To include the spread or to not include the spread: that is the question!

Beginner Questions
22

Hello,

You’ll have to stop this thinking, can you not see what it’s doing to you? I’m getting worried :smiley:

‘Many a true word spoken is jest’!!! It’s like ‘here we go again’!!! LOL!!!

Never stop thinking. :wink:

Sometimes I wish I could!!! There’s an old saying (slang) (I THINK it’s South African slang but maybe not): ‘Sometimes I sits and thinks and sometimes I just sits’ (or is it ‘Sometimes I thinks and sometimes I just sits and thinks’)??? LOL!!! Either way: my ‘problem’ is the latter!!! LOL!!! And of course this thread is NOT helping because now, after receiving all of these different ‘takes’ on the subject, it’s got me THINKING MORE about this issue and ask MORE questions (and here I was THINKING that the asnwer to my original post was going to be a ‘quick and easy’ ‘yes: include the spread’ or ‘no: don’t include the spread’)!!! LOL!!!

Best would be the charts are based on mean price. Because that is the real price. Rare to see, however.

Well this answers ONE question and the answer makes sense to me (thank goodness for that)!!! LOL!!!

This is not a problem with targets or sl larger than 10*spread

Have you any idea how ‘worrying’ that statement is (assuming that you mean ‘10*spread’ is ‘TEN TIMES THE SPREAD’)!!! LOL!!! Yes (and if this is indeed the case) with EUR/USD: ‘who cares’ but (again ‘going from the sublime to the ridiculous’) what about the spread of USD/RUB (1 500 pips) or even something more ‘conventional’ like GBP/NZD (20 pips) or (in my case) something like the Nikkei 225 which has a spread of 16 points or the Hang Seng Index which has a spread of 23 points??? I’m THINKING that maybe I don’t understand what you’re saying here!!! LOL!!!

If targets/sl become lower than 10*spread then this might become an issue, because the spread runs you sell sl’s easier than your buy sl’s. Same with targets.

Notwithstanding my (possible) misunderstanding you above: this is the EXACT point of my ‘dilemma’. I referred to it as ‘bias’ but it’s the ‘core’ of the issue really. That being said: I would have THOUGHT that it’s the other way around i.e. when placing orders based on a bid price only chart is it not the BUY sl’s that would get ‘run’ easier than the SELL sl’s (if you don’t take the spread into account when placing your BUY sl’s that is)???

If you show the ask price in the charts it doesn’t change the charts. It just shows you the current ask price which is forgotten a few seconds later.

Quite correct (of course) and hence ONE of the reasons for my ‘detesting’ variable spreads!!! Let’s assume it was a stop loss order that was ‘run’ because of the variable spread: you have NO way of knowing what the ACTUAL spread was at that exact point in time (and following on from that you have no way of knowing if the spread REALLY WAS THAT WIDE at that exact point in time either)!!!

Hmm… never thought of that. I bet you’re right about the stop-hunting thing.

Well put it this way: ‘in a previous life’ (with my first and second brokers) many times I had a stop taken out but according to the CHART that was in front of me price never got anywhere NEAR where my stop loss order was and the reason that was ALWAYS given by the broker was ‘it was the spread that widened’!!! Try and argue THAT one with a broker and see how far you get!!! LOL!!!

I’m going to post a link here now. I SWORE to myself that I would not post it i.e. I found it earlier today while trying to ‘research’ this very topic and basically ‘the guy’ is selling a trading system and obviously has MY VERY OWN ‘equities bias’ so I didn’t think it relative (and was worried about the ‘knives in my back’) but the more I think about it now he does make some VERY good points which may (or may not???) be relevant. It makes for interesting reading (at least I thought so anyway): Forex trading systems beaten by the spread

I could be wrong about this, but I think Oanda processes their spreads different than all other brokers (that I’m aware of). Instead of the typical scenario where we have a bid-based chart and the broker charging the spread on buys only… in Oanda it appears that we have a chart based on the average of the current bid/ask, and it also seems that they charge 1/2 the spread on every order buy or sell. (Someone please correct me if any of this is wrong – I really want to know the truth on this.)

