Day trading at the weekend is a growing area of finance. Forex weekend trading hours have expanded well beyond the traditional working week. With no central market, currency rates can be traded whenever any global market is operating – be it London, New York, Hong Kong or Sydney. For similar reasons, Bitcoin and other cryptos, can also be traded over the weekend. Some brokerages now also offer weekend trading on indices as the growth in day trading part time continues. Here we detail some of the markets for weekend trading, strategy choices and some benefits and risks to consider.
Can You Trade On The Weekends?
There is a popular misconception that you cannot trade over the weekend. Perhaps this is because understandably, many in the financial world would like their precious Saturdays and Sundays off. Nasdaq weekend trading, and trading in India, plus the U.S stock exchanges are all off the cards from 16:00 on Friday, until 09:30 on Monday morning.
However, technology has been the catalyst for globalisation and not everyone in the world works on the same schedule. The Middle East’s trading hours, for example, work Sunday to Thursday, and in some places, Saturday through to Wednesday.
So, the answer is yes, you definitely can start trading online at the weekend. In fact, weekend trading in binary options, currency, stocks, CFDs, and futures is growing rapidly.
Some of the most popular indexes available during the weekend are:
- DFM Index – This index is based on the Dubai stock exchange, which is one of the major exchanges in the United Arab Emirates.
- Kuwait Stock Exchange – This is the national stock exchange in Kuwait and includes the biggest companies, banks, insurance companies, and real estate.
- Tadawul Index – This is the only stock exchange located in Saudi Arabia.
- Tel Aviv 25 Index – This is comprised of the top 25 companies by market capitalisation in the Tel Aviv Exchange, Israel.
In addition to the above, some brokers are now also offering weekend trading on European and US indices including the FTSE, DAX and even Wall Street. Always ensure you read the terms of weekend trades, particularly if using stop losses. At IG for example, stop losses setup during the week will not be triggered at the weekend. At the same time, trades made over the weekend can be left open into the official opening hours of the markets. These conditions may play a vital part in your strategy, so make sure you understand them. As more brokers start to offer weekend trading, the differences between how they operate will grow.
Why Trade On The Weekend?
So, whilst there are weekend trading markets available, it’s an entirely different question as to whether you should get involved. Here are several reasons why you might want to:
- Strategy friendly – Whilst some strategies will turn handsome profits in a high volume week, others will perform better on the weekends. The Asian markets that are open, for example, behave differently to many western markets. This plays into the hands of certain traders with strategies better suited for the different market conditions.
- More trading = more profit – Whilst this is not always the case, in general, the more time you spend trading the greater opportunity you have to turn profits. If it’s a choice between housework and generating revenue, many will opt for the latter.
- Flexibility – For some, trading in the week simply isn’t an option. The weekend is ideal for those with busy schedules and intra-week commitments. You have the freedom to choose the hours that suit you.
- Focus – If your week is hectic, the weekend may come with fewer distractions. This could translate into greater concentration and enhanced trading decisions.
Restrictions On Weekend Trading
Despite the numerous benefits weekend day trading offers, there remain several limitations. The most problematic of which are listed below.
- Limited instruments – There are fewer assets available on the weekends. If you like to trade using the news and with instruments you have a good understanding of, you may face problems. For example, Nokia, Ford Motors, and Twitter are all traded on the New York Stock Exchange and out of bounds at the weekend. However, those trading on price movements using technical analysis should still be able to turn profits.
- Low volume – Forex weekend trading hours stretch across both Saturday and Sunday. When London closes up shop, Hong Kong is still going strong. Weekend gold and oil trading markets are very similar. The problem is, at some points trading volume will be extremely low. This results in flat markets and unhelpful charts.
- Time zones – This limitation is rather self-explanatory. Your body clock may not look favourably on trading over the weekend. Stock exchanges in the Middle East, for example, operate at less friendly hours if you’re based in the UK or the US. If you don’t want to get up in the middle of the night, you might want to think twice.
- Brokers hours – Many brokerage firms take the view that there aren’t enough customers to warrant opening their doors over the weekends. This means you’ll need to check your broker’s trading times. If they aren’t open, you’ll need to head elsewhere. 24option, Metatrader, Scottrade, Etrade, and FXCM all offer weekend trading platforms, as do IG and Nadex.
- Dangers of volatility – Whilst volatility also promises traders plenty of opportunities to turn profits, it also comes with risks. Because normal market participants aren’t active, there are often vast differences between bid and ask prices for stocks. This leads to some traders getting hoodwinked.
Do Weekends Effect Trading Strategies?
Yes, they do. As a result of the big market players spending their profits on the weekend, the markets on a Saturday and Sunday can behave in peculiar ways. You’ll find increased volatility and varying volume.
This all means you need to amend your strategy in line with the new market conditions. Alternatively, you may want a unique weekend trading strategy.
Below several strategies have been outlined that have been carefully designed for weekend trading.
Closing Gaps – Gap Trading Strategy
The market conditions are ideal for this weekend gap trading forex and options strategy. Gaps are simply pricing jumps. At some point something shifted the market, leading to a price jump to a higher or lower level, whilst excluding the prices in-between.
