What is spread widening?
In one line: Spread widening is when the gap between the bid and ask price grows bigger than normal, usually during news, quiet hours or sudden fast moves.
A simple example
On a normal day, EUR/USD might show a Spread of about 1 Pip: 1.0850 bid, 1.0851 ask.
At 8:30 am ET on jobs report day, it jumps to 6 pips for a minute. Bid 1.0848, ask 1.0854.
Now imagine your Stop loss is 8 pips below your buy. The spread alone eats 6 of those 8 pips. A normal wiggle can hit your stop even if the chart barely moved.
When it happens most
- Big news: CPI, the jobs report, Fed decisions. See CPI and FOMC days.
- Forex rollover: around 5 pm ET, when the trading day turns over.
- Thin hours: late Friday, holidays, the Sunday open in forex.
- Stocks: the first minutes after 9:30 am ET, and Pre-market and after-hours.
- Sudden shocks: surprise headlines, a Trading halt reopening.
Why it happens
Market makers and liquidity providers quote wider when they're unsure. Fewer orders also wait near price. Less Liquidity means a wider gap.
Why it matters
A wider spread costs more to get in and out. It can also trigger stops on the ask side of a sell trade or the bid side of a buy, even when the chart line didn't touch your level. Charts usually show bid prices, so this can look confusing.
A common mistake
Using very tight stops around news. Tight stops plus wide spreads is a bad mix. Either stand aside, or give the trade room and shrink the size so the risk stays the same. The position size calculator keeps the math straight.
Check an economic calendar each morning. Knowing when news lands tells you when spreads are likely to widen.
Questions
Why did my stop get hit when price didn't reach it on the chart?
Charts often plot the bid price. A buy trade's stop is a sell, which fills at the bid. A sell trade's stop is a buy at the ask. If the spread widened, the ask can hit your stop while the bid line on the chart stays clear.
How long does spread widening last?
Usually seconds to a few minutes around news or rollover. In thin holiday markets it can last longer.
Do all brokers widen spreads at news?
Most variable-spread brokers do, because the prices they get widen. Fixed-spread accounts may requote or delay fills instead.
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