Hello everyone,
I have a simple spread question. Does the spread affect a stop loss in any way? Let’s say I short a pair at 100 and my stop loss is at 200. Price moves against me 75 pips and I’m now at 175. A news event is coming up and the broker widens their spread to 30. Do I get stopped out? Doesn’t the candle wick have to hit 200 to hit my SL? I thought the spread only affected your entry price and not stop losses but I’m getting conflicting answers. What is the consensus here?
Thanks in advance.
Hi! If you place a buy order then your stop loss wont be affected, because the spread affects your entry price (only when you buy). But if you are selling, your entry price is not affected by the spread, so have to add to your stop loss the spread 
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I’m referring to a trade that is still open from a few days ago. The way I understood it (or thought I did) is that the tick price has to hit the stop loss and the spread only has to do with opening/closing a trade. Perhaps a picture would help.
When you take a short trade the price you receive is the bid price,
the lower of the 2 prices, but your trade is then controled by the ask price,
the higher of the 2 prices in the spread.
If the ask price should rise for any reason, ie a widening of the spread,
this will then affect any stop loss it hits.
In your example though I would say the spread would need to move
50 pips (25 pips added to the ask price) to stop you out.
So the answer to the question is yes the spread does affect the stop.
Thank you daydreamer.
So in the pic, you have to add the spread to the highest point of the wick.
Only just saw this, the price shown on the chart is the centre of
the spread, ie 10 pip spread the chart marks 5 pips, not 10 pips (ask)
or 0 pips (bid).
On your chart I would say the mid-point was 1.5581, but the ask
price was at 1.5583 ?
In fact when you have taken a short trade there is only one price
moving, the ask, the bid price is now suspended as your entry price.
In a long trade the opposite applies.
Half the spread, dependant upon what your chart is marking.
Ok here’s the deal. When I looked at my charts this morning I see I’m stopped out but the wick never reaches it. When I talked to the broker (oanda) they said “oh no, you have to use the min/max to see why you were stopped out” (see pic). I was unaware of this. So it appears I need to take into account the ever-changing spread when I set my SL?
Thank you- I was unaware of that.
Oanda widen their spreads on Friday evening from approx.
1700 hrs New York time, ie NYSE close. until approx.
2000 hrs NY time Sunday, Tokyo open.
They also do widen during various news items.
I had the same thing happen to me with Oanda. I had a open position and Asuie news came al;ong they increased spread to 30 pips or so and stopped me out. wick was 20 pips or more away never got close. The problem I have is you have to keep up with what news they do this with and and much spread. They told me you have to look at there spread history… Just more stuff to keep in mind when trading LOL . Keeps us on our toes I guess…