What Really Happens to Forex Spreads at Night

Many traders notice a strange pattern — spreads suddenly widen after a certain time — and assume something is “wrong.”

You open your platform late in the evening. EUR/USD, which normally shows a 0.8–1.2 pip spread during major sessions, now shows 4–6 pips. You place a scalp trade, and suddenly your stop loss is hit even though price barely moved.

This used to happen to me too — especially when I first started trading without understanding session dynamics. I once executed a scalping strategy late after New York close, earning what I thought was a 6-pip setup… only to watch the trade break even because the spread alone consumed most of the move. That experience taught me the value of understanding how liquidity affects pricing before entering trades blindly — a lesson every trader learns sooner or later, and one I share in detail to help you avoid the same mistake.

To understand why this happens, we first have to clarify what a spread truly reflects in the global foreign exchange market.

What a Forex Spread Actually Represents

In the simplest terms:

Spread = Ask price − Bid price

It is your immediate cost of entry.

Tight spreads occur when multiple financial institutions — banks, hedge funds, market makers — compete to provide pricing. Wide spreads occur when competition thins.

To understand how this cost fits into the full landscape of trading expenses (including commissions and swaps), reading our beginner-centric guide on what forex trading is and how currency prices are formed will help you ground the concept before we go deeper into spread behavior.

Here’s the core principle:

Spreads reflect liquidity and risk in real time — not the malicious intent of a broker.

What “Night” Really Means in Forex

Forex operates 24/5 because major financial centers open in sequence:

Session	Typical Local Time (UTC)	Liquidity Level
Sydney	22:00 – 07:00	Low
Tokyo	00:00 – 09:00	Rising
London	08:00 – 17:00	High
New York	13:00 – 22:00	Peak

You can check official forex session times on tools like Investing.com’s Market Hours page: https://www.investing.com/forex-tools/forex-market-hours.

After New York closes, liquidity declines sharply — and spreads widen accordingly.

According to global turnover data from the Bank for International Settlements (BIS), London and New York together account for a large majority of daily forex volume (https://www.bis.org/statistics/rpfx22.htm). When those sessions end, global volume contracts.

This table summarizes typical spread behavior:

Session Type	Typical Spread Behavior	Why
London–New York Overlap	Tight	Highest liquidity
London Only	Moderate	Strong regional volume
Late New York	Widening	Liquidity drops
After New York Close	Noticeably wider	Thin market
Asian Early	Selective tightening	Yen/AUD pairs active

So when traders say spreads “blow up” at night, it’s a shorthand for reduced global liquidity after the major Western markets close.

Why Spreads Expand After New York Closes

Three structural reasons explain this:

1) Fewer Liquidity Providers

Banks and institutions that provide pricing gradually reduce activity after major business hours end. Fewer competing quotes = wider bid–ask differentials.

2) Lower Order Flow

During London and New York hours, billions of dollars change hands due to economic data, corporate hedging, and institutional flows. Once those sessions quiet down, order books lack depth.

Here’s a practical comparison of EUR/USD spreads throughout the day:

Time Window	Typical EUR/USD Spread	Liquidity Level
London–NY Overlap	0.6–1.2 pips	Peak
Post–NY Close	2–4+ pips	Thin
Rollover Window	3–10+ pips temporarily	Very low liquidity

3) Market Depth Shrinks

Market depth is the aggregate of standing buy and sell orders at different prices. At night, fewer participants mean shallower depth. A moderately sized order can move price more aggressively, and wider spreads act as a protective cushion for liquidity providers.

If you’re newer to trading, understanding this concept early will prevent many execution surprises — just like trading education that highlights common traps does in our article on top mistakes beginner forex traders make and how to avoid them.

The 5 PM New York Rollover Effect

Around 5 PM New York time, the forex market executes its daily rollover — a technical settlement process used by banks and brokers worldwide.

This is when:

Overnight swap rates are applied
Positions are re-booked
Interbank settlement windows adjust

During this brief window, spreads can widen sharply across many currency pairs — sometimes momentarily spiking even on majors.

External resources like CME Group’s explanation of FX rollover and swaps (https://www.cmegroup.com/education/articles-and-reports/rollover-in-fx.html) can help you visualize why this happens from a clearing perspective.

It’s also why many seasoned traders deliberately avoid entries during this period — something noted in advanced trader discussions and resources.

Major Pairs vs. Exotic Pairs at Night

Not all currencies respond to night liquidity the same way.

