Page 354 - THE MARKET WHISPERER

350 PART 10 - Winning Trades
Intraday Round Number Breakout – MFB

We bought MFB in the trading room when it broke out above the round
number of $25. Before the stock broke out, it reached the round number
and stopped there several times [1]. The breakout sent it upwards by 30
cents, allowing us to take a good partial of three-quarters of the quantity
bought. Notice the increase in volume [2] at the breakout point. The final
quarter was closed at a loss of ten cents [3]. Not a big trade, but definitely
some nice clean work there, taking advantage of the round number

breakout in the correct way.

SMART Round numbers serve as points of resistance and support.
MONEY We try to buy above round numbers, and realize profits
below them.

When a stock drops towards a round number, things turn around.
Usually there will be a large number of buyers at the round number,
therefore if you are in a long, it is better that you let your stop order remain
beneath the round number in the hope that the stock will find support
and return to highs. If you’re planning a short, it’s best to execute it only
when the price drops below the round number. If you’re already in a short
with a stock dropping towards the round number, consider taking a partial
several cents before it reaches the area of support at the round number
and turns around.