WelchCandlesticks_v2 - MetaTrader 4 Script - MT4/MT5 Resources

The basic candlesticks built into MetaTrader 4 have a fundamental and potentially devastating flaw. They never show you the ask line, and they never save that ask in history. This situation may become more complicated when/if the broker chooses to send bid data to your MetaTrader 4 as an "average price" calculated from the average bid and ask prices. I know of one agent who does this, so I can imagine more than one.

In MetaTrader 4, candlestick calculations are based on bid data. To view the current ask price, you need to check "Show Ask Lines" in the chart properties. It's important to see the Ask prices when placing Stop Loss.

To see the situation in a live chart and get the full effect, I recommend opening the 1M chart: Open a blank chart -> Open chart properties -> Change the chart style to Candlestick -> Then make sure "Show Ask Lines" is activated.

You will immediately see a red line pop up on the chart. Observe this red line, it will not have any impact on the candlestick's construction unless/until someone actually buys at the asking price.

This ASK price is valuable in determining a stop loss. If you find that the ask price is consistently higher than the historical price (or well above the historical price when the spread increases), you can set your stop loss more accurately when entering new trades.

How to remedy this? Unfortunately, there is no way to resolve past issues without creating an offline chart containing the data, as historical data on the chart does not save the ASK, only the BID.

BUT, there is a way to remedy this on a live chart. The first method is the one I've already shown you. The second way is to where WelchCandlesticks_v2 comes into play.

When you add this indicator to your chart, it will build all new candlesticks with spread data as part of the candlestick WICKS. This does not affect OPEN/CLOSE/LOW, only HIGH. (The bids are always low so it doesn't affect this, that's why I only put stops on sell trades because they will reverse and the spread will go up, taking me out before I can see it happening and close my position... The automatic way to fix this when you're not looking at the chart is to always watch the ask price and calculate the spread and whatnot, but I'd like to visually see when I'm getting cut out of a trade so I can better understand why...)

Below you will see 2 charts. One is a regular candlestick and one is my candlestick. You should be able to easily spot the Lime Line, which is where the spread is above the candlestick high telling you...

This is today’s AUD/JPY (2014/08/25)

There’s also a chart showing a huge spike in spreads not long ago before prices fell further…

I've been using this for the past few years now with good success. It's just something that I've found gives me a slight edge in the grand scheme of things. It's not an overnight money maker, by any means, and in fact it won't make you money at all! But it should at least help you visually see when your broker is changing the spread, and since now it's reflected in the candlestick pattern, you can use it to set your stop loss more accurately without getting kicked out of the trade when the trade might just challenge the price before making a big move in the direction you originally placed the trade. :-)

Attachment download

📎 welchcandlesticks_v2.mq4 (5.88 KB)

Source: MQL5 #11745