I would blame the Aliens for that. The US government paid them to stop you out on your trade by increasing the spread during NFP. Every experienced trader knows that the market can only move in 1 pip increments unless it being manipulated by aliens with laser beams... ITs a big government/alien/FX broker conspiracy.
Good questions.
The reward for a broker closing out your trade is none. A broker does not make any extra money whether you win or lose. Say you are buying 100k GBPUSD. In reality, you are borrowing from the broker to purchase 100k of Sterling(i.e. if GBPUSD was at 2.000, you would receive 100k pounds, using 200k USD). As the rate of GBPUSD appreciates or depreciates, your "profit/loss" goes up or down... you make or lose the difference of the trade. The broker simply makes back their 100k plus the difference of the spread you pay that they split with the bank(brokers make less than a pip on most every pair... the bank pulls in most of the cost of spread).
In other words, the broker makes money on the placement of the trade(think of it as a commission to make the trade... the bank charges the broker a spread and the broker in turn charges you a little more spread). Think of it as this... there has to be a buyer and a seller. A broker doesn't want to close a trade because they would be taking a naked position against you. If your trade is getting stopped out, then that means someone else is selling at the price that you are buying at somewhere in the world(depending on the liquidity provider that your broker is using). This is why spread goes up during market news... because there is less liquidity providers offering quotes and therefore less buyers and sellers and much more volatility. That means that spikes are likely to happen.
As for it happening on some brokers and not others, that simply is because all brokers have different liquidity providers. And the smaller brokers tend to have less liquidity providers... and much more spikes.
Hope that helps!
Good questions.
The reward for a broker closing out your trade is none. A broker does not make any extra money whether you win or lose. Say you are buying 100k GBPUSD. In reality, you are borrowing from the broker to purchase 100k of Sterling(i.e. if GBPUSD was at 2.000, you would receive 100k pounds, using 200k USD). As the rate of GBPUSD appreciates or depreciates, your "profit/loss" goes up or down... you make or lose the difference of the trade. The broker simply makes back their 100k plus the difference of the spread you pay that they split with the bank(brokers make less than a pip on most every pair... the bank pulls in most of the cost of spread).
In other words, the broker makes money on the placement of the trade(think of it as a commission to make the trade... the bank charges the broker a spread and the broker in turn charges you a little more spread).
If I can explain it all in one phrase: there is a buyer and a seller. A broker doesn't want to close a trade falsely because they would be taking a naked position against you(and they would risk losing a trade for MANY pips!). Basically, If your trade is getting stopped out, then that means someone else is selling at the price that you are buying at somewhere in the world(depending on the liquidity provider that your broker is using). This is why spread goes up during market news... because there is less liquidity providers offering quotes and therefore less buyers and sellers and much more volatility. That means that spikes are likely to happen.
As for it happening on some brokers and not others, that simply is because all brokers have different liquidity providers. And the smaller brokers tend to have less liquidity providers... and much more spikes.
Hope that helps!
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