Keeping an eye on the spread

[apresau]

Monitoring the spread is important.

 

If you scalp trade, you need to know when to trade i.e. what times have low spreads.

 

If you are looking for a broker, you need to know if the spreads are consistent.

 

If you get stopped out by a spike with exceptionally high spread, you need a record of that event to put your case to the broker.

It happens - check out this image http://www.4shared.com/photo/RNvsV1Du/gbpusd_m15_-_30-11-10.html

See the spike in the spread? Notice that the time (GMT+2) was not during a low liquidity period?

If you'd entered short in the previous bar with a 30 pip TP, you would have successfully exited the trade with a substantial loss.

I actually contacted the broker about this particular example. They confirmed the spike by going through their tick data history. This took a fair bit of time (there are a lot of ticks in 15 mins), so it's better to show them a 1 min screenshot.

 

Now for the nuts and bolts.

I wrote the simple indicator in the image to monitor the spread. The red histogram is the spread at the bars' open and the thin yellow histogram is the maximum spread. (you'll notice on some pairs that the opening spread is substantially lower than the maximum)

 

Keep in mind that Metatrader keeps no spread history, so the indicator builds up bar by bar.

If you refresh the indicator or change timeframes or turn off the chart, the indicator will clear itself and you'll be back to square one.

 

The indicator shows real pip values, so that 30 pips in a 5-digit chart reads 3.0 as it would in a 4-digit chart.

 

The best way to use the indicator would be to run it in the chart that you're trading (this would alert you to a pip-spike event) and run it on a separate 1 min chart as a reference in case you need to take a screenshot for your broker.

 

The indicator is here http://www.4shared.com/file/RrcCGsGG/Spread_Histo.html

 

 

note to moderator - not sure if this is in the right section

could you please move it if it's not

Thanks

[mtuppers]

I don't know u guys but.. thanks for this thread anyway.

 

if you are scalper why not just using status monitor 1.2 below is a link on 4shared

 

reason is you do not need to know the pass of the spread, because no use for it. and status monitor give you the current spread you need to know.

 

hxxp://www.4shared.com/file/lVw_lu0b/Status_Monitor_V12.html