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. Currency traders should read our guide to forex weekend trading.
Some of the most popular stock 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 (IG offer the ‘Dow IG Weekend’ market). 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 challenging aspects of weekend trading are outlined below:
- Limited availability of instruments – There are fewer assets available for trading on weekends, which can pose a problem for those who prefer to trade with instruments they are familiar with, especially those who rely on news. For instance, Nokia, Ford Motors, and Twitter are all traded on the New York Stock Exchange and are off-limits during weekends. However, those who use technical analysis to trade can still make a profit.
- Low trading volume – Forex trading hours on the weekend span both Saturday and Sunday. While Hong Kong’s market is still active when London closes, trading volume can be extremely low at times, leading to flat markets and unhelpful charts.
- Time zone differences – This limitation is self-explanatory. Trading during weekends may not be ideal for those whose body clock is not used to it. Stock exchanges in the Middle East, for example, may operate at less friendly hours for traders based in the UK or the US.
- Brokerage hours – Some brokerage firms may not open their doors over the weekend due to a lack of customers. It is crucial to check your broker’s trading times; if they are not open, you may need to look elsewhere. IG, Nadex, 24option, Metatrader, Scottrade, Etrade, and FXCM all offer weekend trading platforms.
- Volatility risks – While volatility offers plenty of opportunities for traders to make a profit, 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.
Weekend trading has also boosted by those ‘always on’ assets – cryptocurrencies.Brokers have seen the appetite to trade is growing and add markets all the time, e.g.the DOW IG Weekend and other indices.
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 discover closing gaps.
Closing gaps can be formed by just a few traders. For one reason or another, a few people invest in the same direction. The market then spikes, leaving everyone else puzzled. What do they do? They believe it must be a mistake and trade in the opposite direction, seeking to benefit 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, such as on weekends, there is a high possibility that they will close.
Application
Because you know the gap will close, you have all the information necessary to earn a profit. You know:
- The price target – The market will move up until the price reaches the level of the first candlestick that forms the gap. For downward gaps, it should rise to the low of your previous candlestick. For upward 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. As a result, you can trade a high/low option. Additionally, you could trade a one-touch option, which may provide you with a greater payout. Ensure that you invest in an option with a price target inside the gap and an expiry shorter than one period.
This strategy is simple and can be used with 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).
Bollinger Bands
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.
Weekend Use
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 improbable that a significant amount of traders will join a movement and disrupt the status quo.
Application
Implementing your new strategy is only a matter of following three simple steps.
- Build your chart – Choose an instrument and set up your price chart with Bollinger Bands.
- Be patient – Sit back and wait for the market to approach your bands. Stay patient until the market gets within one of the three Bollinger Band lines.
- Make your prediction – Enter your position that the market will turn. For instance, use a high/low option that predicts the market won’t breach the Bollinger band.
Because of its straightforwardness, both experienced traders and beginners can benefit from it.
Alternatives
In case you don’t want to spend your weekend trading Bitcoin or on the stock market, there are other ways to be productive. The weekend is an opportunity to analyze past performance and prepare for the week ahead.
Below are some worthwhile endeavors to explore on the weekends.
Education
As Paul Tudor Jones aptly highlighted, “The secret to being successful from a trading perspective is to have an indefatigable, undying, and unquenchable thirst for information and knowledge.” While 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.
Manual Back-Testing
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.
Evaluation
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.