All indicators and price levels in spot forex are always based from Bid. If we place a SL at the low of a bar for a long position and we also place a stoploss at the high of a bar for a short position, then the long position SL will trigger when the bid reaches the low as expected but the short position will trigger the SL slightly before the bid gets all the way to the high. Why? Because the short position SL is actually triggered by the ASK price. This bias is exacerbated at lower timeframe bars where the spread becomes a larger portion of the size of the smaller bars.
Therefore, some orders need this bias counted for:
-any time the stop order is based on an indicator or price level that was solely calculated from the bid prices AND that stop order is going to be triggered by ask. Such as a SL placed at or trailed to the high of a bar for a short position. Also, stop entry orders for long positions placed at any price level calculated from BID. In these cases we need to add the spread to the order level.
-anytime the stop limit order is based on an indicator or price level calculated from bid prices AND that stop limit order is going to be triggered by ASK. Such as a stop limit order for a long position entry or a stop limit TP for a short position based on indicator or price levels calculated from bid. In these cases we need to add the spread to the order level. (or subtract the spread from the opposite orders but not both!)
Some times you do not need to account for it are:
-any time you have already accounted for it or any time you are entered at market AND the SL and TP are based from the entry level, such as entered at market (or entered with stop order or limit order with the spread already accounted for in it’s trigger point) and SL or TP set to 100 pips away or 1 ATR away. In that case you needn’t adjust your TP or SL.
