Weekend day trading is a growing field of finance. Trading hours on Forex weekends have extended well beyond the typical working week. Without a central bank, currency rates can be exchanged whenever any global market – be it London, New York, Hong Kong or Sydney – is involved. Bitcoin and other cryptos, too, can be exchanged over the weekend for similar reasons. Several brokerages now also offer index trading on weekends as the rise in part-time day trading continues. Here we explain some of the weekend trading markets, strategic options and some advantages and risks that need to be weighed.
Can You Trade On The Weekends?
There’s a common myth about not being able to trade over the weekend. Perhaps that is because those in the financial community would like their precious Saturdays and Sundays off, understandably. Trading in India and at Nasdaq weekends, or at the U.S. stock exchanges, are all off the cards from Friday 16:00 until Monday morning 09:30.
Technology has, however, been the cause for globalization and not everyone in the world is working on the same timetable. For example, the hours of trade in the Middle East operate Sunday through Thursday, and in some cases, Saturday through Wednesday.
So, the answer is yes, you can certainly continue the weekend trading online. In reality, trading in binary options, currency, stocks, CFDs, and futures over the weekend is rising fast.
Some of the weekend’s most common indexes are:
- DFM Index – This benchmark is based on the Dubai stock exchange which is one of the main UAE exchanges.
- Kuwait Stock Exchange – This is Kuwait’s main stock exchange, including the largest businesses, banks, insurance firms and real estate.
- Tadawul Index – It is Saudi Arabia’s first stock exchange.
- Tel Aviv 25 Index – This is made up of the Tel Aviv Exchange, or more precicely of Israel’s top 25 market capitalization firms.
Besides the above-mentioned, some brokers now also offer weekend trading on European and US indexes like the FTSE, DAX and even Wall Street. Also make sure you read the terms and conditions of weekend trades, particularly when using stop losses. Stop losses configured during the week at IG for example will not be activated at the weekend. At the same time, trades carried out over the weekend can be left open in the market’s regular trading hours. Such factors will play an important role in your approach, so make sure that you understand them. When more brokers start offering weekend trading, the differences in how they work will increase.
Why Trade On The Weekend?
And while there are trading markets open on weekends, it’s a completely different issue as to whether you can get involved. Here are some of the reasons you may want to:
- Friendly strategy – While some tactics in a high-volume week will make beautiful money, others will do better on weekends. For example, the Asian open markets behave differently to many Western markets. This plays into the hands of certain traders with tactics best suited to the different market conditions.
- More trading = more profit – Though this is not always the case, in general, the more time you spend trading the greater chance you have to turn profits on. When it is a option between housework and income generation, many would opt for the latter.
- Flexibility – It’s just not a choice for some to trade during the week. To those with busy lives and obligations intra-week, the weekend is perfect. You have the freedom to choose which hours are right for you.
- Focus – If your week is hectic, fewer distractions can come on the weekend. It could turn into greater focus and improved decisions on trade.
Restrictions On Weekend Trading
Despite multiple advantages the weekend trading offers, some drawbacks remain. The most prominent onesare described below.
- Restricted instruments – Fewer funds are accessible on weekends. If you want to trade with the news, and you have a clear understanding of it with instruments, you will face problems. Nokia, Ford Motors and Twitter, for example, are all traded on the New York Stock Exchange and out of bounds on the weekend. Nonetheless, those using technical analysis for price movement trading will still be able to turn profits.
- Low volume – Trading hours on the Forex weekend extend through Saturday and Sunday. Hong Kong is still going high, as London shuts store. The gold and oil trading markets over the weekend are quite similar. The problem is, trading volume would be extremely small at certain points. This results in unhelpful charts and flat markets.
- Time zones – This is a very self-explanatory restriction. Over the weekend, your biological clock might not look favorably on trading. For example, stock exchanges in the Middle East run at less comfortable hours if you’re based in the United Kingdom or the States. You may want to think twice if you don’t want to get up in the middle of the night.
- Brokerage hours – Most brokerage companies claim there aren’t enough clients to justify opening their doors on the weekends. It means you will need to test the trading times for your broker. If they’re not available, then you’re going to have to go somewhere else. 24option, Metatrader, Scottrade, Etrade and FXCM all offer trading platforms for weekends, as do IG and Nadex.
- Volatility risks – While volatility also offers many incentives for traders to turn profits, it also includes risks. Since regular market participants aren’t involved, there are often large gaps between bidding and demanding stock prices. It leads to hoodwinkling of some traders.
Do Weekends Effect Trading Strategies?
Very much so. The markets on a Saturday and Sunday will act in unusual ways because of the big market players spending their earnings on the weekend. You will consider the uncertainty increased and the volume varying.
All of this means you need to change your plan according to the current business conditions. Alternatively, you would want a special trading plan over the weekend.
Several strategies which were specifically planned for weekend trading have been outlined below.
Closing Gaps – Gap Trading Strategy
For this weekend gap trading forex and options strategy, the market conditions are perfect. Gaps are literally jumps on prices. Something changed the market at some point, resulting in a price change to a higher or lower level, thus excluding the intermediate prices.
