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Bid vs. Ask price when counting "ticks" ?

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nanquan 2012.02.07 01:48
 

As I understand it, Bid price is the actual market price, while Ask price is an artificial price which is determined by each broker for either Opening or Closing an order (creating the 'spread').

My question is, what constitutes a "tick" ? i.e. a tick is the point of incoming price change. When I want to save X number of ticks in an array, sometimes you have a situation where only Ask price changes while Bid remains the same. So basically the market price hasn't changed, and yet it will still trigger the special function 'start()'.

So does a change in Ask price really constitute as a "new tick" if the bid price hasn't really changed? Should I just skip these "Ask only" ticks and not count them in when wanting to save "new tick" information inside an Array?

What do you guys think?

Thanks! :)

 
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ubzen 2012.02.07 02:23 #
 

Bid price is the actual market price.________No.

My question is, what constitutes a "tick" ?_____incoming price change.

So does a change in Ask price really constitute as a "new tick".____Yes.

Should I just skip these "Ask only"________Do you have a Trading Platform which can read Ask?

Mt4 data is Bid only for all practical purposes.

The Bid is the Actual Price - Spreads, The Ask is the Actual Price + Spreads.

The Actual Price is whatever the Broker is quoted from her Inter-Bank dealer.

Dealing Desk/Market Makers do-not always have even distance between Actual_to_Ask vs Actual_to_Bid. They can make the spreads heavier on one side to encourage opposite action, limit their exposure, example...everyone wants to sell during a news ... the bucket shop could make the distance from actual to bid much wider.

Inter-Banks have spreads too, they're just much smaller than the retail rates.

If you have a platform which could utilize the Ask, then saving them would be helpful as such a platform could simulate variable spreads easier, and be much closer to reality.

 
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nanquan 2012.02.07 16:36 #
 

Hi Ubzen,

Thank you for taking the time to reply to my questions.

Yes, I understand what you are saying with regards to Bid/Ask. I just meant in terms of practical considerations if analysis should be made mainly off of Bid price, or Ask, or Both, but of course it depends on what your purpose is, so I thought it over and decided that Bid was more relevant for the type of calculations which I want to make.

I'm curious however, what did you mean when you asked if I have a platform which could utilize the Ask price? Isn't 'Ask[i]' a standard series array in MQL4 and thus MetaTrader 4 (i.e. the platform)?

Thanks!

 
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RaptorUK 2012.02.07 17:14 #
 
nanquan:

Isn't 'Ask[i]' a standard series array in MQL4 and thus MetaTrader 4 (i.e. the platform)?

Thanks!

Nope . . . not as far as I know it isn't . . . maybe I'm missing something.
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ubzen 2012.02.07 17:34 #
 
The list of Array-Time Series are Time[], Open[], High[], Low[], Close[], Volume[]. I'm not aware of a Ask[]. The OHCL are Bid only. In the back-tester the Ask is generated as Bid+Spreads. On live charts, the Bid/Ask comes from the Broker. No where within mt4 can you reference the Ask of say 3 bars ago. If you're saving them, then you must be ready to built you own environment around your own arrays. Example: instead of having your indicators read the standard arrays, you instead will need to have the indicator ready your arrays.
 
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dabbler 2012.02.07 21:54 #
 
nanquan:

As I understand it, Bid price is the actual market price, while Ask price is an artificial price which is determined by each broker for either Opening or Closing an order (creating the 'spread').

No. Both Bid and Ask are actual prices to you the retail customer. A change on either or both constitutes a tick. During news events it is not uncommon for only one to move during one tick. In ordinary market conditions they both typically move together to maintain the spread.

Spread = Ask - Bid

To say there is an "actual price" with half the spread to Ask and half the other way to Bid is perhaps a nice way to think about it, but it is also an unnecessary consideration.

 
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flaab 2012.02.13 18:49 #
 
If you are going long, you should calculate risks and TP using the ASK price. If going short, use BID price.
 
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WHRoeder 2012.02.13 21:34 #
 
Wrong. You buy at the Ask and sell (stop) at the Bid. The TP and SL must be relative to the Bid. If you have a 2 pip spread and put the SL 3 pips below the ask, it triggers if market drops by 1 pip.
 
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