Hello Traders,
There is only one thing…the one important thing to consider when you decide to let your trade sleep through the weekend. And its not about profits..(though we like profits).
I have two examples below of what happened to me when I let my trades run through the weekend when I did not close them on Friday before the forex market closed.
I learnt a handful of valuable lessons which I wan to share with you here in this post.
What do I mean “sleep over the weekend”?
It means when Friday came, you did not close your trade when the forex market ended for the week on Friday (Or Saturday Morning in some cases). So you may be in profit or with a loss but you decided to leave the trade and see what happens the following week.
Now, if you are long term trader, the ones that trade on the daily and weekly charts, this may not be your thing as you’d be doing this all time…letting trades run through the weekend.
Now, if you are the trader that trades on much smaller timeframes, (daytrader/swing trader) you may have come across situations where on Friday for example you place a trade and its now $100 profit.
The question is: Should you close the trade that can make potentially a $1000 profit and take that profit before the market closes or should you leave it?
Or if your are $100 in loss, should you take that loss? But what If the market opens on Monday and price moves in the right direction as your trade? If you closed it now, you will not be making any profit…
Ok, before I get into the good and bad of letting trades run through the weekend or not let me tell you my experiences, both good and bad…
And all it comes down to this called a gap. This is what a forex gap looks like and it can be your friend or enemy depends on which side your trade is on…
If you don’t know what a gap is? See the chart above? That’s what a gap is…there’s a huge difference in the closing and opening price.
Case 1: The Good
One time, I remember I did not close a trade on Friday and decided to let it run through the weekend and see what happens on Monday. When the forex market opened on Monday, I was in for a really big surprise.
The market gapped. (Not sure whether it gapped up or down, it was quite a while back) but tell you what?
That trade that was struggling to make profit on Friday…and now it was suddenly showing a very huge profit on the very first 1minute candlestick that started the day!!!
Case 2: The Bad
Then there was the time I left a very profitable trade run through the weekend and got a massive shock of my life when the market opened on Monday and totally wiped out my huge profit as well as I suffered an extra loss as the market opened below my stop loss price due to the gap.
The reason for this was a big news came out over the weekend when the markets was closed and when the market opened on Monday, I took a big hit as there was a huge gap that went against my trade!
SHOULD YOU LET YOUR TRADES RUN THROUGH THE WEEKEND?
Before you decide to let your trades run, there only one important thing to consider: risk!
If the market gaps by 100- 200 pips or more (worst possible case) due to a bad news(or good news) over the weekend, and if your trade is against it, would it wipe your trading account?
If the answer is yes, don’t let your trade run over the weekend. (Always expect the worst).
If 100-200 pips gap is not going to be huge hit(loss) to your account, then let your trade run.
This all depends on how much % (percentage) risk you are taking on your account for each trade you place. The more risk you take for each trade and if there is a huge gap against your trade on start of forex market on Monday morning, you are definitely going to take a huge hit on your forex trading account!
Now, generally the forex market is really liquid market…especially on the major currency pairs and opening price on Monday often tends to be equal or almost close to the closing price on Friday.
Having said that, there will be times when the currency pairs will gap. Sometimes these price gaps can be huge if there’s a big impact news over the weekend.
CONCLUSION
Letting trades stay on through the weekend can work with or against your trades if there is a market gap on Monday morning.
The most important lesson for me when I suffered a huge loss was this: Consider the risks to the trading account before deciding to let trades run through the weekend. Expect the worst! Anything can happen over the weekend…
If you see that there will be a high impact news that is scheduled to be announced on the weekend and that can negatively impact your current trade you have running then you should close your trade on Friday if you don’t know how it might impact your trade.
In my opinion, if you are taking a big risk on each trade you take, you should never let your trade run through the weekend. Period! This is one of the fastest way you are going to bust your trading account if there is a massive price gap on Monday.
The second lesson is this: If your trade has a good amount of profits on Friday, consider taking some of the profits and let the others to run through the weekend.
This also helps to reduce your overall risk as well as if the market gaps up or down in the direction of your trade on Monday, you stand to make additional profits on this trade.
DO YOU HAVE A SIMILAR CASE/STORY JUST LIKE MINE THAT YOU’D LIKE TO SUBMIT?
If you have a personal story/case of the forex market gaping up or down Monday Morning and how did it impact your trading account?
Please submit your story using the comment space below and submit and I will approve it and share it with the rest of regular traders who visit www.swing-trading-strategies.com
BIG THANKS!
Thanks guys and girls for sharing and tweeting posts made on this site and for those that visit regularly to read, a big hi-5 from me!
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