Expanding the spread for holidays, myths and reality
Almost every holiday, we receive warnings from our brokers about a possible widening of spreads.
For this reason, there is an opinion that trading these days is not profitable, since the size of the spread is simply off the charts.
Yes, I myself remember the times when Alpari before the New Year had a spread on the EURUSD pair of 100 points, and this was with a four-digit quote.
But how are things today, how significant is the expansion of the spread on days when the liquidity of assets on the exchange decreases?
Everything here is quite individual and depends on the holiday and the type of asset you are going to trade.
For example, the average spread on EURUSD is 0.5 points, and before the holidays it widens to 5-6 points. Significantly, but far from critical, the size of the spread today :
Before less significant holidays, the spread may practically not widen at all. For example, today, two days before Catholic Easter, such an expansion is almost not noticeable, you can convince yourself of this by looking at the picture above..
This happens because, thanks to new algorithms, the liquidity of assets in the foreign exchange market is much higher, including on holidays.
On such days, the greater risk comes from closing trades earlier, since in this case you will have to pay the swap for several days and it is unknown how the price will change during the holidays.
If we talk about strategies, then it is clear that at this time it is better to refrain from using scalping , since the widening of the spread significantly affects the overall result of scalping trading.
As a result, we can say that if you have time to trade on these days, then you should not deny yourself the pleasure, the main thing is to control the size of the spread before each transaction.
Spread indicator - https://time-forex.com/indikators/indik-spred-monitor