From what I gather from other responses on this thread: Oanda does indeed show the middle price (and following on from that I’m assuming that they will add half the spread to the high and subtract half the spread from the low i.e. same as my middle price charts). What I’m NOT sure about is your ‘observation’ that other brokers charge the spread on buys only (and if this IS the case then my problem is solved of course i.e. it means that if looking at a bid price only chart then one HAS to add the spread to the price of any buy stop order but I’m THINKING NOW that this would be WAY too simple). I’m THINKING that maybe with my ‘connection’ to this business I should ask a broker about this (and maybe the rest of you can ‘sort of like mention’ this ‘issue’ to YOUR broker and we can ‘compare notes’)!!!

If this were true, it could really help trader psychology. The mind plays a lot of games on you when you’re analyzing the charts and we are visual beasts by nature. The broker has to hide their spread somewhere, right? Instead of it being a “surprise” that we get hit with on every buy, it seems somewhat brilliant for them to just include it always. That way when we are buying and selling, everything is consistent to our brain. In that way, it would be much easier to train our subconscious with a fluid trading technique. It is very non-standard to try to train your brain to add spreads in only one direction IMHO.

Yeh well: good points made. I wouldn’t go so far as to say that the broker tries to ‘hide’ the spread i.e. I think the word ‘include’ may be more ‘apt’ (well notwithstanding my comments about variable spreads of course)!!! But you make an observation that may go aways to answering my original question and the reason for starting this thread i.e. it’s the buy’s that get hit by ‘surpise’ not the sells (worse with variable spreads). So with fixed spreads: maybe my ‘belief’ is after all correct i.e. when looking at a bid price only chart one must add the spread to any buy stop order price???

I SUPPOSE the only way to ‘play it safe’ would be to either use charts that show the middle price and add or subtract ONE AND A HALF TIMES the spread to ALL orders (both buy and sell) OR if you only have a bid price chart to add TWICE the spread to any buy orders and subtract ONE TIMES the spread to any sell orders!!! But then again I fear you’re creating a ‘bias’ using the latter method!!!

I’ll tell you this: given this discussion MAN I’d rather pay straight commissions and trade with NO spread!!! And come to think of it: HOW COME in ALL the trading books that I have (and believe me I have FAR TOO many of them) this subject is never even discussed or noted. AT BEST the words ‘ignoring spreads and commissions the results would be …’ will appear!!!

Regards,

Dale.

Edit 1:

I’m THINKING that maybe we need to ‘enlist’ the help of the ‘Larry Williams’ or the ‘John F. Carter’s’ or the ‘Linda Bradford Raschke’s’ of this world to address this issue for us!!! I’ll ‘give it a shot’!!!

Edit 2:

Well HERE is something that I just found i.e. I Googled the phrase ‘when does the broker charge the spread’ and found this link: Forex Trading - understanding commissions, spreads and trading costs. About a third of the way down the page there is a paragraph that reads: [I]’[/I][I][B]The good news though is that typically [/B]this spread is only charged on one side of the transaction’. In other words, you don’t pay the spread when you buy AND then again when you sell. It is usually only charged on the “buy” side of the trades’ [/I]so dusktrader could very well be right and this would indeed be the answer to my original question would it not??? The problem of course: I have NO idea who’s site this is and I’ve not found any other reference stating the same thing (so anyone else feel free to ‘back this up’).

BUT THEN and just THINKING about this: should one not SUBTRACT the spread from any buy stop orders (assuming the above is correct and assuming a bid price only chart)??? But then again I fear this will AGAIN create a ‘bias’.

I’m THINKING that maybe I should include a chart here to show what I mean (I’ll get to it shortly i.e. I have to go feed my dogs before they eat the furniture or, worse still, each other)!!! LOL!!!

23

Hello Dale,

regarding thinking: Yeah I didn’t mean not to stop thinking for a break. I had in mind don’t stop thinking at all, lol. :slight_smile:

Bout that spread and sl/tp. I meant if you go short then ask will be responsible for sl and sl is higher then entry. True, you never know what was the ask that time in the past. Plus yes I had in mind ten times the spread. Around that.

However however however. Don’t make it too complicated, lol. There is light at the end of your tunnel and it is not a train in your direction, lol. :wink:

You can’t avoid the spread with a particular broker. You can however avoid pairs and a broker. If it’s too risky, avoid pairs or brokers. Look for other pairs or/and brokers. Or use bots. If you code your own bot, like I do, you can implement whatever formula is required. As I mentioned above, I knew about this issue and I coded a circumvention in my scalper. My scalp bot is looking for mean prices. If you do have an average spread number, you can work with that and then you can calculate the mean price for all of your signals, sl and tp values. Automagically. :slight_smile:

Best regards to SA!

edit: Just to add, you can also code an indi with all of your key prices, if you don’t have a bot. Just use the key bid prices of the chart and 1/2*spread and you have the mean price and can show it anywhere as number at the screen.

