Everything looks perfect. The chart is lining up with your technical setup. A major economic report is about to drop. You have your entry ready, stop-loss in place, and you are confident. Then the news hits. Price whips violently, and when you enter, the spread has exploded. You are already in the red by several pips before the candle even closes.
This is the often-ignored reality of trading during news events. Even brokers offering the best Forex spreads during calm market hours can shift dramatically when volatility spikes. Here is the truth about what happens to spreads during news releases and how to navigate it.
Why news events shake up spreads
News events create sudden uncertainty. Central bank announcements, employment reports, inflation figures, and GDP updates all have the potential to shake markets instantly. Traders react within seconds, and liquidity providers struggle to keep up with order flow.
This rush creates temporary gaps between the bid and ask. Brokers, especially those with variable spreads, widen pricing to manage risk. Even ECN brokers pass along the natural widening from liquidity providers. This is why accessing the best Forex spreads becomes difficult, if not impossible, during those critical few minutes.
What actually happens behind the scenes
During high-impact news, liquidity thins out. Market makers and banks that normally provide deep order books temporarily pull or reduce quotes. Brokers then receive fewer price updates, and spreads widen to compensate for slippage, price gaps, or missed fills.
In short, the tighter spreads you see during London and New York sessions become irrelevant in a flash when the market is digesting unexpected data.
Common myths about spreads and news
- Myth 1: ECN brokers never widen spreads
Reality: Even ECN brokers reflect market depth. If liquidity disappears, spreads widen regardless of how the broker is structured. - Myth 2: Spreads only widen for exotic pairs
Reality: Even majors like EUR/USD and GBP/USD can experience 3 to 10 pip spreads during big events. - Myth 3: You can rely on stop orders at exact levels
Reality: In fast-moving conditions, even stops are subject to slippage, and wide spreads can trigger them earlier than expected.
How professional traders deal with it
Many experienced traders avoid entering right at the moment of a release. They wait for the market to digest the information and for spreads to return to normal levels. Others may choose to reduce position sizes or use wider stop-losses and targets to account for the spread volatility.
If you are trading during these periods, you are unlikely to get the best Forex spreads, so your strategy needs to be adapted for that cost environment.
Tips for safer trading around news
- Use an economic calendar and set alerts for major events
- Check average spread behavior 5 minutes before and after news drops
- Reduce position size to limit exposure to cost spikes
- Avoid tight stop-losses, which can be triggered by sudden spread widening
- Consider using pending orders to wait for post-event confirmation
News events offer opportunity but bring real risk. One of the biggest risks is not the direction of the move, but the invisible cost that creeps in through widened spreads. Even brokers known for the best Forex spreads cannot shield you entirely during volatile news releases.
What matters is understanding how the market functions in those moments and being prepared to react wisely. If you build your strategy with spread behavior in mind, you will trade with more confidence and fewer surprises when the headlines hit.
