Spreads change because live market conditions change. Around major news and session opens, liquidity can thin, volatility can rise, and markets can reprice quickly, which is why the same instrument can show a different spread at different times.
What is a spread?
In simple terms, a spread is the difference between the bid and ask price in a live market. CME defines the bid/ask spread as the price difference between the bid and offer price. That sounds simple, but the important point is that the spread is part of live pricing conditions rather than a number that must remain fixed all day. CME glossary.
That is why spread behaviour becomes easier to understand when it is linked to liquidity, volatility, and the speed at which the market is repricing.
Why spreads change
A better way to think about spreads is that they reflect current market conditions. If there are many active participants and pricing is more competitive, spreads often feel tighter. If markets are thinner, more uncertain, or moving quickly, spreads can widen.
IG explains this directly: more liquid assets tend to have tighter bid-ask spreads, while during periods of high market volatility, spreads typically widen as market makers protect against faster price movement and higher trading risk. IG bid-ask spread guide.
Why news can widen spreads
Major news releases matter because they can force markets to reprice quickly. When a key data point or event arrives, uncertainty often rises for a short period while participants adjust to the new information.
IG notes that the forex spread may increase if there is an important news announcement or an event that causes higher market volatility. That is one reason spreads often widen around CPI, central-bank decisions, employment data, and other high-impact releases. IG forex spread explainer.
What this means in practice is that the market is often adjusting to uncertainty before a new equilibrium forms. The spread can reflect that temporary repricing pressure.
Why session opens can widen spreads
Session opens matter for a different reason. As a major financial centre comes online, participation can shift quickly. That can change available liquidity, the number of active quotes, and how responsive the market feels.
IG’s bid-ask spread guide says spreads tend to be tighter during peak market hours when trading activity is at its peak, and that outside those hours, particularly during thinner periods, spreads may widen due to lower liquidity. IG bid-ask spread guide.
This is one reason the same instrument can feel different at a session open compared with a quieter part of the day. It also helps explain why spread changes are closely linked to broader market structure, not just to the instrument itself.
Common spread drivers at a glance
| Driver | What changes in the market | What traders often notice |
|---|---|---|
| Major news release | Fast repricing, higher uncertainty, sharper volatility | Wider spreads and more reactive price behaviour |
| Session open | Participation and liquidity can shift quickly | Temporary spread changes as market depth rebuilds |
| Thin liquidity period | Fewer active participants and less competition in quotes | Wider spreads and more sensitivity around price |
| High volatility window | Market makers and participants manage faster movement risk | Spread widening alongside more aggressive price swings |
Common misunderstandings
Wider spreads do not always mean something is wrong
This is the biggest misunderstanding. Wider spreads often reflect thinner liquidity, faster repricing, or higher short-term uncertainty rather than a broken market.
Spreads are not only about cost
They also tell you something about current conditions. That is why spread behaviour can be a useful read on live market quality and why it often sits close to concepts such as slippage and execution conditions.
Time of day matters
Spread conditions can change through the day because participation changes through the day. This is especially relevant when linking spread behaviour back to trading sessions and overlap periods.
Risks and limitations
Spread behaviour is useful, but it is not a complete market answer on its own.
It still needs to be read alongside:
- the instrument being traded
- current volatility conditions
- whether a major release is due
- how deep liquidity looks at that time
- broader market tone
That is why spreads are best treated as part of live market context rather than as a single standalone signal.
Further reading
- RockGlobal Market Guides
- RockGlobal Insights
- Glossary: Liquidity
- Glossary: Volatility
- Glossary: Slippage
- CME Group Glossary
- IG: What Is the Spread in Forex?
- IG: Understanding Bid-Ask Spread in Trading
FAQs
A spread is the difference between the bid and ask price in a live market.
Because important news can raise uncertainty and volatility, leading markets to reprice quickly. IG says forex spreads may increase if there is an important news announcement or an event that causes higher market volatility.
Because liquidity and trading activity can shift as major market centres come online. IG notes that spreads tend to be tighter during peak market hours and may widen outside those hours due to lower liquidity.
No. A wider spread often reflects thinner liquidity, higher volatility, or faster repricing rather than a broken market.
More liquid assets generally have tighter spreads, while thinner markets often have wider spreads.