24

Well: I’m not seeing ‘the light at the end of you (my) tunnel’ yet!!! LOL!!!

BUT I’ll tell ya this:

I decided to ask the question another way (this regarding the CLOSE anyway) and ‘good ‘ol faithful’ Investopedia came up with the answer (AGAIN is something that I’ve always THOUGHT about)!!! The question (in my mind) was: ‘what prices are quoted on the ticker tape’ or ‘when Bloomberg TV says that the Dow closed at 11 000 which price is being quoted’ or ‘when CNBC shows the current price of EUR/USD which price is being quoted’. The answer (according to Investopedia) is (wait for it) (drum roll): the BID price(s)!!! Take a look here: Understanding The Ticker Tape. This would most certainly explain why the ‘default’ for most brokers’ (and MT4) charts is to show the bid prices not???

NOW I’m wondering if SDC IS is not the one that is right i.e. the spread is ‘already factored in’ so you work off a bid price only chart, place your order at wherever value you trading system tells you to place it, and leave it at that??? (I STILL fear that this creates a ‘bias’ or a ‘skew’ but I’m not sure)!!!

And JUST THINKING AGAIN: why does a broker not just simply deduct the spread from your capital when opening the position (in the same way as commission would be deducted)??? Would this not make WAY more sense??? In other words: the moment you opened a position the spread at that exact moment would simply be deducted from your capital (it’s a cost whichever way you ‘slice it’) and the position would be opened ‘square’ i.e. not with an immediate loss (of the spread). This would SURELY elminate the need for any charts other than the bid price charts which are theoretically the ‘correct’ charts (this ‘logic’ of mine now being based on the information just ‘gleaned’ from Investopedia above)??? Put it this way: I’d be quite happy to pay the spread BOTH ways if it was done on this basis (the same way that the commissions are charged i.e. both ways) just so long as I had a ‘correct’ chart in front of me (or using Oanda’s APPARENT ‘model’ pay half the spread when opening the position and the other half when closing the position but in both cases the spread is deducted immediately from your capital and not reflected in the P/L of the position itself until it’s closed)??? OR (‘conspiracy theory time’ here) is this done for the purposes of ‘window dressing’??? You’ve ‘seen the signs’ i.e. ‘no commissions: you just pay the spread’!!! Well if you think about it: it’s the same thing i.e. the spread is a forex broker’s ‘commission’ is it not??? So why treat it differently (unless there is another reason which you can be almost SURE does NOT have your average retail trader’s interests ‘at heart’)!!! LOL!!!

Regards,

Dale.

26

Hmm, then you have to wait for another light (or the train), lol. :slight_smile:

Regarding your new thoughts: That with the bid and tape might be. However, as brokers use different spreads the tricky thing lies within those differences. If you have a broker with 3 pip spread and another with 1.5 pip which broker has the “right” bid price?

Anyways, I am just concerned about the sl/tp issues, so that’s why I coded the mean price into my bot.

If you know that brokers use different spreads and also a little different prices in the +/-1 pip range usually, the closest way to the interbank feed imho is to calculate the mean prices. Or maybe mean minus half interbank spread, but I doubt this is really a big difference.

I have some backtest results here and that is why I let my scalper run with a mean price. That gave the optimum performance with smallest drawdown so far. Far better than bid price! :slight_smile:

With my other bot of course it makes no difference, as that plays on the bigger tfs where +/- 2 pips are not that important, lol.

27

Hi cubanpip,

Of course it’s great to have you here!!! I can only assume though that you were typing your post while I was busy typing my post (the one previous to yours) i.e. in one of those links it’s clearly stated that the spread is only ‘charged’ on buy orders (but as I also noted that’s according to only one website which I cannot personally vouch for).

As far as your comment (Buckscoder) about the different brokers / spreads: my ‘logic’ tells me that if the above is correct and if Investopedia is correct then the bid price will ALWAYS be the ‘correct’ price shown at ANY broker at ANY given point in time i.e. only the ask price will vary according to the spread. But then again: I’ve OVERTHOUGHT this issue today!!! LOL!!!

