While many bid/ask price spreads can be narrow or wide based on your source costs, the mid-price is usually very similar across sources. This means that selecting the correct price in your analysis is crucial for your strategy. Of course, doing this manually would be practically impossible, but there is software that helps you work with FX bid/ask and mid-prices through automated strategies. Here, our experts explain how this could change your business performance, especially if you’re a systematic trader.
How to Manage Different FX Prices in Your Strategy Feed
If you trade equities or futures, then chances are you run historical analyses based on executed prices. Yet when trading Spot FX, there is no single trade price available; there’s only a time series of bid/ask prices which can differ depending on the source.
Even more annoyingly, when the market has wide spreads due to low liquidity (such as overnight) or fast market conditions, the risk of producing inconsistent analysis increases, which results in many systematic traders experiencing false signals.
But this is exactly why it’s beneficial to run FX analysis using mid-prices; an action that can help minimise the impact of spread costs which can otherwise skew your trading cost analysis.
Unfortunately, however, this has been missed by many charting software packages, which only display bid prices. As a result, many traders base their analysis on these alone, which obviously introduces risk. Thankfully, our software fixes that.
Using FX Bid/Ask and Mid-Prices in CYBMIND to Trade Better
While not many software platforms offer the option of working with FX bid/ask and mid-prices, having this flexibility can make a world of difference to your overall investment strategy return. And it’s with that in mind that we created CYBMIND, our investment strategy wizard.
CYBMIND has been created specifically to help traders perform better, offering you the flexibility to apply bid/ask and mid-prices to your FX strategy, because while mid-prices provide clearer, more consistent results, the bid/ask prices are still necessary for execution.
In fact, CYBMIND gives you access to three time series in real-time:
- the top book bid,
- the top book ask, and
- the mid-price.
By simultaneously working with these three different time series, you can fine-tune your order triggers and target prices. You can also make comparisons between back-testing and real-time behaviour to show more consistent results.
This, in itself, gives you better, more accurate data on which to base your decisions. So, if that is something you’d like to work with, get in touch with us and discover how our software can help you trade better and improve your efficiency.