This subject came up in one of the Trading rooms so we decided to cover it off in here.

The answer to the above is it generally doesn't matter so long as you get your Entry rules correct.
Let's say our example system dictates that a Bid price chart should be used and Entry Long is High + 5 + Spread and that for a trade in the opposite direction, Entry Short is Low - 5, quite a standard approach.

Now, let's say our spread is 4 and the price on our chart is Bid = 15400, Mid = 15402, Offer = 15404 for the case of both our High and Low entries for our example system above.

Bid chart = Long @ High + 5 + Spread (15400 + 5 + 4 = 15409), Short @ Low - 5 (15400 - 5 = 15395). This is as per the system rules.

Mid chart = Long @ High + 5 + Spread/2 (15402 + 5 + 4/2 = 15409), Short @ Low - 5 - Spread/2 (15402 - 5 - 4/2 = 15395). Long and Short entry adjusted to include half of spread as we are on Mid prices.

Offer chart = Long @ High + 5 (15404 + 5 = 15409), Short @ Low - 5 - Spread (15404 - 5 - 4 = 15395). Long entry adjusted to no longer include spread, Short entry adjusted to include all of the spread.

Does the size of the Spread matter - No! The Spread is the variable in the above equation so even is it is 2, 3, 4, etc. it will not matter. It matters that you have your Entry rule base correct and properly adjusted to suit the chart type you prefer / are using.

Hope this is useful.

Great post - really clean and clear. Thanks!

One year on, this still stumps me sometimes. On MT4 I switch on the ask/bid lines to show me the spread at all times, as some systems can sometimes require out-of-hours trades.

Not sure we get your point here !

Who said there has to be a point?

Nice one