Put it this way: I’d ‘jump at the chance’ to trade with a broker that deducted the spread from my capital as opposed to ‘including’ it as a part of my open position (JUST AS LONG as it was Deltastock of course i.e. in SPITE of this discussion at least I know my money is safe, my stops don’t get ‘gunned’, and an order gets ‘slipped’ once every six months at most and no this is not ‘cheap advertising’ it’s simply ‘statement of facts’)!!! LOL!!! Hey: maybe I’ve even come up with an ‘marketing edge’ for a broker here (guess which one)??? LOL!!! It would be a kind of ‘paradigm shift’ would it not???

Regards,

Dale.

28

Look I’m being serious here, am I the only one that thinks that you are wasting your time splitting hairs?

You are looking at far too much detail and missing the big picture, I don’t really even consider the spread as such, seriously, have a look at those charts and see how often a pip or two of spread makes the difference.

How often do you have a pinpoint support and resistance?

The market can easily move the spread while you are putting your trade on.

29

No, there is nothing wrong with questions or thinking. Most ppl don’t think about it and might give away some pips.

Anyways, your logic is not correlated with reality in this case. If you watch different price feeds from different brokers you can clearly see that they have different bid/ask spreads and prices. If I compare my brokers, the mean is the most correlated and the bid and ask is the spread what the brokers add/subtract from the mean. So, they don’t just add to ask, they also subtract from bid.

31

Hello,

Well stop being so serious then: I don’t like it!!! LOL!!! It’s ‘unbecoming’!!! LOL!!!

But SERIOUSLY: I’m don’t disagree that ‘a pip or two’ is going to make a big diffrence but I’m not talking about ‘a pip or two’ here and that’s the problem. I’m talking about a spread of say 0.60 on the S&P or a spread of 6 points on the Dow or the spreads on the Nikkei or HSI (as noted previously) or the spreads on USD/ZAR (500 pips) or USD/RUB (1 500) etc. etc. etc. That’s more than ‘a pip (point) or two’ (and that’s before you even start ‘throwing in’ tick sizes and tick values)!!!

Regards,

Dale.

33

Hello AGAIN!!!

Anyways, your logic is not correlated with reality in this case. If you watch different price feeds from different brokers you can clearly see that they have different bid/ask spreads and prices. If I compare my brokers, the mean is the most correlated and the bid and ask is the spread what the brokers add/subtract from the mean. So, they don’t just add to ask, they also subtract from bid.

Well that is indeed another clarification i.e. I just assumed (because of MT4 charts for example) that the spread is ‘varied’ by changing the ask price and the bid price would be the ‘baseline’ (and therefore the bid price at ALL brokers would, theoretically, be the same, at least on the hourly charts and timeframes shorter than that). I guess this all just comes back to one of my FAVOURITE ‘bug bears’ in this business i.e. EUR/USD is trading at x.xxxx and this should be the same price no matter WHERE in the world you are (but it never is)!!!

cubanpip:

Your points are noted. Don’t get me wrong though: I’ve NO problem paying the spread at all. I just think that the entire ‘process’ could be a lot simpler and less confusing is all.

Let’s not forget though (after all of this insightful but possibly superflous information): my question was whether or not to include (add) the spread on any buy orders or NOT to include (add) the spread on any buy orders assuming a bid price only chart!!! LOL!!! At this point: I’m still ‘none the wiser’ (although I’m sure though, after careful THOUGHT, and as I ‘contemplated’ earlier, that you cannot SUBTRACT the spread from a buy order price on a bid price only chart i.e. it would be impossible to place the order espeically when there is a large spread involved).

Regards,

Dale.

34

LOL!!!

No problem cubanpip!!!

Maybe I’m wrong but you don’t seem to me like a long term trader holding your positions for months or years.

You ARE wrong INDEED here i.e. I DO NOT trade on any timeframes shorter than the daily timeframes BELIEVE IT OR NOT (well maybe ‘now and then’ I’ll ‘check out’ the hourly charts but that comes more from sheer boredom than the ‘hope’ of profits)!!! LOL!!! But this little ‘issue’ STILL makes a difference even on these longer timeframes (actually it can EVEN make things WORSE i.e. if you get into a trade prematurely simply because you SHOULD / POSSIBLY have compensated for the (larger) spreads your losses are magnified on a long timeframe because your stop on a trade like this is WAY further away of course)!!!