Firstly, what causes the gaps? Any number of things can be the cause, from new movements to accelerated movements. The one thing they do require though is substantial volume. Because the weekend sees the big players out of the game, you’ll struggle to find these gaps. Instead, you’ll find closing gaps.
Closing gaps can be created by just a few traders. For whatever reason, a few people invest in the same direction. The market then spikes and everyone else is left scratching their head. So, what do they do? They think it must be a mistake and trade in the opposite direction, looking to profit from the error.
- Upwards gap – Traders will sell their assets. The markets will then fall and the gap will close.
- Downwards gap – Traders will buy assets. The market will then rise and the gap will close.
If you see gaps in low-volume markets like on the weekends, there is a high chance they will close.
Because you know the gap will close you have all the information needed to turn a profit. You know:
- The price target – The market is going to move up until the price reaches the level of the first candlestick that makes up the gap. With downwards gaps, it should rise to the low of your previous candlestick. With upwards gaps, it should fall to the high of your initial candlestick.
- The expiry – You know the market should reach the target price within the next period. So, you can trade a high/low option. In addition, you could trade a one-touch option, which could give you a greater payout. Make sure you invest in an option with a price target inside the gap and expiry shorter than one period.
This strategy is straightforward and can be applied to currencies and commodities. All you need is your weekend trading charts and you can get to work. You can even pursue weekend gap trading with expert advisors (EA).
This is an effective strategy to add to your weekend arsenal. Bollinger Bands highlight a price channel that the market shouldn’t leave. You’ll find that on the weekends this price channel can be extremely accurate. This makes it the ideal foundation for your weekend strategy.
The bands are composed of three lines:
- Upper line – The moving average plus twice the standard deviation. This works as a resistance.
- Lower line – The moving average minus twice the standard deviation. This works as a support.
- Middle line – A 20-period moving average. This can be either support or resistance, depending on whether the market is trading above or below it.
On the whole, you’ll find the market will turn around when it approaches your Bollinger Band.
These bands often yield the best results at the weekend. This is because in the week news events and big traders can start new movements, so the trading range varies more. When the standard variation shifts, so do the upper and lower Bollinger Bands. Strong movements will stretch the bands and carry the boundaries on the trends. This can render predictions useless.
However, the reduced volume on the weekend makes the market more stable. It’s unlikely a substantial number of traders will jump on a movement and disrupt the status quo.
You need to follow just three steps to implement your new strategy.
- Build your chart – Decide on an instrument and then set up your price chart with your Bollinger Bands.
- Be patient – Now you can sit back and wait for the market to approach your bands. You need to stay patient until the market gets within one of the three Bollinger Band lines.
- Make your prediction – Now it’s time to enter your position that the market will turn. For example, you could use a high/low option that predicts the market will not breach the Bollinger band.
Because it’s so straightforward to apply, it’s ideal for both experienced traders and beginners.
If you don’t want to spend your weekend trading bitcoin or on the stock market, there are other ways you can be productive. The weekend is an opportunity to analyse past performance and prepare for the week ahead.
Below are several worthwhile endeavours to explore on the weekends.
As Paul Tudor Jones aptly highlighted, “The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge.” Whilst practice makes perfect, you need to absorb as much information as possible. So, consider spending the weekends pursuing the following:
- Courses – There are numerous online courses that will help you get to grips with intricate strategies, taught by veteran traders.
- Books – You’ll find a whole host of books and ebooks that provide invaluable advice and guidance. If you’re looking for some of the most highly regarded, see our books page.
- Podcasts – If you’re busy on the weekend, or on a long drive to the in-laws, why not put a podcast on? You’ll find asset-specific audio casts written and recorded by experts. Just one useful tip could make the difference between a financially flailing strategy and a profitable one.
There’s no better way to predict how the markets will behave in the future than by looking to the past. You can use those lazy Sunday hours to simulate market environments of the past to test potential strategies.
Whilst it must be said past performance is no guarantee of future performance, it can be a strong indicator. Not to mention you can iron out any creases so your plan is ready to go when you head online at 09:30 am on Monday morning.
When the markets are open you can often get caught in a whirlwind of emotions and trading activity. The weekends are fantastic for giving you an opportunity to take a step back. You can take a look back and highlight any mistakes.
This will help you implement a more effective trading plan next week. Perhaps you may need to adjust your risk management strategy. Perhaps it’s time to try a different breakout strategy this week. So, if you’re not interested in weekend share trading, sit down and identify areas for improvement.
The weekend also gives you the opportunity to investigate any upcoming events that may impact your market. The DailyFX Economic Calendar, for example, allows you to identify important economic dates, like policy reform. You can then tweak your action plan to take into account upcoming events that are going to influence market conditions.
For the switched on day trader the weekend is just another opportunity to yield profits. Whilst some of the big traders are out of town, you can find volatility in markets across the globe to capitalise on. Whilst many brokers and exchanges close, there’s always some alight with activity, particularly in The Middle East. If you do want to trade, remember to amend your strategy in line with the different market conditions. Alternatively, opt for one of the weekend specific strategies above.
If you want a break from the bustle of actual trading, you can still prepare for the week ahead. You can utilise any of the educational resources listed above, or you can start back-testing and strategising for Monday.