Hello,
You’ll have to stop this thinking, can you not see what it’s doing to you? I’m getting worried
‘Many a true word spoken is jest’!!! It’s like ‘here we go again’!!! LOL!!!
Never stop thinking.
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!!!