One of the best things about the FX market is that it is open 24 hours a day, seven days a week. However, weekends are not included. There are a few markets open on the weekend, but forex traders are best off using this opportunity to explore themselves, do analysis and manual back-testing, and strategize for the upcoming week ahead of them.
Due to the fact that institutional forex traders and major banks (the sellers and buyers of foreign exchange) work during the week and take time off on weekends, the forex market is closed on the weekend. This is how most occupations work, and the FX market is no exception. Even if the forex market is unavailable, you do not have to be in a bind because of it. In addition to learning, reflecting, and planning for the next trading week, traders may take advantage of a long weekend to do just that.
Each major trading session has its own unique features that need to be aligned with a trader’s trading strategy while planning for the upcoming week.
As a result, the exchange rate does not vary every day. For example, the value of the pound against the euro or the US dollar will not change from Monday to Tuesday.
Instead, the exchange rate fluctuates significantly more often than it did in the previous decade. In reality, they’re always changing. During a 24-hour period, the pound-to-euro exchange rate, for example, fluctuates a great deal.
What’s the reason behind this? The main thing that traders need to take into consideration is that the Forex market is always live. Therefore, the exchange rate is continuously changing.
Currency rates fluctuate as a result of market perceptions of each country’s economy. Because of the UK’s financial and political performance relative to the Eurozone’s, the pound to the euro exchange rate is what it is.
So, let’s suppose sterling is trading at 1.10 vs the US dollar one day, and then increases to 1.15 the following. Good economic news from Britain or poor economic news from Europe will be reflected in the pound’s increase.
Consequently, the currency rate fluctuates as investors appraise the prospects of various countries.
The exchange rate is continuously changing since the world economy is moving at a rapid pace, and the value of each currency fluctuates as new events occur.
During weekends and holidays, the exchange rate fluctuates less. There are periods when the foreign currency market fluctuates less, even if it is always “open.” That happens due to the fact that human beings make up the market and have lived just like everyone else.
Exchange rates fluctuate less throughout the weekend or during holidays such as Christmas and New Year’s, for example.
In fact, it’s because each country’s currency is a mirror of its economy, which is also subject to constant change!
Does Weekend Trading Exist?
Trading on the foreign currency market is restricted to a set number of hours each day. In the forex market, traders can buy, sell, exchange, and speculate on currencies all over the world according to the timetable. In addition to that, it is worth noting that the FX market has its defined Forex market trading hours during the week, which means that for example, the Forex market is open 24 hours a day, but on the weekends, it is closed.
As a result of time zone shifts, the weekend is shortened. The New York City forex market starts on Sunday at 5 p.m. local time. A new trading week begins 48 hours after the market ends on Friday at 5 p.m. When the currency market is open, traders from all around the world can conduct deals, but the trading conditions may differ from country to country.
Forex brokers and investors from across the world participate in the international currency markets, which are composed of banks, commercial enterprises, central banks, investment management organizations, and hedge funds. These markets are open 24 hours a day, 7 days a week, with the exception of weekends.
As a result, there isn’t one dominant currency market in the globe. Instead, there is a worldwide network of currency markets. Each country’s trading hours determine the forex market’s trading hours.
London and New York have the busiest time zones. During the overlap of these two trading periods (London afternoon and New York morning), billions of dollars are exchanged.
For example, Reuters/WWM’s benchmark current foreign currency rate is established during this period. Investors prefer trading at periods when the volume is higher, but they also trade in pairings between these seven currencies.
Traders benefit from lower transaction costs when forex brokers provide tighter spreads (bid and ask prices that are closer to each other). Determining when to trade is a priority for institutional traders as well.
In spite of the fact that the forex market is largely decentralized, it remains an efficient transfer mechanism for all players and a global access mechanism for those who desire to speculate.
Indicators and cryptocurrency markets are accessible on weekends through weekend trading. In the case of Brexit news breaking on a Saturday, for example, you no longer have to wait until markets open on Monday before trading.
Based on client business and news flow, the weekend indexes are quoted independently from their weekly indices. Due to this, you can utilize these markets to hedge your weekday bets against risk. Indicator positions held after Sunday closure, with any stops or limits in place, will roll over into weekday positions.
If you are interested in trading with cryptos you should know that any positions you have in cryptocurrencies will continue to move over the weekend, which means you can still activate your stops and limits.
This way, you may counteract moves that might affect your daily position by trading over the weekend (s).
When the market closes Friday, let’s say you’re long on our weekday Wall Street offering at the time. On Saturday morning, you expect some bad news that will force Wall Street’s value to plummet.
You initiate a short position on our Weekend Wall Street to counter your current position. To compensate for the losses suffered on Wall Street over the week, your short position would make a profit if you were accurate.