Regards,

Dale.

36

Good morning,

Sorry for ‘bailing’ last night but I had to get some sleep (I had to SLEEP on this issue)!!! LOL!!!

You (cubanpip2010) ‘got in’ with a response before me on one issue i.e. oddly enough when I awoke this morning I realised how silly my comment was that the price of EUR/USD should be x.xxxx no matter where in the world you are FOR THE VERY REASONS that you have given i.e. the many banks, brokers, and market makers involved. You must forgive me i.e. I always do tend to think in ‘stock market terms’ e.g. I don’t care where in the world you are: Citigroup closed at x.xx yesterday (I don’t know where because I have not checked yet this morning) but I think you understand what I mean. Sorry about that and ‘good on you’ for pointing it out!!!

Another thing I was THINKING about that I fear needs some further clarification (especially for new traders) was that one article (link) that I found yesterday i.e. [I]’[/I][I][B]The good news though is that typically [/B]this spread is only charged on one side of the transaction. In other words, you don’t pay the spread when you buy AND then again when you sell. It is usually only charged on the “buy” side of the trades’. [/I]This statement has nothing to do with going long (‘buying’) or going short (‘selling’) otherwise it would follow that you’d only pay the spread when you went long (or when you closed a short position)!!! When you open ANY position you’re still buying ‘something’ and ‘selling’ something else. I just thought that this needed to be made clear (and I’m assuming everyone agrees with me on my ‘take’ on this)!!! LOL!!!

Now I THINK that ‘overnight’ I’ve managed to answer my own question (it’s amazing what a BIT of sleep can do anyway). I THINK that I’m correct in saying that if you only have a bid price chart available you have to include the spread for any buy stop orders or stop loss orders on a short position and here is my ‘logic’:

Again I’m just going to use the Dow for the purposes of explanation simply because of the price format (and the spread is 6 points).

When you’re looking at a bid price only chart then EVERY price shown on that chart is, of course, the bid price. So let’s say that you are required to go long at the high of bar and the high of the bar in question just happens to be 11 000 (the spread is 6 points as previously noted). With NO spread: you would place your stop order at 11 000 and when it was executed it would be executed at 11 000 and that is where you’d be long or where you’d be stopped out right??? HOW SIMPLE!!! HOWEVER: we DO have to contend with spreads so I THINK that one should see the spread as an ‘extension’ of the bar itself. In other words: the high of the bar that I’m using as an example is NOT 11 000 but 11 006 (the high plus the spread) and THAT is where you would / should place your stop order (here I’m ignoring any additional offset of course but you would simply add that to the sum of the high of the bar in question and the spread).

Not yet convinced??? Read on!!!

If the above does not make sense (or if you don’t agree with me) then think about it in terms of a stop loss order. Let’s assume you’re short and you ‘wish’ to be stopped out at the high of the bar being used in the above example i.e. you ‘wish’ to be stopped out at 11 000. If you IGNORED the spread and simply placed your stop loss order at 11 000 you would IN EFFECT be stopped out at 10 994 (11 000 - 6 point spread) and NOT at 11 000!!! Does THAT make more sense???

I would elect to use only the bid price charts because as I’ve managed to ‘glean’ thanks to this thread that is the price shown on the ticker and therefore is the ‘correct’ of ‘baseline’ price. Sorry Buckscoder: I know this is contrary to the discussion that we’ve had regarding this BUT I’m thinking that your bid prices are not different because of the spreads being varied but rather because of the different price quotes from the various parties involved (as noted as the beginning of this post).

Oh and purplepatchforex: I’M STILL SANE!!! But thanks for caring!!! LOL!!!

Anyway: what do you all think??? Logical or not???

Regards,

Dale.

Edit:

Sorry cubanpip2010: you’ve asked me MORE than once how long I like to ‘hold on’ to trades and I’ve not answered. The answer is anything from a day (but that would only happen if stopped out) to ‘as long as is possible’ be that days or weeks or months (although I’ve not had the privilege of being able to hold on to a position for a month or more yet i.e. I came ‘close’ ONCE on Sugar but was stopped out ODDLY ENOUGH because at the open on a particular day the spread widened and I was stopped out and I never bothered to re-enter which, of course, I regret because Sugar ‘kept going’ for months after that)!!! Typical huh!!! LOL!!! But that was using the Turtle Trading System so it’s not REALLY me that was ‘in error’ i.e. the system dictates that if the previous trade was a winner you ‘skip’ the next signal which is what I did. In this instance: the ‘rules’ didn’t 'pay off!!! LOL!!!

