FOREX - Trends, Forecasts and Implications (Episode 19: September 2012) - page 64
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The spread may widen to unimaginable sizes, usually profitable trades cancel, and the loss only on the application and not all DCs.
Yesterday I saw a spike of ten points in futures of three dealers, for five-digit - duh!
57821 even the Ascom, as far as I can see, didn't get it...
Well, it shouldn't have at all, unless of course the spread was increased slightly at the time.
And maybe it's for the best that the sell is closed, it's crawling up nicely, a couple of bearish candles is not a reason for a reversal
On strong moves, the spread is widened. And there's nothing to think about.
Why nothing? And if you widen the spread without making any strong moves, what happens?
Regardless of the strength of the moves, time of day or other circumstances, the size of the spread always characterises the dealer's willingness to trade and nothing more. The more interested the dealer is in stepping up the trade, the narrower the spread and vice versa.
Nothing happens to it. The dealer's spread does not affect the price in any way.
There are cases when the dealer shifts the midmarket, but that's another topic :)
About flat: if dealer widens spread in flat, then he does not want to trade with those who does not care about flat :)
And maybe it's for the best that the sell closed there, it's crawling up nicely, a couple of bearish candles is not a reason for a reversal