Hi there.
I am very confused by this concept.
So a day ago I shorted a EURNOK gap and set the TP. The price of my tp was reached, but the TP was not triggered.
When I inquired about this I was told that the ASK price did not reach my TP.
So from my understand the ASK price (or the spread difference) must reach my tp and if only the target price ( price on the chart ) reaches my TP it will not be triggered.
If this is correct, that means I have no way of know my TP will actually get triggered, beacause if the price on chart reaches my TP, but the ASK price just simply increases ( due to market opening/closing or w/e) my TP wont get triggerer and I might wake up with a loss.
The ask price is the price at which you open a long position or close a short position. Charts normally show the bid price, which is always lower.
Some charts can be re-set to display both ask and bid price at the same time and this allows you to see the spread between them. Otherwise you must watch the price quotes. Either way you can see that the spread can vary continuously and enormously.
I have beentrading forex for 2 years and I never knew this. It seems very illogical that I can set a take profit, but it might not get triggered if the actual price hits it, but the spreqd increases…
It can happen that the ask price spikes past the TP level you have set and falls back very quickly. Some brokers’ systems will not execute the order if the market has not traded at the ask price you set. Others will only execute the order if that price is not just touched but rests there for a few seconds at least.
You can check how your broker works their platform by watching the bid/ask quotes and their live chart simultaneously. You will very quickly confirm the ask price does not have any impact on the chart. Also that sometimes the bid price spikes up or down to a certain level but the chart display does not respond. On a very liquid market like one of the major pairs watching at a busy time you will notice this within just a minute or two.
The bid-ask spread is always going to be a risk, but with a reputable broker it is unlikely that your TP is often going to exactly match the high/low of the actual market price and be right in the middle of the spread as well - but it can happen, especially at times like weekend closing or prior to important mkt releases when spreads generally are wider. And it is worth watching your trade during these times if you TP is near the market price.
Also, the “market price” is not a universal price and varies between various brokers depending on where they source their price data. I don’t know much about that but I follow three broker charts and they often have marginally different traded prices, for example, for the HLOC on various candles.
There is also the suspicion of broker manipulation but if the broker is a reputable and regulated company then it is unlikely.
Wow okay, this is a shocker. I did not know this and quite frankly it does not make much sense to me for this to be implemented this way…
This might be the reason why I quit trading, which is a shame as I have just recently developed a winning strategy… oh well.
I simply cant stare at the price movement 24/7… shame honestly
Spread is less of an impact on higher time-frame trades. The TA chart features which you might use will also be more reliable. A good bonus is that the extra time margin you have allows you to identify confirmation price action, improving your win rate. You should also be able to set entry orders in advance rather than entering live.
Many traders avoid volatile times of the week, when spreads can go crazy - especially the start of the week’s trading. Also the hours before and after expected news announcements. Many also avoid holding through or having pending orders set through the Asian session.
What exactly is this TA chart feature? Is it available on cTrader, because that is where I make my analysis.
I guess these could be defined as simple workarounds, but they dont help me when trading gaps. I put in alt of effort into identifying different gaps and that strategy is not viable anymore now that I know this fact.
Why would this be necessary? In normal circumstances you would very rarely find that your TP is just one pip away from a market turning point and right in the middle of a bid/offer spread. Ok it may occasionally occur but certainly not enough to require 24/7 screen monitoring?
I could add that I have been trading for decades and as a day trader and I have never had this situation occur even once! Certainly, sometimes price has failed to reach my target by a few pips but never has it failed mid way between bid/offer as the market turned…it is possible but surely not enough to decide trading is not worthwhile.
Maybe your broker is not the best choice and spreads are wider than generally in the market. That may be the case with an off-shore firm… worth checking.
By chart feature I just mean patterns or lines that you might see the chart showing. For example patterns like head-and-shoulders, double tops, engulfing candles, support/resistance levels, trend-lines etc. These features are only important because of our interpretation of them. And those interpretations are less and less reliable as you come into shorter and shorter time-frames.
Actually, thinking about it, this is not a pair that I trade but I think the spreads on this kind of instrument are much wider than with the common majors and crosses. So that may well be the issue here…
Edit: If I recall right then @dushimes has some experience with this pair and may have some thoughts on this issue…
Not a real risk with regulated brokers, it is not worth their while attracting bad publicity for minimal reward. Besides, with most regulated brokers who are obliged to publish their clients’ success rates, the failure rate is about 70-80% anyway! In other words, they gain from the clients without any need to cheat them!!
But off-shore, unregulated, or superficially regulated, brokers are possibly harder to analyse. Traders may use them due to the larger leverage availability and have no problems at all. Some off-shore firms are subsidiaries of bigger, intl firms and I would think these are ok. But there are others that are not so easy to justify!
But surely that is exactly the point here? If the pair has a wider spread than normal then there is a bigger risk that your TP will not be hit by the respective bid or ask price. The market has to move that much further for the bid/offer to hit your order than with normal spreads.
Hello! You’ve brought up something really important. For your TP to work, it needs the ASK price to match your chosen level. So, it’s crucial to watch out for the difference in prices and also keep an eye on any changes in the market to make sure your trade goes as planned.
I really love trading the Kroner. They move so wonderfully. However, the margin requirement might be really high. Much higher than majors. The spreads are quite reasonable.
My favourite was the Danish kroner, DKK.
In @Osoarrogant’s question, though, I think it’s just a matter of switching buy/sell views. If you went long, the buy price may have reached your TP, but the sell price didn’t. It can be quite deceptive.
What I do, whenever looking for or setting potential TP zones, or resistance zones, I switch to the sell view. For support zones, I do the opposite and look at the buy price.
It sounds tedious to switch buy/sell views all the time, but it can make a big difference.