Why are forex candles made from the offer?

jacknapier

jacknapier

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Why are forex candles made from the offer? As opposed to from trade data? Do some brokers let you see trade data?

It seems to me that things like volume of offers/bids is completely meaningless.
 
Anyone? I'm guessing that it's a function of the fact you are buying and selling two non-tangible things at the same time.
 
All of those things are very important! Just because its not tangible does not mean it doesn't exists. Somethings that work for one trader will for another. i hope this helps with some of your questions.

The daily candlestick line contains the currency's value at open, high, low and close of a specific day. The candlestick has a wide part, which is called the "real body". This real body represents the range between the open and close of that day's trading. When the real body is filled in or black, it means the close was lower than the open. If the real body is empty, it means the opposite: the close was higher than the open.
Just above and below the real body are the "shadows." Chartists have always thought of these as the wicks of the candle, and it is the shadows that show the high and low prices of that day's trading. When the upper shadow (the top wick) on a down day is short, the open that day was closer to the high of the day. And a short upper shadow on an up day dictates that the close was near the high. The relationship between the day's open, high, low and close determine the look of the daily candlestick.

The bid is the price at which the market would buy the currency pair (before any commissions or fees), the
offer (or ask) is the price at which the market would sell the currency pair (before any commissions or fees).
 
fxmade2trade said:
The bid is the price at which the market would buy the currency pair (before any commissions or fees), the
offer (or ask) is the price at which the market would sell the currency pair (before any commissions or fees).
Click to expand...

FXCM is my broker and I'm using Trading Station 2. There are bid/ask buttons. When I switch between them, there are two different candles. One chart shows the bid candles, and the other shows the ask candles.

In equities, you have bid/ask as well. But you also have the last price that an equity was traded at. But you do not have a last price in Forex. Why is it that there is no last price? That's what I'm asking.

For example, the USD/JPY right now has bid price of 102.581 and an ask price of 102.605, but there is no way I can see what the last price of the last trade is.

In forex, you are converting one currency into the other. From dollar to yen and back again. In stocks, you're buying a share then selling a share. I believe I'm not understanding the fundamentals of the transaction process in forex. Equities it is simpler because it's something physical(you used to be able to buy paper shares.) But these currency transactions remain something of a mystery to me. I could go downtown and there's a store where I could trade my physical dollars for physical euros or whatever other currencies they have. But this does not solve the mystery of the non-existent last price.
 
jacknapier said:
FXCM is my broker and I'm using Trading Station 2. There are bid/ask buttons. When I switch between them, there are two different candles. One chart shows the bid candles, and the other shows the ask candles.

In equities, you have bid/ask as well. But you also have the last price that an equity was traded at. But you do not have a last price in Forex. Why is it that there is no last price? That's what I'm asking.

For example, the USD/JPY right now has bid price of 102.581 and an ask price of 102.605, but there is no way I can see what the last price of the last trade is.

In forex, you are converting one currency into the other. From dollar to yen and back again. In stocks, you're buying a share then selling a share. I believe I'm not understanding the fundamentals of the transaction process in forex. Equities it is simpler because it's something physical(you used to be able to buy paper shares.) But these currency transactions remain something of a mystery to me. I could go downtown and there's a store where I could trade my physical dollars for physical euros or whatever other currencies they have. But this does not solve the mystery of the non-existent last price.
Click to expand...

hmmmm I don't think your system is set up properly
 
jacknapier said:
In equities, you have bid/ask as well. But you also have the last price that an equity was traded at. But you do not have a last price in Forex. Why is it that there is no last price? That's what I'm asking.
Click to expand...

Hi Jack,

Last price is something used with exchange-traded products such as equities and futures. Since spot FX is traded over-the-counter with multiple liquidity providers around the world, it's unusual for a forex platform to display last price.

jacknapier said:
Equities it is simpler because it's something physical(you used to be able to buy paper shares.) But these currency transactions remain something of a mystery to me. I could go downtown and there's a store where I could trade my physical dollars for physical euros or whatever other currencies they have.
Click to expand...

Something that might help you in conceptualizing currency transactions is to keep in mind that the base currency on the left is being priced in terms of the counter/quote currency on the right. When you trade GOOG or AAPL the shares are priced in US dollars just like the AUD/USD currency pair. The USD/JPY currency pair is priced in Japanese yen, but so are all the companies listed on the Tokyo Stock Exchange.
 
Jason Rogers said:
When you trade GOOG or AAPL the shares are priced in US dollars just like the AUD/USD currency pair. The USD/JPY currency pair is priced in Japanese yen, but so are all the companies listed on the Tokyo Stock Exchange.
Click to expand...

Thanks, that's a good way of looking at it. I was mainly asking because it seems unclear where I should put my entry and which chart(bid or ask) I should look at when entering the trade.
 
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