I understand that a spread could widen much in times such as day opening, week opening and news release. So I use a spread indicator to monitor it during trading. I found something interesting. It could jump to 10-20 pips for every pairs. 30 pips at a single time of AUD/USD. XAU it could be 9$. Amazingly GBP/USD leading the pack. Some phenomenon for it as following:
On 28th Oct 2011: GBP/USD spread reached 60 pips
On 5th Mar 2005: longtime ago, it’ spread shot up at [B]205 pips[/B]
Maybe the indicator not truly reflected the real spreads which FXCM offering. I hope that so.
Otherwise, you as a trader should do as following:
Widen your Stop loss 15 pips more at EOD. Better to act on a motor " Rule number 1: do not let your position overnight"
Rule number 2: do not let your position over weekend. Or widen your SL more 30 pips at Friday closed
EUR 1hour chart in Aug 2012, spread be around 10 pips at 5PM EST daily
That’s a neat indicator. Our trading desk to dig into the archives to verify spreads going that far back. It is possible, but since it’s a time consuming process, we normally would only do it, if there was a trade audit involved where one of your live trades was affected. If that was the case, please email me your account details and the trade ticket numbers affected at <[email protected]> and I’ll be happy to ask the Trade Audit Committee to perform a thorough investigation.
Otherwise, if you were just asking a general question about how wide spreads can get, then I can address that here. Theoretically there is no limit to how wide spreads can get. That is because FXCM does not set the spreads. The spreads you see on our platform are based on the lowest buy price and highest sell price we receive from 10+ liquidity providers plus our pip markup. That means if you see our spread on GBP/USD widen from 2.6 pips up to 10 pips, then it is the banks providing us with liquidity who have widened their spreads 7.4 pips.
As you noted though, a knowledgeable trader can prepare for this by knowing the times when spreads are most likely to widen, such as 5pm New York time every weekday, since it marks the end of one trading day and the start of the next. Banks will typically widen their spreads, since their is not much trading in the market at that time, giving banks the opportunity to refresh their servers and apply rollover interest to open positions. News events are another time when spreads typically widen. You can use an economic calendar such as this one on DailyFX.com to know when major news events are scheduled and manage trades accordingly.
The two steps you suggested are wise for any trader to use when settings stops.