For starters, what is behind the gaps? The trigger can be any variety of factors, from new steps to rapid movements. However, the one thing they do need is considerable volume. Since the weekend sees the big players out of the game, you are going to be struggling to find those holes. Instead, you’ll find closing gaps.
Only a few traders can build gaps to close. A couple of people invest in the same direction, for some reason. Then the price spikes and everyone else is left to scratch their heads. What do they do now? They think that this must be a mistake and move in the opposite direction, hoping to benefit from the error.
- Gap upwards – Traders are going to sell their assets. Then the markets fall, and the gap closes.
- Gap downwards – Traders are going to purchase assets. The market then increases, and the gap disappears.
If you see holes like at weekends in low-volume markets, there’s a strong probability they’ll close up.
Since you know that the gap is about to close you have all the knowledge you need to make a profit. You know :
- The price target – The market must push up until the price hits the point of the first candlestick creating the hole. With gaps downwards, it will go up to your previous candlestick’s low. It will fall to the top of the initial candlestick, with gaps upwards.
- The expiry – You know the market is supposed to hit the target price in the next cycle. So, you can trade the high/low option. On top of that, you could trade a one-touch option that could give you a bigger payout. Make sure you invest in an option with a price target within the gap, and expiry less than one year.
This technique is simple and applies to currencies and commodities. All you need is your trading charts for the weekend, and you can get to work. You can also be a part of weekend gap trading with professional advisors (EA).
This is an important plan for adding to your arsenal over the weekend. Bollinger Bands shows a price channel which shouldn’t leave the market. You’ll find this price channel can be highly reliable on the weekends. This makes it the perfect basis for your plan over the weekend.
The bands consist of three lines:
- Upper line – The sum moves plus the standard deviation twice. This is serving as a resistance.
- Lower line – The sum moves minus twice the standard deviation. This acts as support.
- Middle line – A cumulative average of 20-period. This can be either help or resistance, depending on whether the amrket is trading above or below the level.
Overall, you will find that as it reaches your Bollinger Band, the market will turn around.
Such bands also deliver the weekend’s best results. This is because news events can trigger new moves in the week (as well as large traders), so the trading range varies more. The upper and lower Bollinger bands shift when the normal variance changes. Powerful movements should stretch the bands and push the the boundaries on the trends. This can make predictions useless.
Nevertheless, the weekend’s reduced demand makes the market more stable. A large number of traders are unlikely to jump on a bandwagon and threaten the status quo.
To start implementing your new plan, you only need to follow 3 steps.
- Create your map – Pick an instrument and then use your Bollinger Bands to set your price level.
- Be patient – You can now sit back and wait for your bands to be hit by the market. You need to be patient before one of the three Bollinger Band lines is reached by the market.
- Make your forecast – Now it’s time for the market to turn your position that you have entered. You may, for example, use a high/low option that forecasts that the market will not infringe the Bollinger band.
Since applying is so easy, it is suitable for seasoned traders, as well as novices.
There are other ways you can be successful if you don’t want to spend your weekend trading bitcoin or in stock market. The weekend is an opportunity to evaluate past results and plan for the upcoming week.
Below are some interesting weekend exploration endeavours.
As Paul Tudor Jones rightly pointed out, the secret to being successful from a trading perspective is to have an indefatigable and undying and unquenchable appetite for information and knowledge. While practice is crucial, as much information as possible needs to be absorbed by you. Therefore, consider spending the weekends with some of these options:
- Courses – There are numerous online courses, taught by seasoned traders, to help you get to grips with intricate strategies.
- Books – You’ll find a whole host of books and ebooks with useful tips and advice.
- Podcasts – Why not put on a podcast if you’re busy on the weekend, or on a long drive to the in-laws? You can find expertly-told and asset-specific audios. Only one valuable tip could make the difference between a profitable approach and a financially flailing one.
There is no better way to predict how future markets will behave than by looking at the past. To check new tactics you can use those lazy Sunday hours to model past business conditions.
While past performance must be said to be no guarantee of future success, it can be a powerful predictor. Not to mention that you should smooth out any creases and your strategy is ready to go when you go online Monday morning at 09:30 am.
Once the markets are open you will always find yourself trapped in a vortex of emotions and trading. The weekends are great and you can take a step back. You should take a look back and see to any errors.
Next week, this will help you execute a more effective trade strategy. You may need to change the risk management plan. Next week maybe it’s time to test out a new exit technique. So, if you are not interested in trading on weekends stock, sit down and find areas for change.
The weekend also helps you to explore any upcoming events that could affect your business. For example, the DailyFX Economic Calendar lets you bear in mind important economic dates, such as policy reforms. Then you should change your course of action to take into account future developments that will affect market conditions.
The weekend is yet another opportunity for the switched on day trader to reap money. Although some of the major traders are out of town, there is uncertainty to capitalize on in markets across the globe. Although many brokers and trades are closed, activity is often raging somewhere else, particularly in the Middle East. When you plan to trade, remember to change your approach according to the various market conditions. Opt for one of the approaches we mentioned above.
In case you want a break from the real trading bustle, you can always plan for the upcoming week. You can use all of the above described educational tools, or you can start Monday back-testing and strategizing.