Spreads go crazy at 5 pm EST!

[shawnh]

Hi all... here's a newbie question for you (one that hopefully has a reasonable explanation): I'm doing some paper trading on some demo accounts with Alpari UK. During the day spreads are normal and pretty stable, ie. 1 pip for EURUSD, etc. But come 5 pm EST, the spreads go absolutely crazy... like 16 (sixteen) pips for EURUSD, I think I also saw about a 45 (forty-five) pip spread on GBPCHF also! Then after an hour or so, it returns to normal. Has anyone else also experienced this? Is there some explanation? If you're already in a good profitable position when this rolls around, you're going to get stopped out right away. I'm just wondering how anyone can have a snowball's chance in hell of making any money in the Forex market if this is how it is.

Thanks!
Shawn

 

[Forexwatchman]

I don't trade with Alpari but I can tell you that I've never had an issue like that occur with any of my brokers and price feed providers unless a major economic news event was occurring. The first thing I would do is address it with Alpari and see what kind of excuse they give you. Let them know that there is no way you would ever trade a live account with them if their liquidity providers get so stressed at 5:00 EST that the spreads need to be any wider than usual because that is ridiculous and you're right that you'd have a snowballs chance in hell of ever making a profit trading with them.

 

[Pharaoh]

Think of it this way. Spreads, requotes, and slippage are generally much better on demo. If a broker's demo platform does this, I'd never place a cent on their live platform.

If it happened only once, maybe there was a huge news event. If it's happening every day, there's a problem.

If they do rollover at 5 pm, I might expect spreads to widen by a few pips for a few minutes leading up to 5 pm. That would reflect people trying to dump negative swap pairs and others trying to scalp the rollover on positive swap pairs.

 

[Ricex]

In Alparis own words:

During certain times of the day, periods of lower liquidity and when there is increased market volatility, spreads will naturally widen. Fully understanding the dynamics of flexible spreads is the key to better-informed and more considered trading.
(the rest of what they say is here: Trading Accounts - Contract Specifications - Alpari (UK)

If the increases are daily and as you quote them then I'd avoid this time period completely or if your strategy depends on it, scalping for example, then find another broker.

 

[shawnh]

Thanks for the replies guys. This is really discouraging. It happens pretty much everyday around 5 pm EST with these guys. I have a "Spread & Session" indicator on all my charts that keep track of the current spread throughout the day - many, many times during the night and early morning here (Eastern time) when the spreads have spiked up to 12, 15, 20 pips. Here's a good one - 9:30 pm AST yesterday, EURAUD had a spread of 103 pips (that's one hundred three). If someone is in a profitable position from the previous day and is holding it overnight (as I'm sure many traders do), how do you NOT get stopped out of your profitable trade? The only way I could see to make money is to scalp - get in and out very very quickly so as to not subject yourself to these spikes in spreads.

Are all forex brokers like this? If so, why would anyone trade forex? May I ask, which brokers do you guys use?

Thanks
Shawn

 

[Jonster51]

Happens at many brokers and has been for years. Nothing to worry about. Volumes are very low at 1700 EST\EDT and a lot of long trades are closed out by day traders etc. before the swap. Not a big deal. I trade on Vantage which has really low spreads and is NOT a market maker ( a real good thing ) and it pretty well is a sure bet just like the 4 AM drop on USDCAD…. you know it comes and you deal with. I can't see how anyone can complain about this costing them money? It is very temporary, BOTH the bid and the ask move which means no positions are taken out and once again... all seasoned traders expect it and deal with it. Good luck trading.