Prices ending by a round number as 20, 50 or 100 have some particularities. The market often considers these prices as support or resistance. That means the probability to see a technical rebound after the market touch these prices is very high.
It is very important for you to implement this particular price knowledge in your automatic trading system.
The rounded prices detection algorithm
There is a very simple algorithm that allows you to know if the actual price of an asset ending by 100, 50 or 20 thanks to ROUND instruction.
hundred = ROUND(close / 100) * 100
fifty = ROUND(close / 50) * 50
twenty = ROUND(close / 20) * 20
Define nearest hundred round number as a target
After that, you can choose this price as a target. However, you should control the round price is higher than the actual price. If the rounded price is lower than the actual price, you can just add 100 points at the actual price in case of a long position opening.
For example, if the actual price is 13244, the rounded price to the nearest hundred will be 13200 therefore you must add 100 to obtain 13300.
// long position case
IF hundred < close THEN
hundred = hundred + 100
ENDIF
After your verified the nearest hundred is higher than the actual price, you can define your TARGET.
pTargetHundred = hundred - close
SET TARGET pPROFIT pTargetHundred
If you decide to define your target price after you opened a position, you should use POSITIONPRICE instruction to compute your target price. POSITIONPRICE indicates the current average position price of the whole opened orders.
pTargetHundred = hundred - POSITIONPRICE
Be careful, cause this example works for a long position but if you want to open a short position, you must verify the rounded price is lower than the actual price. If not, you must sub 100 points of rounded price.
// short position case
IF hundred > close THEN
hundred = hundred - 100
ENDIF
pTargetHundred = hundred - POSITIONPRICE
Choosing to determine your TARGET on the nearest rounded as hundred when you trade index as DAX increase strongly the success rate of your automatic trading system.
If you want to learn more about automated trading, please see our automated trading learning section.
If you are any questions, please ask me in a comment and if this article pleased you I would be grateful to see you share it.
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