At data releases, brokers protect themselves from speculators by widening their spreads. The move from tight spread to wide spread does NOT involve quoting prices between the new spread. In other words, temporarily, there is no market between the widened spread.
This is bad news if your stop is between the spread because it will not get filled. You will have to get out manually when there is a market and this could mean being many points beyond where you wanted your stop to be.
My broker horror story: one of my brokers became increasingly keen to protect itself from speculators on NFP day. Initially it would widen the spreads 5 minutes before release. Then 10 minutes and so on. This was both for market and stop/limit orders.
I used to straddle the market with a buy order above and a sell order below (about 20 pips away from market). I made a lot of money doing this. One Friday, my short was triggered but wasn't filled until the market had fallen another 40 points.
I desperately tried to buy the position back, as it whipsawed north, but price gapped up through my stop which wasn't triggered. Price kept going north with my frantically pressing 'buy' but there weren't any takers. I finally got out 60 pips above my stop.
The moral is don't trade the news.
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