The moment is ringed. An invented chart, drawn to show the shape. Not market data.
Also searched asspread widening · why is the spread so high · rollover spread · variable spread
What you see
- The bid and ask move apart while the mid price barely changes.
- It is routine around the daily rollover, in the hours between sessions and at releases.
- An open position shows a larger loss for a moment, although the market has not moved.
Why it happens
A buy position is closed at the bid and a sell position at the ask. When the spread widens, the price that would trigger a stop moves closer, so a stop can be reached with no real move in the market.
What traders check next
- The time: is it the rollover, a session gap or a release?
- How close a stop is to the price, in pips, compared with the spread at its widest.
- The typical and the minimum spread for that instrument, which are different numbers.
Where people go wrong
- Measuring a stop from the mid price and forgetting the spread.
- Trading the quietest hours for their calm, and paying their spreads.
- Reading a minimum spread as the spread.
Questions people ask
- Why is the spread wider at night?
- Fewer participants are active between the close in New York and the open in Asia, and the daily rollover falls in those hours.
- Can a wide spread trigger my stop?
- Yes. A stop on a buy position is triggered by the bid, and on a sell position by the ask.
The words on this page
An explanation for study. It is not advice, a recommendation or a forecast, and a pattern or a situation described here says nothing certain about what a price will do next.