Big Clarification on Bid/Offer

[drifting]

Thanks John, that is the exact answer I needed.
Now I'm off to Amazon to buy your book and if I'm not a gazillionaire by a week Tuesday, I'll know who to blame, right? :-)

[drifting]

Thanks John, this is exactly the reply I needed. I replied to thank you yesterday but see that it wasn't posted. Maybe that was because I said that I was off to Amazon to buy your book? No advertising allowed huh? Thanks again.

[rhodytrader]

Well, now it's up two times. Twice as much advertising!

Seriously, I'm glad to be of service. Hope you get a lot out of the book.

[drifting]

Thanks John. That's exactly the answer I needed. This is the third time I have acknowledged your reply but for some reason my posts are not getting included.

[craigfx]

Originally Posted by rhodytrader

When you enter a buy limit or stop, you are basically saying "When the offer price hits X I want to buy". Similarly, for a sell order you saying "When the bid price hits X I want to sell". If you are using a bid based chart, then when you buy you would need to add the spread to the chart point to get your order price, but when you sell you could just use the displayed price. .

When exiting a sell order for profit do you add on the spread to your target?
--say your spread is 5 pips and you want to gain 20 pips, Sell at 1.200 (no spread added) Take profit/limit at 1.175 and would you add 5 pips to the stop loss if you wanted a 20pip stop loss at 1.225? Is this correct?

[rhodytrader]

Originally Posted by craigfx

When exiting a sell order for profit do you add on the spread to your target?
--say your spread is 5 pips and you want to gain 20 pips, Sell at 1.200 (no spread added) Take profit/limit at 1.175 and would you add 5 pips to the stop loss if you wanted a 20pip stop loss at 1.225? Is this correct?

Think about your question for a second.

If you sell at 1.2000 and you want to make 20 pips, where do you need to put your buy order?

The answer is 1.1180. When the bid gets there, your order will be filled and you'll make the 20 pips, regardless of the spread.

You only need to take the spread in to consideration when you are thinking in terms of chart points.