37

You would only do this in special circumstances, either you yourself developed the system and you require the order to go in when the bid price equals the high of a certain bar, or if the system was developed by someone else and they specifically said buy when the bid price equals the high of that 11 000 bar.
If someone else developed the system and they said go in when the price equals the top of the bar they would never mean to enter when the bid price equals the top of the 11 000 bar because that would create too much confusion over the spread, they would always mean enter at 11 000 which would be when the ask price equals the top of the bar.

Not yet convinced??? Read on!!!

If the above does not make sense (or if you don’t agree with me) then think about it in terms of a stop loss order. Let’s assume you’re short and you ‘wish’ to be stopped out at the high of the bar being used in the above example i.e. you ‘wish’ to be stopped out at 11 000. If you IGNORED the spread and simply placed your stop loss order at 11 000 you would IN EFFECT be stopped out at 10 994 (11 000 - 6 point spread) and NOT at 11 000!!! Does THAT make more sense???

When you place the stop loss order at 11 000 on that sell order you would be assigning the stop loss at the ask price, all sell orders close at the ask price so the stop loss would be triggered when the ask price reached 11 000.
At that same time the bid price would, as you say equal 10 994 but remember, although you opened the sell order at the bid price, from that moment on all calculations are done on the ask price, because that is the price to close the order, this is why your profit shows a negative value when you open the order.

With your 6 pip spread it would show negative 6 to start with.

Now, there is a further complication, if you wanted to have a 30 pip stop loss, and your order went in at the bid price 10 070 you have two choices, the usual way is to enter the stop loss at the required level, 11.000 this would means your sell order opened at 10 070 started with the ask price at 10.076 so you are already 6 pips towards the stop loss from the off so then if the price moves another 24 pips your ask price will hit the 11.000 stop loss and take a loss of 30 pips.
The other option is to allow an actual price move of 30 pips to trigger the stop loss, this would mean you need a stop loss actually of 36 pips, you would set it at 11.006.
As you are already at negative 6, if the price would move the full 30 pips you would take a 36 pip loss.
I think overall the spread is at its most significant when considering the stop loss order. This is where the impact of the spread shows the most.

The price has to move a full 36 pips for you to make a 30 pip profit, but it only has to move 24 pips the wrong way for you to take a 30 pips loss.

This may be one of the most overlooked facts about forex trading and the impact this has on profitability for short term/day traders/scalpers is severe.

We had a discussion about this on another thread and I believe I was wrong for what I posted, I am thinking I should find that thread and probably apologise to the original poster because considering all we have discussed in this thread, it appears he was correct in his statements regarding the impact of the spread on day traders, and I was wrong to dispute what he said.

39

Hello again,

Well cubanpip2010: you and I (at least) appear to be ‘on the same page’ i.e. your ‘flipping’ the charts between bid prices and ask prices is the same thing as me simply adding the spread to the highs of the bars on the bid price only chart so (as you’ve noted) you ARE INDEED ‘compensating’ for the spread.

And yes: the wording of that article COULD be a bit misleading hence my ‘additional clarification’.

SDC:

Thanks for the great insight. One thing: my ‘main’ (let’s call it that) trading system is a swing system so my stop losses are also my stop and reverse points so (for ME anyway) they ‘carry the same weight’ as it were.

