$FET ｜Breaking through the 0.2 level
How are key price levels determined? Round-number levels attract attention mainly because people like to place orders and stop-losses near round numbers, causing orders to cluster there. That’s why they’re also called psychological levels.
Many people use these levels as a reference for risk management: which side of a level to trade on and where to place a stop-loss are more practical considerations than trying to predict whether prices will rise or fall.
The point of understanding an indicator is to avoid being spooked by a single number—not to use it to pinpoint tops and bottoms.
How are key price levels determined? Round-number levels attract attention mainly because people like to place orders and stop-losses near round numbers, causing orders to cluster there. That’s why they’re also called psychological levels.
Many people use these levels as a reference for risk management: which side of a level to trade on and where to place a stop-loss are more practical considerations than trying to predict whether prices will rise or fall.
The point of understanding an indicator is to avoid being spooked by a single number—not to use it to pinpoint tops and bottoms.