Quote from clandestine:
chaos,
When they widen out the spread, approve. how wide are you talking? Yesterday, for instance: 5, 10...15? I don't give a sh*t about paying up...I just don't want some BS re-quote 30 seconds after I put my order in.
Hi clandestine,
Oanda is open for business 24/7. During weekends, when liquidity is low because most other brokers are closed, it widens the spread on the EURUSD, GBPUSD, USDJPY, USDCHF and several other pairs to 10 pips. The spreads begin to widen in the afternoon on Friday and reach 10 pips by 5:00 or so EST. Barring a major event, such as the capture of Saddam, the spreads remain at 10 pips until late Sunday, when they begin to return to normal. If a Saddam happens over the weekend, the spreads will widen further until the markets settle back down. They will also widen during regular spot forex trading hours (Sunday night through Friday at 5:00, nights included) in the event of a Saddam or a highly anticipated news event.
I've never seen the EURUSD spread exceed 10 pips during regular hours, but it's possible that it has. Events that would cause the spread to widen like this during regular hours are very rare - they probably occur only a few times a year.
Go the the Oanda.com site and you can read about how they calculate spreads. Well, they don't give up the algorithms, but they discuss their strategy.
Some nights the EURUSD spread will widen from its normal 2 pips to 3 or 4 pips and the other majors may widen a pip or two as well. The USDJPY is normally 3 pips and may go to 4 or 5 pips. I assume this occurs because Oanda is responding to news somewhere in the world or liquidity has temporarily dropped, necessitating risk-averting action on their part.
The way I look at it, spread-widening events are so rare they won't have a meaningful impact on my P&L. I don't need to open a trade at any given time and certainly not if the spread has become too wide for comfort. If something happens leading to wider spreads while I have a trade open, I will have to pay additional to close the trade. But so be it. It's a drop in the bucket.
BTW, my style is to swing/position trade for 100-plus pips per trade and I rarely trade the news.
Regarding what the spreads were yesterday leading up to and during the Greenspan speech, I'm not sure as I wasn't watching the market. Maybe someone here knows or you could ask on the Oanda forum.
Regards,
chaos
