What can You Trade on Weekends?
High leverage is a major feature of retail trading that is attractive to traders. Also the freedom of trading at any time You want directly from your smartphone or laptop is another attractive feature. However, all the financial markets do not operate in the same way nor feature the same open market hours. Some trade around the clock from Monday to Friday. Some are available for trading 24/7. Others have a rigid schedule of open market hours that are usually determined by the exchange. Due to this discrepancy in trading times, some financial markets are available for trading on Saturdays and Sundays. This is known as weekend trading.
Day trading at the weekend is gaining traction among traders. Forex weekend trading hours have increased much more than the traditional working week. Since there is no central market, it means currency pairs can be traded anytime. Global market exchange is operational whether it is in New York, Sydney, Hong Kong, or London. Similarly, Bitcoin and other cryptos have also become available for weekend trading. Some brokerages are now offering weekend trading on indices. Day trading continues to grow.
The Misconception about Trading on Weekends
There is a popular misconception that it is not possible to trade on weekends. This is understandable considering many people in the financial world prefer to have their precious Saturdays and Sundays to themselves. Nasdaq and other U.S stock exchanges are all unavailable starting from 4:00 PM on Friday to 9:30 AM on Monday.
However, considering that time zones are different and not everyone works on the same schedule. Technology has made globalization possible. Trading opportunities are now available on weekends. For instance, in the Middle East, trading hours are from Sunday to Thursday while it is from Saturday to Wednesday in some other places.
Trading on weekends is now very much possible and available. Opportunities to trade on weekends in currency, stocks, CFDs, binary options, and futures are rapidly rising. This article will be examining these opportunities. As well as the best strategies that will increase your chance of becoming profitable in weekend trading.
The Trading Times of Major Markets
As mentioned earlier, not all markets have the same operating hours. To trade on weekends, you will need to identify a market that is open during weekends so that you can get a counter-party for your market order. In the United States, the open market hours for regular stocks on Nasdaq and the New York Stock Exchange are between 9:30 AM and 4 PM EST.
While there are after-market trading hours in the stock market from 4 PM to 8 PM on each workday. Trading during these hours tends to incur higher trading costs. Along with execution prices that are less favorable to traders. Invariably, trading during after-market hours will result in the trader either buying a stock at a higher price or selling it at a lower price.
Stock trading is not available on weekends. All that can be done is market analysis from a position-trading or swing-trading point of view. This will enable traders to identify potential trading opportunities. Opportunities that they can capitalize on when the market resumes operation again by Monday.
The cryptocurrency market is different. It is continuously open for trading from Monday to Sunday. It is only closed when crypto exchanges shut down due to an upcoming fork or for maintenance.
The forex market is somewhere in between the stock market and the crypto market. In between with regards to open market hours as it is open round the clock but just from Monday to Friday. However, a new trading week starts on Sunday due to the over-the-counter nature of the market.
Forex is an over-the-counter market. Currencies are traded during forex trading sessions. The most important sessions include the London session, the Sydney session, the New York session, and the Tokyo session. These sessions exist across different time zones. Forex traders can place trades at different times around the world on workdays. However, when a new trading day begins in Sydney on Monday, it is still Sunday in the United States and Europe. This is why a large portion of forex traders can engage in trading from Sunday to Friday instead of the normal Monday to Friday.
Pros and Cons of Trading on Weekends
Weekend trading comes with its benefits and drawbacks which will be examined shortly.
· Strategy-friendly. There are certain trading strategies suited to perform well and produce substantial profits in a high volume week. But some trading strategies are best suited to weekends. For instance, the Asian markets that are open on weekends behave differently from several western markets. Once a trader has the strategies needed to win in such unique markets, then weekends are always periods to look forward to. Another way weekend trading can be beneficial in terms of strategies is that the weekend gives you time to develop more sophisticated trading strategies. This could be useful in generating profits whether on weekends or during the week.
· Flexibility. For some people, trading during the week is just not possible. Busy schedule or solid commitments during weekdays which is why weekends are ideal. They can choose to do whatever they want with their time. And if trading is what interests them, then trading on Saturdays and Sundays might just be ideal for them.
· Focus. This also has to do with having a hectic week that is filled with so many activities. You cannot get some meaningful time to yourself. This means trying to focus on any trading activity is difficult. However, once the weekend rolls around, you can set your mind and concentrate on trading. This could result in a more synchronized coordination of activities. There are fewer distractions. This will enhance your decision-making process for executing trades.
· Time. Trading on weekends allows you to trade several currency pairs while still having sufficient time to evaluate each trade. Also, there is less pressure compared to during the week. You are probably trying to frantically enter and exit the market at specific price points. On the weekends, there is no need to rush. You can take your time with your decisions. Moreover, the more you trade on weekends, the more you are likely to imbibe that calmness. That might serve you well anytime you are trading even if it is during the week.
Below are some of the drawbacks of weekend trading:
· Limited options. Generally, there are fewer assets that are available for trading on weekends. If you are the type of trader that prefers trading with the news on instruments that you have a solid understanding of, then you are likely to experience serious issues. For instance, the assets of Twitter and Ford Motors are traded on the New York stock exchange. This is not operational on weekends which means such assets are unavailable for trading. However, if you trade on price movements through the aid of technical analysis, you should still be able to make some gains even on weekends.
