Why it matters
Your spread is your first tax. When spreads widen, stops trigger earlier, fills worsen, and strategies that look fine on mid prices silently lose expectancy.
Decision use: treat this term as a risk input. If you can’t observe it, you can’t size for it.
Common trap
Sizing and stop placement using “normal” spreads, then getting surprised when rollover, news, or thin sessions expand the spread and your risk doubles without you changing anything.
Example
EURUSD shows a 0.6 pip spread during liquid hours, but widens to 2.5 pips around rollover. A tight stop that survived all week gets clipped purely by spread expansion.
Operational cue: if you can’t point to it on the chart, in the DOM, or in your broker logs, treat it as a story and trade smaller.
Notes
Quick rule
- If you see this repeatedly, you are in a different regime than your model assumes.
- Regime change usually means position size change.
- When in doubt: trade smaller, or don’t trade.