Crowd Money: A Practical Guide to Macro Behavioural Technical Analysis by Eoin Treacy

Author:Eoin Treacy [Treacy, Eoin]
Language: eng
Format: epub
Tags: Business & Economics, E-Commerce, Online Trading
ISBN: 9780857193544
Google: NoHgAgAAQBAJ
Publisher: Harriman House Limited
Published: 2013-10-07T00:08:52.598523+00:00

Roundophobia

David Fuller defined roundophobia as “the tendency of markets to at least pause in the region of round numbers”.

Most relatively experienced investors can remember a time when a market they were interested in was approaching a big round number. The Dow Jones Industrials at 10,000, gold at $1,000, crude oil at $100, the Canadian dollar / US Dollar at $1 or UK gilts at 4% are all examples of where markets have either paused or reversed at psychologically significant round numbers. Just why individuals and crowds attach significance to such levels has a common-sense explanation.

Let’s consider the psychological machinations behind such tendencies. When the price of an internationally traded financial vehicle is moving higher, people naturally begin to think about how far it will go, if for no other reason than they are thinking about potentially participating. If asked for their target they are more likely to give the next round number because most of us are not so pedantic as to speak in fractions. We are more likely to say $1,000 than $982, 10,000 than 9,941. And when lots of people do this, the greater the likelihood a market will pause at a round number.

West Texas Intermediate Crude Oil offered a good example of prices pausing in the region of a round number from 2007.

West Texas Intermediate Crude Oil 2006–2008

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.