Spread Widening

Spread widening is the temporary increase in the gap between bid and ask that occurs when liquidity providers become less willing to quote. It happens most predictably around major economic releases, at the daily rollover when banks step away from the market, at the weekly open after the weekend, and during holidays or sudden shocks. Variable-spread accounts show the change directly, while fixed-spread accounts may respond with requotes or wider execution instead. Widening matters because trading costs are paid on both entry and exit, and because stop and limit levels are triggered from the relevant side of the quote — so a stop can be reached by the spread alone, without the mid-price travelling as far.