· Limited brokers. There are not a lot of brokers out there that offer traders the option of trading on weekends. They feel the volume is not sufficient enough to be worthwhile. Invariably, if you are already committed to a particular broker, you might not be able to trade on weekends. This is why thorough research must be carried out before selecting a broker. Be sure the one you have chosen will cater fully to your trading needs.
· Low volume. Weekend trading hours in forex trading span both Saturday and Sunday. This is why London can close operations while Hong Kong is still active and some other financial markets are like that. However, at some point, the trading volume becomes extremely low. This affects market conditions as the markets become flat and charts become unhelpful. Also reduces the trader’s capacity to verify price shifts.
· Differences in time zones. Weekend trading might not suit your body clock. This is especially true when it concerns markets in the Middle East and you are located in Europe or the United States. You might have to be waking up in the middle of the night to place trades. While that might be fine by some people, others might just not find it comfortable. Concluding that the extra potential profit is not worth the stress.
· Risks of volatility. Due to the absence of the normal participants in the market, there is less liquidity. This could lead to an increased level of volatility. Also will most likely result in wider spreads between the bid and ask prices. But on the other hand higher volatility means higher potential profits. It is like a double-edged sword.
· Weekend bias. Trading on weekends means you run the risk of carrying a weekend bias with you into a new trading week. For instance, you might have adjusted your trading plan slightly or be desperate to make up for a loss. If left unchecked can cause you to have an unprofitable first one or two days of trading for that week.
Ideal strategies for Trading on Weekends
It is safe to say that weekends affect trading strategies. There is a likelihood that strategies that work during the week will not work on weekends. This is because markets tend to behave in odd ways on weekends. Big market players spend their profits during these periods. This is leading to increased volatility and varying volume.
What this means is that your strategy has to be modified. Modified according to the new market conditions. Conditions that have arisen due to the weekend coming around. You might prefer to even design an entirely new strategy that is unique and suited only to weekend trading. Weekend trading has been enhanced by ‘always on’ assets– cryptocurrencies. This is why brokers are starting to realize that it is growing in popularity. Brokers are starting to add new financial markets now and then. One prominent broker that does this is IG Markets. Let us now look at some trading strategies that are ideal for trading on weekends.
Gap trading strategy
This strategy is ideal for the market conditions that are seen on weekends, especially for trading forex and options. Gaps are defined as pricing jumps. That occurs when something causes a shift in the market. This leads to a price jump either to a higher or lower level while the prices in-between are excluded. For starters, what causes gaps? They can be due to several factors such as new market movements or accelerated movements. But the most crucial condition that favors the existence of gaps is substantial volume. However, since the prominent players are absent from the market on weekends, it will be difficult to find these gaps as you will only see closing gaps.
Closing gaps can be created by a few traders through a simple process. For some reason, a set of people invest in a similar direction causing the market to suddenly spike. This leaves everyone wondering what is going on. Traders then trade in the opposite direction. They think the sudden spike is a mistake and they can profit from it leading to two types of closing gaps in such a situation:
· Upwards gap: traders sell their assets causing the market to fall and the gap closes.
· Downwards gap: traders purchase assets causing the market to rise and the gap closes.
If you come across gaps in low-volume markets which are common on weekends, there is a likelihood that they will close.
Since you are now aware that the gap will close, all the information required to make a profit is now available to you in the form of the following:
· The price target. The market will continue moving in an upward direction until the price gets to the level of the first candlestick that makes up the gap. With upwards gaps, the price should drop to the high of your previous candlestick. For downwards gaps, it should rise to the low of your initial candlestick.
· The expiry. You are now aware that the market should attain the target price within the next period. This means you can trade a low or high option. You can also trade a one-touch option which could allow you to make a larger profit. The major thing to remember is to invest in an option that has a price target within the gap and an expiry that is shorter than one period.
The strategy is quite simple and is applicable to currencies and commodities. You just need your weekend trading charts and you are good to go. You can even use expert advisors (EA) to enhance your chances of profit with weekend gap trading.
This is an effective strategy for weekend trading. Bollinger Bands highlight a price channel that the market is not likely to leave. You will discover that this price channel can be highly accurate on weekends. This is making it a suitable foundation for your weekend strategy. Bollinger Bands consist of three lines:
· Upper line: this works as resistance and is calculated as the moving average plus twice the standard deviation.
· Lower line: this works as support and is calculated as the moving average minus twice the standard deviation.
· Middle line: this is a 20-period moving average that can function either as support or resistance depending on if the market is trading over or under it.
These bands tend to produce the best results over the weekend. During the week, news events and big traders can initiate new movements causing more variation in the trading range. This is something that does not happen on weekends. When there is a shift in the standard variation, the upper and lower Bollinger Bands will also shift. Strong movements will cause the bands to expand and carry the boundaries of the trends thus making predictions futile. However, with the reduced volume on weekends, the market is more stable, making it perfect for Bollinger Bands to be effective.
