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Entering at a 0.6 pip spread and exiting at 3.0: the exit costs more than the entry did

Entering a trade with a 0.6 pip spread feels cheap. The exit is the part people forget, because the spread you pay on the way out is whatever the market offers at that moment.

Take a long on EURUSD. Relative to the mid price, you pay half the spread on entry and half on exit. In normal conditions, with a 0.6 pip spread, that's 0.3 pips each way and 0.6 pips for the round trip, or $6 on one lot.

Suppose the trade runs into a news release and you exit when the spread is 3.0 pips. Assuming the widening is symmetrical around the mid, the exit costs 1.5 pips against the mid. The round trip is 0.3 + 1.5 = 1.8 pips, which is three times the normal figure. On one lot, $18 instead of $6.

On a 10 pip target, the extra 1.2 pips is 12% of the gross profit. On a 5 pip target it would be 24%. The take profit at a set price may not fill during the widening at all, since a limit order for a long needs the bid to reach it, and the bid has moved down by half the extra spread.

So one reason to be flat before scheduled releases is arithmetic: the entry might be cheap, but the exit is priced by the market at the worst time. If a trade must be held through an event, move the stop wide enough to survive the spread, not just the price.

For a short, the picture is mirrored. You sell at the bid on entry and buy back at the ask on exit, so a widening spread moves the ask up by the same half-extra, 1.2 pips in the example. A stop-loss buy order is triggered by the ask. With the spread at 3.0, a stop at 1.0860 triggers when the bid is 1.0857, three pips earlier than the chart's bid suggests. The result is that a short with a 10 pip stop behaves like a 7 pip stop on the bid chart at the moment of the widening, which can end a trade that the chart seems to show surviving.

Your own history can tell you how much this happens. For the last 40 trades, write down the spread at entry from the journal, and the spread at exit from tick data or from a spread readout on the chart. If you don't record the exit spread, start now, even as a rough note: normal, wide or very wide. After a month you'll know how many of your exits happened during a widening, and the dollar cost is that count, times the lots, times $10, times the extra pips each time. Ten such exits at 0.5 lot and 1.2 extra pips would be 10 x 0.5 x $10 x 1.2 = $60.

A simple rule can help without much work. Before a scheduled release, either close the trade or widen the stop and cut the lot size so the dollar risk is unchanged. For a 10 pip stop at 1.0 lot that risks $100, widening to 15 pips means 0.67 lots. The wider stop absorbs a 3 pip spread and some slippage, and the smaller size keeps the loss limit. You give up some possible gain, but a cost that is hard to predict is replaced by one you chose. For the 15 pip version, a 3 pip spread at exit costs about 1.5 pips against the mid, 0.67 x 1.5 x $10 = $10, a tenth of the risk, and that belongs in the plan.

Different pairs behave differently. EURUSD usually widens to a few pips at the worst moments, while GBPJPY or gold can widen far more in absolute terms. What matters for your trade is the widening divided by your stop. A 3 pip widening on a 10 pip stop is 30% of the risk, but 12 pips of widening on a 40 pip stop is also 30%. So the comparison across instruments is the spread change as a share of the stop, which you can compute before taking the trade from your own typical stop size.