On Sunday at 10.40 pm UK time, if you still hold your weekend position, it will automatically be netted off against your weekday trade, unless it has an attached stop or limit. A weekday position with the same stops and restrictions would then be created. When the weekday market re-opens, you’ll have both a long and a short position.
Is There any Strategy for Weekend Trading?
Many people believe that you can’t trade over the weekend. Because many people in the financial industry, naturally, would prefer to take advantage of their valuable weekend days. It’s a no-go from 16:00 on Friday until 09:30 on Monday morning for Nasdaq weekend trading.
In spite of this, technology has been a driving force towards globalization, and not everyone works on the same schedule throughout the world. If you’re in the Middle East or any other part of the world where trade hours are Sunday through Thursday, you’re in luck!
This means that you may trade online during the weekend. Investing in binary options, foreign exchange and stocks, as well as CFDs and futures, on the weekends, has been expanding quickly.
There are weekend trading marketplaces, but whether or not you should participate is a very different matter. Consider the following:
- In a week with a large volume of trades, certain strategies will generate a handsome profit. Other methods will perform better on weekends. In contrast to western markets, Asian markets that are open act differently. Certain traders with methods better suited to certain market circumstances can benefit from this.
- It’s true that more trade equals more profit, but it’s not always true. If given the choice between housekeeping and earning money, most people will choose the latter option.
- For some, trading throughout the week is simply not a possibility. People with busy schedules and intra-week engagements will appreciate the weekend. Choose the hours that fit your schedule.
- There are fewer distractions on the weekend when you’ve had a stressful week. This might lead to a larger concentration of trading power as well as better trading decision-making.
Weekend day trading has many advantages, but it also has some drawbacks. These problems are listed in order of severity below.
- On the weekends, there are fewer instruments available. If you like to trade utilizing the news and using instruments that you are familiar with, you may run into some issues with this method. Nokia, Ford Motors, and Twitter, for example, are all traded on the New York Stock Exchange and are off-limits on Saturdays and Sundays. Trading price fluctuations using technical analysis, however, should still be profitable.
- Low volume — The Forex weekend trading hours include both Saturday and Sunday, resulting in a low amount of trade. As soon as London shuts down, Hong Kong continues to thrive. Trading volume will be exceedingly low at various periods, which is a concern in the future. A flat market and useless charts are the outcomes.
- Trading over the weekend may not be a good idea for you, depending on your biological clock. Middle Eastern stock exchanges operate at less convenient hours if you’re in the UK or the US, for example.
- A lot of brokerage businesses believe that there aren’t enough clients to justify keeping their doors open over the weekend. In order to do this, you’ll need to verify with your broker about the trading hours. Otherwise, you’ll have to look elsewhere.
In addition to providing traders with plenty of possibilities to make money, volatility also carries hazards. There are typically huge discrepancies between the bid and ask prices for equities since there are no conventional market players. As a result, some traders are taken advantage of.
Do weekends have an impact on your trading strategy?
That’s right, they do. Saturday and Sunday markets might act strangely because large market participants spend their income on Saturday and Sunday. Volatility and volume will rise.
All of this implies you’ll need to adjust your approach in order to keep up with the changing market. The other option is a weekend trading strategy that’s all your own.
In this weekend gap trading forex and options method, the market circumstances are perfect for this approach. A gap is just an increase in the price of a product. When the market changed, the price went up or down without taking into account the prices in between.
Who causes the gaps first? From novel motions to faster movements, a variety of factors might contribute to this. They do, however, demand a lot of volumes. As most of the major players will be out of the game over the weekend, it will be more difficult to locate these holes. Instead, you’ll see holes that need to be filled.
Just a few trades can close the gaps. Several people invest in the same direction for whatever reason. As a result, the market explodes, leaving everyone scratching their heads. As a result, they trade in the other way, hoping to capitalize on the miscalculation.
Your weekend arsenal should include Bollinger Bands. Using Bollinger Bands, you can identify a price channel that the market shouldn’t stray from. These prices can be quite accurate on the weekends. You may use this as a springboard to plan your weekend activities.
These bands are generally the most successful on weekends. Weekday trading ranges are more volatile since news events and large traders might create fresh moves. Strong moves will stretch the bands and push the trend limits. As a result, forecasts might be rendered worthless.
However, the market is steadier during the weekend because of the lower volume. Most traders aren’t going to leap on a trend and disturb the status quo.
It’s okay if you don’t want to spend your weekend trading bitcoin or stocks or other assets. There is no better time than the weekend to reflect on the past and plan for the week ahead.
Interesting related article: “What is FOREX?“