Charts on the bid can mislead, and a mid-price chart is a better reference
Posted: Fri Oct 30, 2026 9:39 am
Charts on the bid can mislead, and a mid-price chart is a better reference
Most platforms plot the bid price. For indicators and pattern recognition, this introduces a bias, particularly when the spread varies.
When the spread widens, the bid stays where it was while the ask jumps up. A chart on the bid shows nothing. A trader looking at the chart does not see the cost change.
A mid-price chart, plotted halfway between bid and ask, reflects the market's centre. It moves when either side moves. Signals derived from it are less affected by spread changes.
Some platforms allow plotting the ask line alongside the bid. A few offer a mid-price calculation through custom indicators.
For analysis of microstructure, the mid-price is cleaner. For testing a strategy, the actual bid and ask must be used in execution logic, because the trader pays the spread.
Seeing both lines together on a live chart for a few days is an educational exercise. The way the gap breathes through the day becomes obvious.
How different do the chart signals look when computed on the bid, the ask, and the mid-price?
Most platforms plot the bid price. For indicators and pattern recognition, this introduces a bias, particularly when the spread varies.
When the spread widens, the bid stays where it was while the ask jumps up. A chart on the bid shows nothing. A trader looking at the chart does not see the cost change.
A mid-price chart, plotted halfway between bid and ask, reflects the market's centre. It moves when either side moves. Signals derived from it are less affected by spread changes.
Some platforms allow plotting the ask line alongside the bid. A few offer a mid-price calculation through custom indicators.
For analysis of microstructure, the mid-price is cleaner. For testing a strategy, the actual bid and ask must be used in execution logic, because the trader pays the spread.
Seeing both lines together on a live chart for a few days is an educational exercise. The way the gap breathes through the day becomes obvious.
How different do the chart signals look when computed on the bid, the ask, and the mid-price?