Below are the three steps that need to be followed for the implementation of this strategy.
· Build your chart. Choose an instrument and then set up your price chart accordingly using your Bollinger Bands.
· Be patient. You need to relax and then wait for the market to move towards your bands. Patience is key here because you need the market to get within one of the three Bollinger Band lines.
· Making predictions. This is the final step where you enter your position in a direction you believe the market will turn. For instance, you can use a high/low option that forecasts the market will not breach the Bollinger Band.
Due to the simplicity of its implementation, this strategy is suitable for both beginners and experienced traders.
Three Top Tips for Weekend Trading
Regardless of whether you have an interest in trading stocks, currencies, or futures on the weekends, there are some useful tips that should be considered. Those tips will help you steer clear of certain pitfalls while enhancing your chances of making profits. The tips are:
Due to the widening of spreads on weekends because of the trading volume and liquidity, you must select a competitive broker. The low level of liquidity can make spreads to be especially large. This is why your ideal broker should be offering competitive spreads on weekends.
The possibility of gaps along with low liquidity during weekend trading could lead to slippage. This is an issue that needs to be solved. This can be addressed by utilizing maximum deviation or market range features. Those can be found on certain platforms like MetaTrader. These features allow you to select a maximum potential slippage that you are comfortable with.
Utilize the news
Weekend trading comes with odd trading behaviors. The majority of the activity and volatility will be determined by news announcements. This is why you have to stay current with any news events that are pertinent to your market. News sources such as CNBC, Yahoo Finance, and Financial Juice are all excellent sources.
What can You Trade on Weekends?
While a larger share of the markets is in hibernation on Saturdays and Sundays, some are very much active on weekends. We will be looking at some of the markets that enable weekend traders to make extra money. Below are some of the financial markets that are available for weekend trading:
· Tadawul Index. This is a stock exchange market located in Saudi Arabia. Because the economy of Saudi Arabia is the largest in the region. It is the most prominent index available among brokers that offer weekend trading.
· DFM Index. This index is based on the Dubai stock exchange. It is one of the prominent exchanges in the United Arab Emirates.
· Tel Aviv 25 Index. This consists of the top 25 companies based on market capitalization in the Tel Aviv Exchange, Israel.
· Kuwait Stock Exchange. This is the national stock exchange of the nation of Kuwait. Consists of the largest companies such as banks, real estate companies, and insurance companies.
In addition to the markets listed above, some brokers have now made weekend trading available on US and European indices such as DAX, FTSE, and even Wall Street. However, it should be pointed out here that traders need to read the terms of each weekend trade. Terms for a specific broker especially if they are using stop losses. For instance, at IG Markets, stop losses that have been set up during the week will not be activated over the weekend. Also, trades that are executed over the weekend can indeed be kept open into the authorized opening market hours.
These conditions can be crucial in a trader’s strategy. This is why they should be understood and as more brokers begin to make weekend trading available. The differences between how they operate will be more pronounced. Therefore, traders need to be aware of the terms and conditions of the broker they have chosen for trading.
Another group of assets that is available for weekend trading is cryptocurrencies. Weekend trading in cryptocurrencies is gaining popularity. Bitcoin and Litecoin are two of the popular cryptocurrencies for this form of trading. Since they are essentially creations of the internet, it means they can be traded 24/7. Setting them up to be ideal for trading on weekends.
Other Means of Capitalizing on the Weekend
If you have had a hectic trading week involving taking various trading positions in the market. And You are looking to have a break on weekends, you can make the weekends more productive. Engaging in trading activities that will firmly position you for more profits in the coming week. It is still a form of weekend trading. Except you are not entering or exiting positions but rather preparing for the week ahead. Some of the activities include:
· Back-testing. This involves using historical price data to simulate previous market environments. You can test a possible trading strategy. This allows you to locate any problems with the strategy. Helps with necessary adjustments that can be made before implementation.
· Performance analysis. Weekends are perfect for reflecting on your trading performance during the week. Check on what you need to improve and eliminate to enhance your growth as a trader.
· Education. You can immerse yourself in educational tools and resources on the weekends. There are now books, courses, webinars, and other educational trading tools. Traders can use them to enhance existing knowledge and gain new insights into their overall trading strategies.
· Planning. The weekend gives you the chance to investigate any imminent events. Events that are likely to affect your market. Then necessary adjustments can be made to account for the effect of such events on market conditions.
Brokers offering Weekend Trading
As mentioned earlier, not all brokers support weekend trading due to the feeling that it is not worthwhile. But some brokers have begun to realize the growing interest in weekend trading. Because of that, they have made markets available for their clients to trade. Below is a list containing some of the brokers that offer weekend trading:
4. IG Markets
5. IQ Option
Although weekend trading tends to be overlooked, it holds an abundance of opportunities for those intending to start day trading on weekends. Forex and cryptocurrencies are both available from Friday evening to Monday morning along with markets in the Middle East that provide the volatility and volume that traders require to generate profits.
However, it will require adjustment of strategy or even adopting a weekend-suited strategy to maximize potential profit opportunities. Another alternative is to use the weekend to prepare for the new week on the horizon through evaluation, back-testing, and educational resources.