News Spread Widening Will Blow Your Stop

[Fairman]

Spreads can widen five to ten times their normal size in the seconds surrounding high-impact news releases — NFP, CPI, central bank rate decisions, and similar events. If you're scalping through these releases without accounting for that widening, your "tight stop" strategy can suffer massive, unexpected slippage.

Here's what actually happens in practice. You place a trade with what looks like a reasonable 8-pip stop under normal conditions. The news hits. Liquidity evaporates for a few seconds as market makers pull their quotes. Your stop, which should have triggered at an 8-pip loss, instead fills at 20 or 30 pips because the market gapped straight through it in the temporary chaos.

This isn't your broker cheating you (in most cases) — it's simply what happens to spreads and liquidity in the seconds around major scheduled news. It's a structural feature of the market, not a conspiracy.

The practical takeaway: either sit out major news releases entirely as a scalper, closing positions beforehand and waiting for the initial volatility to settle, or if you choose to trade through them, size down dramatically and mentally prepare for the possibility that your realized loss could be meaningfully larger than your intended stop distance. Know the economic calendar for your pairs. It should be as familiar to you as your entry criteria.