To explain better: let’s say I have a high with a lower high on either side of this high. This high is my high swing point (alright: there are one or two other requirements for this high to be deemed my high swing point but they’re not relevant here). Now let’s just say that I’ve been short for a while but I would be required to stop and reverse at this high swing point and let’s just say for arguments sake that this high swing point is at the bid price of 11 000. Remember now that I’m looking at a bid price only chart and the high is 11 000. Let’s also just forget about any additional offset here i.e. I want to stop and reverse at the top of this high which as noted is 11 000 on the bid price chart. If I simply place my stop and reverse order at exactly 11 000 I’m going to effectively stop and reverse at the bid price 10 994 (11 000 minus the 6 point spread). However: if I ‘compensate’ for the spread my stop and reverse order would be placed at 11 006 and I would EFFECTIVELY be stopping and reversing at the bid price of 11 000 ‘on the dot’ which is where I wanted to stop and reverse RELATIVE TO THE ACTUAL BAR REPRESENTATION (if that makes any sense). If on the other hand my low swing point was 10 000 and that is where I wished to stop and reverse: then by placing my stop and reverse order at 10 000 and NOT compensating for the spread (because I’m working on a bid price only chart) then I’m going to stop and reverse at exactly the bid price of 10 000 which again is where I wanted to stop and reverse. I guess one thing I’ve not noted here until now is that all of this is not necessarily relative to a certain price i.e. it’s RELATIVE TO THE ACTUAL BAR REPRESENTATION (maybe THAT will clarify things from my end a bit better)???

What’s that thing about ‘a picture’ and ‘a thousand words’??? If you take a look at the charts on the link below you’ll clearly see what I’m ‘getting at’ i.e. on both the Delta Trading and the MT4 charts the little ‘dots’ are POSSIBLE high and low swing points (which would also be stop and reverse points). By not compensating for the spread when placing buy (stop or stop and reverse) orders (on a bid price only chart) you’re in effect getting stopped out or stopping and reversing prematurely by the amount of the spread (well at least this was the whole reason for my starting this thread of course i.e. to clarify this).

Technical Trading Systems: Swing Index System

I have to say though: I’m enjoying this thread immensely i.e. I’ve learned quite a few ‘little things’ thus far that I didn’t know before or had not THOUGHT about before so ‘it’s all good’!!!

Regards,

Dale.

40

No problem on my side! :slight_smile:

Frankly, trading is not an ego business. Whatever works for you, just do it! Even I wrote that I use the bid usually. Only exception would be my scalper, because I like to have the same space between entry and sl short and long side. Plus it shows in backtest it is better so far for this system.

Plus I can see the brokers feeds. While I do have not all brokers feeds, of course.

As you for sure know and I as well, there is no holy grail. Some make money with bid, some maybe with other bid and some maybe with mean or ask prices. The best circumstances however would be those where the spread is not really an issue and that is what I am used looking for. :wink:

42

LOL! Thats no psycho babble. That’s a truth. :wink:

Psycho babble is when you talk to yourself that you are such a cool, great trader oh my holy cow and year after year your shrinking or blown account(s) show the truth that you are anything but. :smiley:

44

I see, we are on the same page! Anyways, if you look at those psycho books, there is a lot of psycho babble that you even could become a tree if you speak long enough to yourself that you are a tree, lol.

Frankly, hard to meet anybody who doesn’t lie to himself in one or another case. If that goes to trading, he lost before he made the first trade.

We here in Europe had one of this nlp guys running around. You could see him in all glory and praying for those self motivation things. You can become what you want, he said. 10 years later he lost everything and was the poor guy he was before those marketing campaigns pushed him. Obviously his psycho stuff worked not for himself.

Happy trading! :cool:

45

Thanks mate, still working on my code

carry on;
iteration until;
end of dosh#

or more BASIC

10 CASH=UNKOWN
20 DO UNTIL NOWCASH>THANBEFORE
30 ADD CASH to Accumulator (machine code)
40 REAPEAT UNTIL

Hope that helps, let me know if you want it in Pascal.

46

Spreads are the name of the game in forex unfortunately…

That’s where the brokers make their money obviously…

Hence, if the broker is making money, that means that you are losing money.

Therefore, you should want to lose as little money as possible.

Therefore you should “shop” brokers…

I would suggest ECNs but, to each his own.

47

Hello AGAIN!!!

Are you sure there are not ‘syntax errors’ in that code above??? LOL!!!

Zs Apprentice:

Thanks for posting. The ‘issue’ though was more where to place orders than the amount of the spread or commissions payable really. Deltastock is an ECN/STP broker anyway so on forex I can sometimes get spread as low 0.01 on EUR/USD (as an example) but that was not the point i.e. it was whether or not one should include the spread (compensate may be a better word) when entering order on a bid price only chart or not. I THINK (HOPE) we’ve ‘sorted it out’ anyway!!! LOL!!!

Regards,

Dale.

48

Sorry, what was the question again? :smiley:

Yes it’s officially Silly Season here, Break Time till next year, it’s such a hard life being a trader.