Holding Forex Over the Weekend: Gap Risk and 5 Ways to Handle It
Have you ever worried about a gap on Monday after holding a position over the weekend?
In short, assume a gap can stop your stop-loss from filling as set, and decide your lot size and margin buffer in advance.
This article covers why gaps open, how stop-losses slip and guidelines for deciding whether to hold.
Key takeaways
- The market closes on weekends, and if a gap opens at the Monday reopen, a stop-loss fills at the price after reopening.
- Zero-cut does not guarantee your stop-loss distance, so if you hold, a smaller lot size and a buffer in margin level are the basics.
- Spreads tend to widen early on Monday, so avoid holding on the assumption that the gap will fill.
In short: decide on weekend holds assuming a gap can happen
- The market closes on weekends, and price can jump when it reopens on Monday
- A stop-loss that is jumped over by a gap fills at the price after reopening, not your set price
- Even with zero-cut, your stop-loss distance is not guaranteed
- If you hold, first secure a smaller lot size and a buffer in your margin level
A guide to when the market closes for the weekend
The forex market runs 24 hours on weekdays but closes on weekends. It is closed from the New York close on Friday until the Oceania session reopens on Monday.
News and events do not stop while the market is closed. The price at reopening can sit away from Friday's closing price.
| Item | US summer time | US winter time |
|---|---|---|
| Friday close (guide, Japan time) | Around 6 a.m. Saturday | Around 7 a.m. Saturday |
| Monday reopen (guide, Japan time) | Around 6 a.m. Monday | Around 7 a.m. Monday |
| Server time | Differs by broker | Differs by broker |
Why gaps happen
A gap is when the close of one candle and the open of the next sit apart, leaving a blank space on the chart. Such blanks tend to appear across a weekend.
- Remarks by key figures over the weekend, or sudden announcements by financial authorities
- Geopolitical events and sudden news such as conflicts
- Political events such as elections or referendums whose results come out over the weekend
- One-sided orders building up while the market is closed
Most weekends end with only a small gap. Rarely, however, a week opens with a large one, and that is where losses grow.
How a gap makes a stop-loss slip
A stop-loss is an order that closes at market once price reaches its level. If a gap jumps over that price, it fills at the first price available after reopening.
- 1
At Friday's close
You hold a buy position over the weekend with a stop-loss 20 pips below.
- 2
Bad news comes out over the weekend
The market is closed, so the stop-loss order does not move.
- 3
Monday reopens with a gap
Price jumps over the stop-loss level and opens 50 pips lower.
- 4
It fills at the price after reopening
The stop-loss closes near 50 pips down, causing a larger loss than expected.
| Item | Expected | If it slips on a gap |
|---|---|---|
| Loss distance | 20 pips | 50 pips |
| Loss amount (0.2 lots) | About 40 USD | About 100 USD |
| Share of account funds | 2% | 5% |
Even with zero-cut, your stop-loss distance is not guaranteed
Zero-cut is a system in which the broker absorbs the amount by which your balance goes negative. Even if a stop-loss slips on a gap, the loss stays larger than you originally planned.
The conditions for applying it differ by broker. The mechanism is covered in more detail in a related column.
Watch for wider spreads early on Monday
Right after the market reopens, few participants are trading and spreads tend to widen. The wider-than-usual state can last for a while.
- Right after reopening, market order fill prices tend to deviate a lot
- When spreads widen, a stop-loss can trigger earlier
- Judgments for limit and stop orders are also affected by the wider spread
- Many traders wait and watch before acting early on Monday
5 guidelines for deciding whether to hold over the weekend
There is no right answer on whether to hold. The basic approach is to decide based on whether you could withstand the loss if it grew.
| Measure | What it means | Note |
|---|---|---|
| Keep a buffer in margin level | Keep it at a level where unrealized losses that grow on a gap still do not reach the loss-cut | How much buffer is enough differs from person to person |
| Reduce your lot size | Cut it to half the weekday size or less to make a gap loss smaller | Reducing it also makes the profit smaller |
| Close part of the position | On Friday, lock in profit or loss on just part of the position | It takes effort to re-enter, and the spread is incurred |
| Lock it with a hedge | Hold an opposite position to stop profit and loss from moving | The timing of unwinding is hard, and it also uses margin |
| Close everything and do not hold | Close all positions on Friday | You cannot ride the moves early in the week |
Cautions when locking with a hedge
Even with a hedge, how you unwind it can fix a loss. Whether hedging is allowed differs by broker, and how required margin is handled also differs.
Before you actually use it, check the conditions on the official page. The mechanism is explained in the related column on hedging.
Weekend swap and the Wednesday triple rule
Swap is an interest rate difference adjustment that is paid or received when you hold a position across days. The amount for Saturday and Sunday is generally said to be applied on Wednesday, as three days at once.
- The day with triple swap may differ by currency pair, symbol and broker
- With negative swap, holding across Wednesday means three days of payment
- Even if you hold from Friday, the weekend portion is generally applied on Wednesday
- Check the exact application day in the trading conditions on the official page
Do not count on the gap-fill anomaly
It is sometimes said that gaps tend to get filled. However, the time it takes to fill is not fixed, and some gaps are never filled.
Do not assume the gap will fill
A plan to hold until the gap fills is a cause of growing losses. Decide your stop-loss and fund management rules first.
How weekend holds relate to cashback
Many cashback schemes are calculated based on trading volume. Whether holding over the weekend changes what is eligible needs to be checked for each broker.
Cashback amounts are not yet confirmed and will be published on each broker page at launch. Avoid holding unnecessarily or raising your lot size because of the rebate.
Enter your lot size and margin to check how much buffer you have before the loss-cut. Before holding over the weekend, check your buffer in case a gap moves price.
Check your loss-cut levelFAQ
Q.Is holding forex over the weekend dangerous?
A gap can make a stop-loss slip and cause a larger loss than expected. Whether it is dangerous depends on your lot size and margin buffer. If you hold, it is common to use a smaller lot size and keep a buffer in your margin level.
Q.Does a stop-loss fill on a gap?
It does fill, but at the first price after reopening, not the price you set. That can mean a larger loss than expected. Even with zero-cut, this difference is not compensated.
Q.Do spreads widen on Monday morning?
Right after the market reopens, there are few participants and spreads tend to widen. How much differs by broker and currency pair. Be careful of fill gaps on market orders right after reopening.
Q.Does a gap always get filled?
Not necessarily. Some see gaps as likely to fill, but the time is not fixed and some gaps never fill. Avoid holding a position on the assumption that the gap will fill, and put your stop-loss rules first.
This article is for information purposes only and is not investment advice. Conditions may change, so please check each broker's official page for the latest information. Offshore FX and CFD trading carries a risk of losses exceeding your principal.
