Spreads widening is a common occurrence in financial markets, particularly in forex and CFD trading. While some level of spread fluctuation is natural—especially during high volatility or low liquidity—manipulative spread widening by unethical brokers can be a hidden drain on trader profits and a deliberate strategy to trigger losses, stop-outs, or missed opportunities.

This article explains how spreads widening works, when it’s legitimate, when it becomes a scam, and how traders can protect themselves from spread manipulation.

What Is Spread in Trading?

The spread is the difference between the bid price (what the market will pay for an asset) and the ask price (what it costs to buy the asset). For example, if EUR/USD has a bid of 1.1050 and an ask of 1.1052, the spread is 2 pips.

Spreads are how brokers earn money, especially in commission-free models. However, spreads should stay within reasonable and transparent limits. When they are artificially widened, it becomes a problem.

What Is Spreads Widening?

Spreads widening refers to a sudden increase in the bid-ask spread of a trading instrument. In volatile markets, widening can be justified. But when spreads are widened strategically or disproportionately—often at predictable times or during critical trade moments—it raises concerns of manipulation.

Some brokers use spreads widening as a tactic to hurt retail traders, especially those with tight stop-losses or high leverage.

When Is Spread Widening Legitimate?

• During major news events (e.g. NFP, interest rate decisions)
• In low liquidity periods (e.g. overnight sessions, weekends)
• On exotic currency pairs or thinly traded assets

Legitimate brokers warn clients about this behaviour and ensure the spreads return to normal quickly.

When Does It Become a Scam?

Spread widening becomes manipulative when:

• It happens without news or volatility
• It occurs only on certain account types (e.g. micro or standard accounts)
• Spreads suddenly spike during trade entry or exit
• The broker fails to disclose widening behaviour
• Spreads remain widened for an abnormal length of time

Scam brokers may use this tactic to trigger stop-losses, force margin calls, or prevent trades from being executed profitably—especially for scalpers or news traders.

Examples of Spread Manipulation

• Widening by 20+ pips on a pair that usually has a 1–2 pip spread
• Stop-loss clusters near round numbers being triggered via spread expansion
• Delayed return to normal spreads after volatility ends
• Spread spikes only on your platform, not reflected on trusted third-party platforms like TradingView

Impact on Traders

• Increased trading costs
• Unexpected stop-outs
• Missed take-profits
• Reduced ability to scalp or trade news
• False entries and exits due to distorted prices

Over time, these issues add up—especially for high-frequency traders and those using tight technical levels.

How to Protect Yourself from Spread Widening Scams

1. Choose a Regulated Broker

Use brokers regulated by authorities such as the FCA, ASIC, or CySEC. These brokers must maintain transparent pricing policies and disclose execution conditions.

2. Monitor Spreads in Real-Time

Compare your broker’s spreads with those on platforms like TradingView or MetaTrader connected to different liquidity providers. Unusual discrepancies are a red flag.

3. Use ECN or Raw Spread Accounts

These accounts usually offer tighter spreads and charge a fixed commission, making costs more predictable. ECN brokers have less incentive to manipulate spreads.

4. Avoid Trading Around High-Risk Events

If you trade with a broker known to widen spreads, avoid placing tight-stop trades around economic news releases or market opens.

5. Read the Broker’s Execution Policy

Reputable brokers disclose when and how they widen spreads. Avoid brokers with vague or missing execution documents.

6. Test with Small Live Trades

Before going all-in with a broker, open a small account and observe how spreads behave during various market conditions.

Trusted Alternatives

Educating yourself about spreads, execution, and broker models is the best defence. Platforms like Traders MBA offer professional trading courses that teach how brokers operate, how spreads are used against traders, and how to avoid common traps.

Explore the Traders MBA trading courses to strengthen your trading foundation and build resilience against hidden broker costs.

Conclusion

Spreads widening is a double-edged sword: a necessary part of market function in volatile conditions, but a dangerous manipulation tool in the wrong hands. Traders must learn to tell the difference, verify broker practices, and choose platforms that act in their clients’ best interests—not against them.

Understanding the mechanics of spreads is more than a technical detail—it’s essential to protecting your trading capital and long-term success.