Here’s a snapshot:

Category	Night Spread Behavior	Example Pairs
Majors	Wider, but contained	EUR/USD, USD/JPY
Minors	More volatile spreads	GBP/NZD, EUR/TRY
Exotics	Very wide at night	USD/ZAR, USD/TRY

Majors still have more depth because global interbank systems quote them continuously, even if volume is lower after hours. Exotic pairs, however, can become inefficient for retail trading — especially when local forex activity is closed.

If you’re evaluating brokers with tight spreads and deep liquidity, it’s helpful to read our comparison Exness vs Pepperstone: which broker is better for serious traders? — where we analyze execution quality in low-liquidity environments.

Why Brokers Don’t “Hunt” Clients at Night

Many new traders assume that sudden spread widening is a broker targeting stops.

That’s a convenient myth — but not structurally accurate.

Reputable brokers simply pass along the widened interbank spread during low-liquidity hours. They source liquidity from larger institutions whose pricing widens at night. When underlying quotes widen, so do retail spreads.

Regulated brokers disclose execution models — ECN, STP, DMA — and many publish third-party execution statistics. If you’re unsure about your broker’s legitimacy or transparency, reading our broker legitimacy checklist on how to tell if a forex broker is legit or a scam will help separate perception from reality.

Why Some Traders Still Trade at Night

Despite wider spreads, some strategies perform well in low-volume environments:

Range-bound strategies
Asian session correlation trades
Yen and AUD structural setups
News releases from Asian markets

But night trading requires adjustments:

Bigger stop-loss buffers
Reduced position sizes
Session-aware pair selection
Avoiding entries during rollover

Here’s a strategic snapshot:

Strategy Type	Best Session	Night Recommendation
Scalping	London/NY	Avoid late NY & rollover
Swing	Any	Broader stops help
Range	Asian	Good if tailored
Correlation	Session-specific	High accuracy needed

If you’re starting out and evaluating your first broker while learning what style suits you best, our review of best forex brokers for beginners in 2026 is a practical complement.

Core Takeaway

Spreads widen at night because liquidity contracts — not because brokers are targeting retail traders.

When you consider:

Fewer active liquidity providers
Low order flow
Shrinking market depth
Daily rollover mechanics

the behavior becomes predictable.

If your strategy doesn’t adjust for these conditions, your risk calculations are incomplete.

Section 2: The Institutional Mechanics Behind Night Spread Expansion

In Section 1, we established that spreads widen at night because liquidity contracts.

Now we go deeper.

To trade professionally, you must understand how spreads are formed — not just that they widen. Once you see the mechanics behind pricing, nighttime behavior stops being mysterious and starts becoming predictable.

How Forex Spreads Are Actually Formed

Retail traders see a simple bid and ask price.

Behind that price is a multi-layered structure:

Tier-1 Banks (Interbank Market)
Prime Brokers
Liquidity Aggregators
Retail Brokers
You

Spreads originate at the interbank level.

Major global banks quote two-way prices to each other. These quotes reflect supply, demand, inventory risk, and macroeconomic exposure.

Retail brokers do not invent spreads from scratch. They stream pricing from liquidity providers and add either:

A markup (in standard accounts), or
A commission (in raw/ECN accounts).

If you want to understand how different brokers structure this pricing layer, comparing execution models is critical — which is why in our Pepperstone 2026 review for serious traders we break down how raw spreads differ from standard accounts under varying liquidity conditions.

What Changes at Night Inside the Interbank Market

The widening process begins before your broker even sees the price.

Three institutional shifts occur after major session close.

1. Banks Reduce Risk Appetite

Banks act as liquidity providers, but they are not charities. They manage risk exposure actively.

During peak hours, inventory can be balanced easily because opposing flows exist.

At night:

Fewer counterparties exist.
Hedging becomes harder.
Risk of sudden price gaps increases.

To compensate, banks widen their bid–ask spread.

Think of it like insurance: the less predictable the environment, the higher the premium.

This is consistent with liquidity behavior documented in global FX turnover data from the Bank for International Settlements (BIS), which shows that liquidity is heavily concentrated in London and New York sessions (https://www.bis.org/statistics/rpfx22.htm).

When those hubs slow down, pricing becomes less competitive.

2. Liquidity Aggregators Receive Fewer Quotes

Most modern brokers use liquidity aggregation systems.

These systems collect price feeds from multiple providers and display the best available bid and ask to traders.

During peak sessions:

15–25 liquidity providers may compete.
The tightest bid and tightest ask get matched.
Spread compresses.

At night:

Some providers stop quoting.
Others widen quotes.
Fewer competitive bids exist.

