This indicator was one of a kind and was clearly made for a professional. Because market makers widen the spread when a large lot appears on the market. In this way, they reduce their losses, because the market maker is obliged to execute the Forex contract for his own money if there is no counterparty. When watching the spread, you can forget about using volumes, because an increase in the spread makes it much easier to see the appearance of large real volumes.shaileshm wrote: Mon Apr 20, 2020 2:57 am Spreads are something which every pro trader looks at and almost no rookie bothers about. Does this information conveys anything to you?
Today we look at the spread monitoring indicator. This indicator plots the minimum, maximum and the average spread on each candle. Since the spread data needs to be collected in real time, the indicator may not be suitable for higher time frames.
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How to evaluate the spread info?
Think of a situation where you buy a product from a shopkeeper at price X. But the very next moment you decide you dont need the product anymore and want to return it back to the shopkeeper. The shopkeeper however is interested to pay you back only a amount Y. (which will usually be a bit smaller than X). Spread is the difference X-Y
What does the spread aka difference X-Y tells you the market situation of the product? What does it mean when spread is large? What does it mean when spread is small?
Think about the four situations below and what it tells you about the market.
- large volume small spread
- large volume large spread
- small volume small spread
This is known as the volume spread analysis (VSA). When you are convinced about the answers to above situations then maybe you have just started to think like the pros. All the best!
- small volume small spread
For me, they once made an addition to this indicator using which you don’t have to keep the main indicator on the chart. The add-on will record the spread readings independently and at any time you can turn on the main indicator and see the entire accumulated history.
Moreover, you can specify in the settings the spread value at which a signal will appear on the chart when the spread exceeds the specified value. The only difficulty is that you cannot change the size of the indicator signal. Maybe someone can fix it?
Well, that's 21 minutes of