One of the best things about the FX market is that it truly operates around-the-clock, however this does not include weekends. While there are a few markets to trade on weekend, forex traders would be best served by spending this time to educate themselves, do some manual back-testing, research, and plan their strategies for the coming week.
Why Are Markets Closed on Saturday and Sunday?
Because institutional forex traders and major banks who are the purchasers and sellers of foreign exchange operate only during regular business hours during the week and take weekends off, the forex market is closed on Saturdays and Sundays. This is how most jobs function, and the forex market is no exception.
However, you are not need to be offline simply because the FX market is. Traders can learn a lot, contemplate, and make plans for the approaching trading week during the weekend.
Each of the major trading sessions has its own features that need to align with your trading strategy, thus it is crucial for traders to be aware of when they start when planning for the coming week.
Opportunities For Weekend Trading
Examine Free Online Courses on Forex Trading
When most FX firms are closed for trading on the weekends, this is one of the more popular ways to fill trading time. Even though the markets may be closed, traders can access resources for weekend study thanks to the abundance of online educational content.
Utilize Your Trading Platform to Its Fullest
Weekends are the perfect time to become familiar with a trading platform and see how it may help you with your trade. Using a variety of cutting-edge trading platforms, traders can examine numerous methods using historical data to have a better picture of how they would have performed. Back-testing is a technique that’s a great approach to test a strategy before using it in real-world situations.
Back-testing is choosing an earlier date and time on the chart (to a time frame in which you are unfamiliar with price activity), “locking the view,” and then examining the comprehensive report afterwards to determine how well the technique would have performed.
ProRealTime and MT4 charting packages are two well-known platforms that have this functionality. The advanced charting software ProRealTime’s back-test capability is demonstrated in the example below.
Backtesting in ProRealTime
It must be noted that just because a plan has succeeded in the past doesn’t guarantee that it will succeed in the future.
Back-testing aims to mimic how a strategy would have unfolded and track the variance between the approach’s expected and actual results.
This is the ideal thing to do when the market isn’t truly moving, giving traders a space to better control their trading emotions.
Plan for the Coming Week
One advantage of trading being suspended is that it gives participants time to reflect on the previous trading week. This might be a fantastic moment to update your trading log and account for the previous week’s trading actions.
Many traders who are following a trading strategy might take use of this time to evaluate, update, and change their plans in light of current observations. The weekend can be a wonderful opportunity to create a trading plan if you don’t already have one.
Given the anticipated releases of economic data, traders who are confident in their strategy can concentrate their efforts on the coming week.
Why Trade on Weekend?
Even while there are weekend trading marketplaces, whether you should participate is a very different matter. The following are a few causes you might want to:
Friendly to tactics: While certain strategies will make good money during a busy week, others will perform better on the weekends. For instance, many open Asian markets act differently from many western markets. This benefits certain traders whose techniques are better adapted to the various market circumstances.
While this isn’t always the case, generally speaking, the more time you spend trading, the more opportunities you have to make money.
Many people will choose to work to earn money instead of cleaning the house.
Flexibility – Trading during the week isn’t a possibility for everyone. For people with demanding schedules and midweek responsibilities, the weekend is great. You are free to select the hours that work for you.
Focus: If your week was busy, the weekend might be less distracting. This could translate into greater attention and enhanced trading judgments.
Do Trading Strategies Change on the Weekends?
They do, indeed. The markets on a Saturday and Sunday can act strangely since the major market participants squander their profits over the weekend. There will be fluctuating volume and heightened volatility.
All of this means that you must adjust your plan to reflect the altered market circumstances. As an alternative, you can want a distinctive weekend trading plan.
Several carefully thought-out tactics for weekend trading are discussed below.
Cryptocurrencies, which are assets that are always active, have helped weekend trading. Brokers constantly introduce markets, such as the DOW IG Weekend and other indices, because they can see that there is a rising demand for trading.
Gap Trading Strategy: Closing Gaps
For this weekend gap trading forex and options strategy, the market circumstances are optimal. Simply put, gaps are price spikes. At some time, the market experienced a change that caused prices to suddenly surge to either a higher or lower level while excluding the values in between.
What first produces the gaps? The cause could be anything, including new or rapid movements. However, they do need a substantial volume, which is the only requirement. You’ll have a difficult time locating these voids throughout the weekend as the major players leave the game. You’ll discover closing holes in its place.
Few traders can open gaps, but many can close them. Somehow, a few people make investments in the same area. After that, the market soars, leaving everyone else perplexed. What do they then do? They speculate that there must be an error and trade against the trend in an effort to gain from the mistake.
Gap upward: Traders will sell their holdings. The margin will then close when the markets decline.
Lower gap: Traders will purchase assets. The disparity will then close as the market increases.
There is a good possibility that any gaps you observe in low-volume markets, such as on the weekends, will be filled.
You have all of the knowledge required to make a profit because you are aware that the gap will close. Know this:
The market will rise until the price hits the height of the first candlestick that fills the gap, which is the price goal. It should ascend to the low of your previous candlestick if there are gaps to the downside. It should drop to the peak of your first candlestick with upward gaps.
The expiry – You are aware that the market ought to hit the desired price inside the following time frame. You can therefore trade a high/low option. You might also trade a one-touch option, which might provide you a bigger reward.
Make sure the option you invest in has an expiration date that is less than one period and a price objective that is within the gap.
This approach is simple and may be used with both commodities and currencies. You only need your weekend trading charts to get started. You can even use professional consultants to engage in weekend gap trading.
You should include this tactic in your weekend toolbox. The market shouldn’t stray from the price channel that Bollinger Bands highlight. You’ll discover that this price channel can be incredibly accurate on the weekends. It is the best basis for your weekend plan because of this.
There are three lines that make up the bands:
The moving average plus twice the standard deviation is shown in the upper line. As resistance, this is effective.
Lower line: The standard deviation divided by the moving average. This serves as a bolster.
Middle line: A moving average of 20 periods. Depending on whether the market is trading above or below it, this may be support or resistance.
Generally speaking, you’ll discover that the market will reverse course when it approaches your Bollinger Band.
Why Use On Weekends
On weekends, these bands frequently produce the finest results. Because major traders and news events might trigger new movements during the week, the trading range varies considerably. The upper and lower Bollinger Bands also vary in response to changes in the standard deviation. Strong moves will carry the trends’ borders and stretch the bands. Predictions may become meaningless as a result.
However, the market is steadier during weekends because of the lower volume. It’s doubtful that a sizable contingent of traders will join a movement and upset the established order.
To put your new approach into action, just adhere to these three simple steps.
Create your chart. Select an instrument, and then create a price chart with Bollinger Bands using that instrument.
Be patient – At this point, you can relax and watch as the market moves toward your bands. Till the market is within one of the three Bollinger Band lines, you must be patient.
Now is the moment to input your forecast for the direction the market will go. Use a high/low option, for instance, to forecast that the market won’t go beyond the Bollinger band.
Because it is so simple to use, it is excellent for both seasoned traders and newcomers.
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