The aggregator has less overlap between best bid and best ask — so the displayed spread widens.

This explains why two brokers can show slightly different spreads at night depending on how deep their liquidity pool is — a comparison we explore further in our breakdown of Exness vs Pepperstone for serious traders.

Stronger liquidity networks tend to show more stable spreads in thin conditions.

3. Rollover and Swap Pricing Adjustments

Around 5 PM New York time, daily rollover occurs.

At this moment:

Banks rebalance positions.
Swap rates are recalculated.
New settlement value dates begin.

Liquidity often drops sharply for several minutes.

Spreads can spike dramatically — even on major pairs.

This is not unusual. It’s mechanical.

If you’ve ever wondered why your trade temporarily went into negative territory at the same time each day, this rollover window is often the reason.

Professional traders either:

Avoid entries during this time, or
Factor spread spikes into stop-loss placement.

How Different Broker Models React at Night

Not all brokers pass spreads the same way.

Understanding execution models matters.

Broker Model	Spread Behavior at Night	Risk to Trader
ECN/Raw	Interbank spread widens directly	Transparent but variable
STP	Pass-through + markup	Slightly amplified widening
Market Maker	Internal pricing discretion	Depends on broker policy

Regulated ECN brokers typically reflect real interbank widening. Market makers may smooth spreads slightly or widen them further depending on risk exposure.

If you’re unsure how to evaluate your broker’s structure, our practical checklist on how to tell if a forex broker is legit or a scam outlines exactly what to verify — including execution model disclosures.

Blind trust in advertised “0.0 pip spreads” without understanding session behavior leads to unrealistic expectations.

Why Prop Firm Traders Must Be Extra Careful at Night

If you trade funded accounts, nighttime spreads are not just inconvenient — they can be dangerous.

Most prop firms calculate:

Real-time floating drawdown
Daily loss limits
Maximum trailing drawdown

A temporary spread spike can push your floating loss beyond allowed limits — even if the market itself hasn’t truly moved.

This is especially relevant if you trade challenges or funded accounts, which is why understanding how funded forex accounts work and how drawdown rules are applied is critical before holding trades through rollover.

Thin liquidity environments punish tight risk margins.

The Microstructure Reality Most Retail Traders Ignore

Here’s what many traders overlook:

Spreads are not just “wider.”

They are also:

Less stable
More jumpy
More prone to sudden spikes

This creates secondary effects:

Effect	Why It Happens
Stop-loss clustering	Thin order book amplifies small moves
Slippage	Fewer matching orders available
False breakouts	Low-volume pushes distort price
Scalping inefficiency	Spread consumes profit edge

Night trading without adjusting to these microstructure shifts is equivalent to using daytime fuel consumption estimates for a nighttime off-road drive.

Same vehicle. Different conditions.

Psychological Misinterpretation of Night Spreads

When spreads widen, emotions often follow:

“My broker is targeting me.”
“The market is manipulated.”
“My strategy stopped working.”

In reality, the strategy may simply not be session-adjusted.

Many early trading frustrations stem from structural misunderstanding — something reflected in lessons shared in mistakes I made in my first year of forex trading and how you can avoid them.

Execution timing is as important as strategy logic.

Institutional Summary: Why Spreads Expand at Night

At the institutional level, widening happens because:

Banks reduce quote competition.
Liquidity providers withdraw depth.
Aggregators receive fewer tight overlaps.
Rollover settlement compresses activity.
Risk premiums increase in thin markets.

Nothing mysterious.

Just lower competition and higher execution risk.

Understanding this structure shifts your mindset from:

“Why is this happening to me?”

“How should I adapt my execution to this environment?”

Section 3: How Smart Traders Adapt to Night Spreads (Instead of Fighting Them)

By now, you understand something most retail traders ignore:

Spreads widen at night because liquidity thins.

The real question is not “Why does this happen?” anymore.

The real question is:

How do you trade intelligently when liquidity changes?

This section is about adaptation.

1️⃣ Stop Treating All Hours the Same

One of the biggest mistakes traders make is applying the same strategy across all sessions.

Markets behave differently depending on:

Liquidity depth
Institutional participation
News flow
Regional activity

Yet many traders run identical position sizing, stop-loss distance, and targets at 3 PM London time and 11 PM New York time.

That mismatch destroys consistency.

If you’re serious about building realistic expectations, especially around performance, it helps to revisit can you really make money trading forex? The truth from real trading experience — because sustainable profitability always factors in execution conditions.

