High spread when market is dead

Hi,

is it right to keep the spread very high in the 1st hours , at the beginning of the week?.

I don’t understand it, I thought high volatility = high spread, low volatility = current spread…

Let me know.

Thanks.

Hey mberon!
Wider spread during market opening is normal. The spread is widest at the start of the trading session and then it should quickly shrink. Normally within minutes, the gap between the price sellers wants which is known as the “ask” price, and what buyers are offering - the “bid,” shrinks sharply and continues to narrow up until the end of the trading session. In my opinion the overall cost to trade is lower, and the risk of getting a bad trade is lower, if you wait 30 minutes after the market opens. However be aware that if you are trading with a market maker it could be that the current marker spread is manipulated and trading cost are included within the offered spread.

High spread during dead market is really annoying. I think most of the highly spread pairs are fluctuating. One should not open positions with dead market because he will certainly loose spread amount if not loose in trading.

What on Earth does that have to do with the OP’s question? And why bump an inactive, old thread to say this, anyway?

The spread is generally (inversely) proportional to market [U]liquidity[/U], not (directly) to market [U]volatility[/U]: they’re not the same thing.