Price alerts that trigger on the bid and why short entries miss them

[Fairman]

Price alerts that trigger on the bid and why short entries miss them

MetaTrader charts show the bid price by default, and most alert functions in MT4 and MT5 trigger on the bid as well. That's fine for buys at support, but it creates a small trap for selling at resistance.

Say you set an alert at a resistance level and plan to sell there with a limit order. The alert triggers when the bid reaches the level. Your sell limit is filled at the bid, so that part matches. But if you place a buy stop above resistance to catch a breakout, it fills at the ask. The ask reaches the level before the bid does, by the size of the spread. So the alert fires later than your order would have filled, or your order fills earlier than the chart shows.

It also works the other way. Stops on short positions are triggered by the ask. The chart's high may never touch your stop, but if the spread widened, the ask did, and you're out. People look at the chart and swear price never got there.

The fix is to turn on the ask line in the chart settings and set alerts with the spread in mind. For short trades and buy stops, place the alert a little below where you want it, by the typical spread. It's a small detail, but at scalping distances a 1 pip spread can be a third of the stop.

[FXS HongKong Scalper]

The buy stop on a breakout is where the bid alert catches people most. A simple fix in MT5 is to write a small script that checks the ask against the level and plays a sound, instead of using the built in alert. On TradingView it is harder, since the chart data is the last trade or the bid depending on the source. I usually set the alert a spread below the level for any order that fills on the ask. On thin hours in Asia, when the spread on crosses can be two or three pips, that adjustment matters more than in London.

[Fairman]

Third party alert tools and charting sites can be worse here because they often show a mid price or a different feed. An alert from a charting site might fire when your broker's bid is still a pip or two away. If you use external alerts to time entries, compare their price with your broker's for a few days. A consistent gap tells you how much to adjust the alert levels. It doesn't take long. Put the external alert and the broker chart side by side during a normal session and note the difference at a few moments. If it's steady, the adjustment is a simple fixed offset added to every alert level.

[Fairman]

MT5 lets you choose whether a chart is drawn using bid or last price for some symbols, and some brokers set this differently for futures based instruments. So check the chart settings for each symbol you trade, because an index or commodity CFD might be drawn differently from the FX pairs on the same account, and alerts follow whatever the chart uses. Indices are the usual case where this differs. Look at the chart properties once per symbol, then you know which price your alerts and chart highs actually represent and can plan entries accordingly.

[Fairman]

During news or rollover, when spreads widen, this effect becomes much larger. An alert on the bid at resistance can be completely out of sync with where the ask is. I disable alerts or treat them as unreliable in those windows. They're tools for normal liquid hours. Relying on them during spread spikes just leads to confusion about what triggered and what didn't. Spreads can be five or ten times normal in the minutes around rollover. An alert set a pip below resistance means nothing when the spread is three pips wide. I simply don't trade from alerts during those windows, and the platform's own alert sound gets turned off at rollover.

[Fairman]

For anyone writing their own alert code, store the spread at the moment the alert fires. Then when you review alerts that didn't lead to a good fill, you can see whether the spread was the reason. Most of the time when an alert looked right but the trade went wrong, the spread was wider than usual at that exact moment, and the alert didn't account for it. Storing the spread also helps compare brokers. If one broker's alerts consistently fire with wider spreads at the same levels, that tells you something about its pricing around the times you trade.