Bid/ask spreads on IB

Discussion in 'Forex' started by nooby_mcnoob, Jul 24, 2019.

  1. Is there a way less likely to have issues than this approach:

    upload_2019-7-24_16-6-23.png
     
    #11     Jul 24, 2019
  2. Look at you clever little fucks... You were right

    upload_2019-7-24_22-53-53.png

    upload_2019-7-24_22-54-25.png
     
    Last edited: Jul 24, 2019
    #12     Jul 24, 2019
  3. tommcginnis

    tommcginnis

    :wtf: :D:D:D :rolleyes:

    (That cracked me up...)

    But to clarify, these 'thicker' tracks -- are they the whole set of your prior graphs now represented on the single graphs? (Just not 100% clear.) And is "Bid/Ask Size" the spread? (Again, just to make 100% clear.)

    If so, I'm glad -- but maybe almost surprised -- that they track *so* closely: I would've thought a bit of room for arbitrage between markets/news/events. But certainly (and especially with foreign exchange), everyone else thinks so, too: no arbitrage. (Or at least, no visually discernible room for it. :()

    It's three days worth of data, but there doesn't seem to be a systematic relation between trade volume and spread size. There appears a possibility of an inverse relationship, given the drop in volume and the jump in spread-size, but I'd want to see it through many more days and to be much smoother than it is, before I offered a hypothesis on it. (What's above a 'hypothesis'? A sur-hypo-thesis? How do you say "Straw man" in Greek? 'Notion?' I dunno.)

    Anyway, "Nice stuff!" Nice work. :thumbsup::thumbsup::thumbsup:
     
    #13     Jul 25, 2019
    nooby_mcnoob likes this.
  4. I should be clear, I converted ONLY the spread into common units. I left the bid/ask size as is. Bid/ask size graph is literally how many units of the pair were to be bought/sold.

    So I converted the spread according to the following:

    Code:
    ['NZDCAD', 'NZDCAD/NZDUSD', 'USDCAD'] # going from NZDCAD -> USDCAD
    ['EURCHF', 'EURCHF/EURUSD', 'USDCHF', 'USDCHF/CADCHF', 'USDCAD'] # going from EURCHF -> USDCAD
    
    And I left the sizes the same since they would now be in units of USDCAD. Also, I did not use variable factors, I just computed the factors once using the first midpoint for each pair.

    That should be fine, right?

    These are the same graphs as before, but converted using the above algorithm.
     
    #14     Jul 25, 2019
  5. The USDCAD chart should make it clear. You can see that the tracks are much stronger for USDCAD but they are similar to the converted charts.
    upload_2019-7-25_9-13-29.png
     
    #15     Jul 25, 2019
  6. tommcginnis

    tommcginnis

    Your original post sought ideas/explanations about a relationship between bid/ask spreads and trade volume. You introduced "size" without defining it, so I'm unclear on the question.
     
    #16     Jul 25, 2019
  7. Oh no, my initial question was why were certain spreads so regular while others were not!
     
    #17     Jul 25, 2019
  8. I don't really understand what you're saying
     
    #18     Jul 25, 2019