I just demo trade as I am very new to forex. In reading some broker reviews some complained that brokers increase the spreads by quite a bit during news releases. This I understand but I got the impression that some traders say their brokers news event spreads affect a trade they are currently holding. Can this be right? I thought that once you were in a trade the spread issue was over. Or I have missed an important point.
It affects your Stop Loss and Take Profits. A spread increase can stop you out of a position if you have a conservative SL or if you trail stop to lock in profits. If you dont have a SL or TP in place (for some strange reason) and you plan on holding your position, it should’t affect you as the spread will most likely return to normal levels after the news release.
they don’t like lose money …therefore they change the rules of the game…otherwise they would lose there shirts to news traders
Spreads always account for two things - volatility and liquidity. The reason they’re as narrow as they are now is because of increased liquidity. When high volatility is anticipated, though, they widen out. It’s always been that way. Keep in mind, it wasn’t all that long ago when the widened out spreads you see now around data releases were actually the normal spread.
More importantly, though, if a widening in the spread is all it takes to get you out of the trade then you definitely have your stop/tp way too close. If they are that close then there’s a good chance normal volatility would have seen them get tripped anyway.
Thank you rhodytrader - I understand now. And I have read your book.
Davet you really need to goto babypips school befor you give advice.