2️⃣ Adjust Your Stop-Loss and Position Size

Night spreads distort tight stop setups.

If your strategy normally uses:

10-pip stop loss
5–8 pip scalping targets

And spreads suddenly widen to 3–4 pips, your risk-to-reward ratio collapses.

Instead, consider:

Adjustment	Why It Helps
Slightly wider stop	Accounts for spread fluctuation
Smaller lot size	Reduces exposure to volatility spikes
Higher timeframes	Reduces noise sensitivity
Avoid rollover window	Prevents temporary spread spikes

This doesn’t mean you must trade wide stops blindly.

It means your risk parameters should match the session environment.

Professional traders think in probabilities and conditions — not rigid rules.

3️⃣ Avoid the 5 PM New York Rollover Window

This deserves repetition.

Around 5 PM New York time:

Liquidity dips sharply
Swaps are applied
Spreads can spike temporarily

Even if price doesn’t move much, your floating equity might fluctuate due to spread expansion alone.

If you trade funded accounts or challenges, this becomes even more important. Many firms calculate drawdown in real time, meaning a temporary spread spike could violate daily loss rules.

If you’re trading evaluation accounts or scaling capital, reviewing how rules and real-time drawdown work in this detailed prop firm breakdown for 2026 helps you see why holding trades through rollover without buffer can be risky.

A simple habit solves this:

Avoid opening new trades 15–30 minutes before and after rollover.

Discipline beats frustration.

4️⃣ Trade Pairs That Match the Active Session

Liquidity follows geography.

During the Asian session:

JPY pairs behave more structurally
AUD and NZD pairs show cleaner movement
GBP and EUR pairs slow down significantly

Here’s a practical session alignment table:

Session	Best-Suited Pairs	Less Efficient Pairs
London	EUR/USD, GBP/USD	AUD/NZD
NY Overlap	EUR/USD, USD/CAD	Exotics
Asian	USD/JPY, AUD/JPY	GBP/USD late night

Trying to scalp GBP/USD deep into the night often leads to frustration.

Adapting pair selection to session liquidity instantly improves efficiency.

5️⃣ Avoid Scalping in Thin Conditions (Unless It’s Designed for It)

Scalping depends on:

Tight spreads
High liquidity
Fast fills
Low slippage

Night conditions reduce all four.

This is why many beginner traders think their strategy “stopped working” when, in reality, they are trading it in the wrong liquidity window.

It’s one of the recurring themes in the top mistakes beginner forex traders make and how to avoid them — ignoring execution context.

If you insist on trading at night:

Focus on range trading.
Use higher timeframes.
Avoid ultra-tight targets.

Scalp during London. Structure during Asia.

6️⃣ Account for Spread in Your Risk-to-Reward Calculation

Many traders calculate R:R like this:

Risk = 20 pips
Reward = 40 pips

But they ignore that:

Entry spread reduces net reward
Exit spread affects actual stop distance

A 3-pip spread on entry and exit can materially distort a short-term setup.

This becomes even more relevant when trading small accounts, where tight precision matters. If you’re working with limited capital, reviewing realistic growth expectations — like discussed in can you grow a small forex account of just $10? — reinforces why spread efficiency matters at every level.

Margins are thin. Costs matter.

7️⃣ Shift Your Mindset: Conditions Over Emotions

Night spreads test patience.

When:

Your trade starts negative immediately
Your stop gets clipped by spread
Execution feels slower

The temptation is to blame.

But professional growth happens when you shift from blame to structure.

If you reflect on lessons from longer trading journeys — like in what 5 years of forex trading taught me — one recurring theme appears:

The market doesn’t adapt to you. You adapt to the market.

Night liquidity is not an enemy.

It’s an environment.

When Night Trading Can Actually Be an Advantage

Not all night conditions are bad.

In fact, some traders prefer them because:

Lower volatility reduces emotional overtrading
Range structures are cleaner
False breakouts are easier to fade
Fewer major news shocks occur

If your strategy is built around:

Supply and demand zones
Mean reversion
Range breakout retests

The Asian session can offer precision — if spreads are accounted for.

The key is alignment between:

Strategy × Session × Pair × Risk Model

When those four match, consistency improves dramatically.

Final Takeaway

Spreads widening at night is not a flaw in the market.

It is a signal.

A signal that:

Liquidity has changed
Risk premiums have adjusted
Conditions require adaptation

You now understand:

Why spreads expand
How interbank mechanics influence pricing
How brokers transmit liquidity conditions
How to adjust your strategy intelligently

Most traders react emotionally to night spreads.