I have been fascinated with FX market maker bid/ask spread and understanding what happens inside the spread, since I first understood how a market maker makes money
Thanks to modern technology and computing power, we now have the unique possibility to monitor market maker activity inside the bid/ask spread and it is quite astounding what it can reveal to us about the intentions of the market maker
Join me, as I take you inside Pitview and explain to you how finally, after over two years of analysis and a period of total rejection, I discovered how we can read market maker intentions using Pitview and gain an edge of hours, sometimes even days prior to the start of a move
Market makes bid/ask spread, what is it, how does it work and how can we understand it to better enhance our own trading skills?
Lots of questions, lots of scope for confusion and misleading or even misguided information on blog posts written by people who have scant understanding. A complicated subject? Not really, so let's get going.
So what is the bid/ask spread and why is it so important?
Many traders do not realise that Forex is a decentralised market place, made up of a myriad of Tier 1 banks, large financial institutions, specialist hedge funds and trading houses which together form what we know as the 'market' and it is they that offer permanently 24 hours a day 5 days a week two way prices, bids and offers, on the currency pairs traders are looking to trade.
Each bank or institution quotes to the market place the price he is willing to buy or sell at and the quantity he is willing to trade at that price.