I have been noticing usually on trades with a stop loss of less than 10pips I get stopped out by a widening spread even though the actual trade itself goes way in the money. Has any other day trader experienced losses due to an increasing spread and if so how do you deal with it?
I’d be cautious if someone says there is a reliable way of dealing with this. It happens every single day and must be causing vast losses.
Test out all the advice you might receive.
I don’t want to risk being accused of promoting a certain broker. I think I have answered this question too many times already.
What is the root cause widening spread? Is it because of the news events? Or maybe you hold or enter your trades during market closed? Usually, widening spread happens because of either one of this.
More information would be helpful.
What financial instrument are you trying to trade? Eg EURUSD or SPX500 or something else?
Approximately what time are you trying to trade?
Can you check if you were trading during the time leading up to or after a scheduled economic calendar event? Eg. US Retail Sales.
Without further information everyone would be in the dark about how to assist.
I am not sure the reason the spread went from 1.2 or so to over 10, bit most of my 28 pairs at that time seemed to have widened in that proportion. Do you expect this to be a daily thing?
Unfortunately I reached the 8% drawdown on ftuk after this trade closed at the loss, so mt5 will not let me see the details of the trade any longer. I can’t find which pair is was on tradingview either but the trade closed itself out yesterday sometime before 5pm and most of my pairs at that time all had a widened spread so I’m not sure the pair itself matters. But if this happens on a regular for most pairs why would that be?
It’s normal for the spread to have widened during major impact news release and during market closed (the period between New York session closed and Sydney session open). If it’s not because of these two causes, then you need to investigate a bit more. Especially, your broker.
Thanks for that input. Is this is a normal occurance everyday around these time periods where markets close for spreads to widen?
I would say yes as most brokers would widen up their spreads during this time but in terms of how much they widen may vary from broker A to broker B.
Ok that makes sense
Every day the liquidity in the market fluctuates.
Looking at the attached EURUSD chart you can see tick volume bars at the bottom. You can notice a pattern that every day at about the same time the bars are very low and also a pattern when the volume bars are longer each day.
When there is less liquidity it is quite possible that there will be gaps between price levels where people have pending orders. Hence the best bid and best offer in the whole world could be further apart than times of higher liquidity.
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Market close (around 5 PM EST) reduces liquidity and widens the spread. It doesn’t seem to have any regularity other than it gets wider. … by 3 to 10 pips. I battle this by staying away from that time, I got tired of getting beat by the spread.
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Spreads often widen when important news is published. Therefore, in order to prevent spreads from widening in my trading, I always look at the time of release of such news in the economic calendar and, accordingly, stop trading before their release. When volatility decreases, I am looking for the next entry points.