Holding a Forex trade over the weekend can be a bit of a risky proposition – but it can also be a wildly profitable one, too. Every single weekend Forex traders the world over are faced with a huge decision:
Hold their positions, let those positions ride over the weekend (when things have the potential to gap up), or liquidate their positions on Friday and hope to get back in on the action on Monday when they see what the market looks like.
Both of these choices have their own pros and cons. Both of them can prove to be incredibly smart and incredibly foolish. You’re wondering “should I hold Forex trades over the weekend” and aren’t sure of which way to go, this detailed breakdown is for you!
You should hold forex trades over the weekend if you’re a swing trader, looking for a relatively large move in the markets, which will take weeks of price movement to complete. You shouldn’t be holding trades over the weekend if you’re a scalper or day trader as the weekend market gaps could be much too large for you to absorb when the market reopens.
Should I Hold Forex Trades Over The Weekend?
The Forex market closes down at 5 PM EST every Friday and then re-opens at 5 PM EST on Sunday.
You can set your watch to it!
There is a tremendous amount of opportunity that can bubble up between 5 PM on Friday and 5 PM on Sunday. But you could also be dealing with a gapped up situation that wipes out your position completely, doing worse than his setting you back to zero – maybe even breaking your Forex nest egg.
That’s not the kind of position anybody wants to find themselves in.
Should I hold Forex trades over the weekend, though?
Well, that really all comes down to whether or not you are swing trading.
Swing traders are able to ride the gap up storms that can happen on the weekends better than day traders in the Forex world. They are uniquely positioned to “shoot long” – even if the swings usually happen much faster than long trading in the stock market – and that gives them protection.
Of course, you need to be sure that you are paying close attention to the kind of trendlines that are happening towards the end of business on Friday.
If the overall trend is going against the position that you’ve taken, you are probably going to want to pull yourself out and see how things look on Sunday.
If, on the other hand, you notice that the current trendlines are supporting the position that you’ve taken you might be much more inclined to “let it ride” – giving yourself an opportunity to cash in on positions that other swing traders might have otherwise exited.
At the end of the day, it really all comes down to the strategies you are using, the context of the market in the moment, and your own specific goals as well as risk tolerance.
What Happens If I Forget to Close a Forex Trade Before the Weekend?
What happens if you forget to close a trade before the weekend?
Well, it’s not like you are going to lose that trade or like it’s going to be deleted from your Forex broker. It’s nothing like that.
You may, though, have to worry about significant gaps in the market bubbling up – especially if big economic news regarding the currency pairs you are trading happens while the market is “paused”.
Anyone that has spent any amount of time trading Forex in the past has got slammed by this tsunami, especially if they were swing trading and holding over a weekend.
Everything looks peachy on Friday around 5 PM when the markets shut down. Almost immediately after, though, terrible news gets leaked and things only get worse and worse through the evening and into Saturday.
By Sunday afternoon things are really reaching a fever pitch. You can almost see the sharks in the water.
When the bell opens on Sunday at 5 PM EST things can get all kinds of crazy – all because of news that broke when you were prohibited from making moves on the Forex market at all.
The most unfortunate thing about these kinds of gaps occurring, though, is that they are almost always unpredictable.
You never really know when the next big bombshell is going to drop that shakes things up completely.
Why Shouldn’t I Hold Forex Trades Over the Weekend?
Should I hold Forex trades over the weekend even though gapping up can occur?
Once again, it really all comes down to the kind of trading strategies you’re utilizing and the amount of risk you are willing to tolerate.
Some people are going to be able to ride out pretty much any storm, no matter how rough things get. Other folks are going to get real spooked the moment that it looks like the tailwinds have turned against them.
Your biggest risk (aside from the spontaneous negative news drops we highlighted above) is that the gaps are going to bubble up, your stop losses aren’t going to get filled, and you are going to be forced to take it on the chin almost instantly the moment that the markets open back up on Sunday.
If you are swing trading, though, and don’t plan to exit these positions in the immediate, short-term basis there’s a whole lot less to worry about.
Day traders, though, are going to want to liquidate their position on a pretty regular basis (like every day). The last thing that a day trader wants to worry about are gaps that bubble up over the weekend when they wouldn’t have been able to make any moves.
That kind of limitation to trading autonomy doesn’t work for day traders.
Swing traders, on the other hand, are perfectly suited and better prepared for these kinds of changes and trends.
If you are pursuing swing trading in the Forex world (or specifically swing trading currency pairs because of current market context) the odds are pretty good you’ll do okay over the weekend.
When you get right down to it, matching a Forex trading strategy into your Forex trading goals is the best way to manage and mitigate risk. If you’re going to be holding over the weekend make sure that you are aligned with that decision and you won’t have much to worry about!
In Summary – Should I Hold Forex Trades Over The Weekend?
In conclusion, you should only hold forex trades over the weekend if you’re a swing trader looking for a huge move within the markets, and if you’re comfortable with the risks associated with unpredictable news. If you’re a day trader, or your goals don’t align with swing trading, it’s best to close any open trades before the weekend begins!
Market gaps are a huge risk and they can easily destroy a whole account if a day trader is leaving trades on over the weekend, then a 200 pip gap appears and your stop loss hasn’t been filled!
Do you leave trades open over the weekend? Let me know in the comments down below…