Hello Everyone,
I have a very basic Question, how much broker can widened it’s spread ?
I had a wining trade but my Broker Forex.com increased spread of USD/CHF to 14 pips and my stop loss was hit 
When i asked for explanation they replied it was low liquidity time and spread could widened , it is not common but can happen sometime. Now what is right ? I am confused
Any explanation please.
Trading time was 1800 EST and only .05 lot was traded
Thanks
I’m not sure about the broker but keep in mind the difference between a 4 digit broker and 5 digit. If you’ve got a 5 digit broker (i.e. 5 decimal numbers after the whole - 1.xxxxx) that fifth decimal is a pipette, not a pip. So if you saw 14 you may have 1.4pips?
Thats my first idea.
If that’s not the case, then you’d chalk it up to the fact that a broker HAS the right to change its spreads depending on market conditions. For any number of reasons they may have chosen to have it that wide. If you’re concerned, have the order number and the trade account number on the side and call customer support. They’ll direct you as to whether the fault is their or yours.
Yes spread widened to 14 pips and they also confirmed but my question is spreads should also be regulated in normal market conditions how could you offer 14 pip spread and blame liquidity ?
my broker fxvipservices.com helps me with all my needs and is sure to have any questions addressed for me as well. they also have some other amazing signal features through fxfortunes.org. overall im extremely happy. they have amazing liquidity and i never have that problem, nor do they have ridiculous 14 pip spreads. above all, i am on the track to becoming a fund manager with a career development program with my account. i funded only 7,500 USD on margin and a 250,000 USD Trading Limit but im up 240 pips on the month (sept. 2011) so far in fxfortunes live virtual trade desk. best brokerage experience i have ever had in any financial market i have traded.
It is possible, I have seen spreads of over 30 pips before on Oanda. There certainly are low liquidity periods and that is what causes it. You have to realize that your on the bottom of the food chain and the broker is only one step above you. I will try to break it down but then again I am not defending your broker just stating how liquidity works.
So we have the interbank market on top. Below them We have several banks who are connected to the interbank. Then we have broker dealers, smaller banks, hedge funds etc… Below them we may have retail broker and bottom of all we have us retail traders.
So your broker may have several quotes from several banks to give choose from say citibank , deuche bank and dukascopy for example. What they do is compare the bid ask rates each bank and forward you the spread given to them but also adding a some pips for profit. It maybe an additional .5 pips it could be 5 pips I don’t know but the point is they mark up the price.
Ok so you have a classic example of low liquidity is at very important news or report releases let’s just use that for our scenario. Now we all know news release numbers come out at set times in the economic calendar, and as we also are well aware that market volatility skyrockets. Well if we know it so does every bank and broker up the supply chain than you.
So let’s say a big news report affecting Eur/Usd is coming out maybe trouche or bernake is talking what’s the event is does is irrelevant. So say that the usual spread that citi bank provides to your broker for fiber is .5, dukascopy is at .7 and deuche bank is .6 pips. Well citi usually provides the lowest price so your broker will use citi a majority of the time and charge you on average say 1 pip. Ok now we are minutes away from news time what happens? Well what do retail traders usually do?? Pull their orders because they have no idea what’s going to happen. So liquidity is going down as the major players are pulling their orders, they aren’t psychic either they do don’t know what bernake will say or how the market will react. What is really happening is orders around the price point that the news is coming out at are being pulled. Resting orders 100 or more pips away are probably still there so you have a gap of orders. Basically a zone around current price where a low amount of orders exist not only at the retail level but at the interbank level, smaller bank and fund level , broker level and you. So say you want to fill an order to go long at news time, your spread is going to be very high. Why? Well the banks and brokers at every level are going to say ok I will take the other side of your trade but your going to pay for it because of the increased risk. Also the distances between orders in this gap could be 5 or more pips apart at the highest level with large order size. So now this cost of an additional 5 pips plus hedge travels down the food chain. To your broker it could be marked up and hedged against at every level. So now you have your tiny odd lot of .05 and your forcing your broker to take the other side if you decide to execute (which is what happens when it reaches a SL or TP or limit order) now they have to increase their spread because their banks raised the spread on them. Also they have no idea what’s going to happen either so they are forced to hedge against it. So who in the end pays the bill?? You do, the retail trader, if you want to execute at low liquidity and especially with an odd lot. You are going to pay massive spread and most likely have slippage.
I hope that helps it’s not necessarily your brokers fault but it may be. But understanding market structure and where the spread is generated from may help you see how it is possible to happen.
Yes, brokers can widen their spreads without notice. I notice this happens during news time or off-hours. It depends on the broker.
There’s a thread on this forum about stop loss hunting that might interest you. Check it out here -> 301 Moved Permanently … Very insightful thread.
perhaps I’d suggest you a Fixed-spreads based broker, this would never happen to you with it
Or widen your stop loss slightly or adapt your strategy accordingly.
In all honesty, I would look to change brokers immediately. Forex.com has one of the most terrible spreads, and I have personally seen and heard of situations like the one you describe repeated by others on a regular basis.
If you are using a market maker as a broker, they will look for every possible opportunity to be profitable at your expense. 
Any broker is looking for it )
In any case brokers should tell to their clients beforehand that there is a possibility that the spreads will be widened.
sid1980, is it mentioned in their documents or at the website?
if no, then they did not have a right to widen their spreads
They should have an agreement license about that too 