You are watching EUR/USD with a spread of a fraction of a pip. The clock hits the release time, and for a few seconds the spread is several pips wide. Nothing is broken. You are watching the market price in uncertainty.
This guide explains why spreads widen when news lands, what it does to your orders in MetaTrader 5, and how to stop it from costing you more than it should.
Key takeaways
• The spread comes from the best buy and sell prices that liquidity providers are willing to quote.
• Around big news, providers pull or widen their quotes because fair value is suddenly uncertain.
• Spreads usually return to normal within seconds to minutes as the market absorbs the data.
• Wide spreads can trigger stops, raise entry costs, and fill pending orders at worse prices.
• Knowing the calendar and choosing your order type carefully protects you more than any setting.
Why do spreads widen during news?
Spreads widen during news because liquidity providers pull back or reprice their quotes when they cannot be sure where fair value is. With fewer firm prices on offer and a bigger gap between the best bid and the best ask, the spread grows. It usually narrows again within seconds to minutes once the market absorbs the data.
Where the spread comes from
On an ECN model, the prices you see are built from quotes streamed by liquidity providers, typically banks and large trading firms. Each one offers to buy at one price and sell at another. Your bid is the best price anyone will pay, and your ask is the cheapest price anyone will sell at. When many providers compete with large volumes, those two prices sit very close together and the spread is tight.
That is why spreads are variable. They are not set by a person at the broker; they reflect how much competition and volume there is at that moment.
What happens in the seconds around a release
Before the release
In the final minutes before a major number, providers reduce the size they are willing to quote. Nobody wants to be holding the wrong side when the data arrives, so the spread often starts to drift wider before anything has happened.
At the release
When the number prints, every provider reprices at once. For a moment, there may be very few firm quotes, and the ones left are far apart. Price can jump from one level to the next without trading in between, which is called a gap.
After the release
As providers agree on the new fair value, quotes return, and the spread narrows. Liquidity normally comes back quickly on major pairs, more slowly on minor pairs, gold, and exotics.
| Time | Illustrative EUR/USD spread | What is happening |
|---|---|---|
| 5 minutes before | 0.2 pips | Normal liquidity |
| 30 seconds before | 0.8 pips | Providers reduce size |
| At the release | 3.0 pips or more | Quotes pulled and repriced |
| 1 minute after | 1.0 pip | Liquidity returning |
| 5 minutes after | 0.3 pips | Close to normal again |
Which events widen spreads most
• Central bank interest rate decisions and press conferences
• US non-farm payrolls, inflation (CPI) and GDP figures
• Unscheduled shocks, such as surprise political or geopolitical headlines
• The daily rollover at 5 pm New York, when liquidity thins as the trading day changes
• The weekly open, public holidays and quieter hours
The effect is strongest on the currency the news is about, and on pairs and instruments that are thinly traded even on a normal day.
What wide spreads do to your trades
Stops can trigger without the chart touching them
MT5 charts show the bid price. A sell position closes at the ask, so if the spread suddenly widens, the ask can reach your stop loss even though the bid line on the chart stays below it. Buy stops placed just above a level are exposed in the same way.
Entries cost more
A market order at the moment of release pays the wide spread in full. On a trade aiming for a few pips, that can be most of the target before the market has moved at all.
Pending orders can fill at worse prices
Stop orders become market orders when triggered. If price gaps through your level, the order fills at the next available price, which may be some distance away.
What a wider spread actually costs
The cost of a spread is the spread in pips, times the pip value, times your position size. On EUR/USD, one pip on one standard lot is worth $10. Using the illustrative spreads above:
| Position size | Spread of 0.2 pips | Spread of 3.0 pips |
|---|---|---|
| 1.00 lot | $2.00 | $30.00 |
| 0.10 lot | $0.20 | $3.00 |
| 0.01 lot | $0.02 | $0.30 |
The trade is identical; only the timing changed. Entering a few minutes after the release, instead of at the release, would have cost fifteen times less in spread in this example. For a scalper aiming for five pips, a three-pip spread means giving up more than half the target before the trade has even started. For a swing trader aiming for a hundred pips, it matters far less, which is why timing is mostly a concern for short-term trading.
How to protect your trades
1. Check the economic calendar each morning and note high-impact releases for the currencies you trade.
2. Decide in advance whether to close, keep or adjust open positions before big releases.
3. If you keep a position, give your stop room for a wider spread rather than placing it right at a level.
4. Avoid market orders in the first seconds after a release; let the spread settle first.
5. Use limit orders when the price matters more than getting filled immediately.
6. Watch the live spread in the Spread column of Market Watch before you click.
Spread widening affects every account type, because it comes from the market, not the pricing plan. On a commission account, the commission stays fixed, but the raw spread widens too. Understanding why spreads widen lets you plan around it instead of being surprised by it. Compare SnabbX Standard, Elite, and ECN accounts on our Accounts page to find the pricing that suits your trading style.
