Orders Going Into The Weekend

Filed under: Learn Forex Trading |

 

As forex is a 24-hour market, the phenomenon of ‘gapping’ (when the market gaps through some prices and jumps) is less of an issue than it is in the stock market, particularly on the daily timeframe (gaps are much more common on the lower timeframes). The only time you will really see a noticeable gap on the daily timeframe in the forex market is after the weekend, because the weekend is the only time (except for certain holidays) when the market closes.

 

This raises an interesting question. Should you close orders or trades in play at the close of Friday’s session because the markets could gap after the weekend? My answer to that is quite simple. If I have an order in that has not yet been filled, I close the order. This is because if there is no gap in the market, you can simply open the order again at the open of the new week’s session. And if the market had gapped, then you may want to reassess this order. Moreover, if the market had gapped, then you may not get the price that you wanted and this will affect your risk-reward scenario. Therefore, it is much better to close the order and reassess when the market opens again.

 

However, with regards to orders that have already been filled and in play, I leave these in play over the weekend. The reason for this is because if you closed the trades and opened them again on Monday, then the spread would eat into your profits too much and your edge might be nullified. Moreover, I feel that over the long term, any gaps would balance themselves out, and sometimes it would go for you and sometimes against you. Therefore, I don’t think this is a major factor in the long term as long as you are using stop losses.

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