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The Sell Price and the Buy Price

The Sell Price and the Buy Price

Thomas Long, Course Instructor

The buy price is higher than the sell price, but the fact that the charts usually only show the sell side price can be the cause of confusion for traders who are not aware of this.  One of the advantages of using the MarketScope charting package that comes with the FX Trading Station II is that you have access to both prices.  Below is a chart of the EUR/USD.  You will notice that there is a choice of whether to choose "B" or "A".  The "B" stands for Bid, which is the price at which you can sell this pair.  We can see that the the sell side price high of the EUR/USD candle noted was 1.35978. 

eurusd1 030210

Many traders who sold this pair earlier and placed their protective buy stop at 1.3599, would assume that they would still be in the trade.  When logging back into their FX Trading Station II, they are surprised to find out that they were indeed stopped out of their trade, and at a price higher than the high shown on this chart.  This second chart explains why.

eurusd2 030210

This chart shows the same time period of the same pair and notes the same candle.  The difference is that I clicked on the "A" which means that the chart will show the buy side prices.  Remember that if you sell to open your trade, you will buy to close it.  We can see that the buy side high of this same candle was 1.35999 which explains why the trade was stopped out at the 1.3599 level.  The difference between the sell side price and the buy side price is of course, the spread.

So whenever you are buying with the use of an entry order or exiting with a buy stop order or a buy limit order, remember to use the buy side prices on your chart.  There are not many charting packages which give you this option, but the free MarketScope charting package does, which shows just how valuable these charts can be for traders at FXCM.



DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.