Why does MT4 form it's candles using the bid price? (as opposed to the ask or mid point). Is this some sort of charting convention?
I assume that the ask price is what the banks ask of us and the bid is what they offer us the currency for. So in the logical world (I assume) we would chart according to the buy prize and not the sell price. As consumers we only care about the buy price. Of course in FX we can also sell, but since it is either the buy price or sell price, the more logical choice would be the buy price.
As for the mid point of the buy and sell price, I think that would be not so good for charting due to the inconsistency with regards to the spread. I assume it would also be damn strange to look at.
I might be wrong, but that is just what I think. I would also appreciate a very clear answer from one of the resident specialists.
Oanda is using the mid point for candles and it does not look "strange" (why should it look strange?), the candles look the same, only everything slightly shifted 0.5...few pips higher on the Y axis, for most (all?) uses (cande patterns, trend lines, etc. it doesn't matter at all).
Scalpers on the extremely low time frames usually activate the display of separate ask and bid lines anyways to be able to always see where the prices really are.