold. The target is modest and fixed, well short of the next round number.
Treating every round number as meaningful. A round number only works as a level when enough other traders are watching it, so stack it with volume or a prior reaction at the same price before trusting the number alone.
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