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Keeping trades over the weekend: your chance or failure?
Have you ever thought whether to keep a trade open over the weekend? If yes, was a decision like this always profitable for you? If not, maybe you should put off doubts and fears and try it? We have gathered the information you should know about keeping trades over the weekend.
Trading over the weekend is a big dilemma. On the one hand, you may suffer big losses, if the market is shocked by the unexpected news that you couldn’t take into consideration before weekends. On the other hand, you may close trading before the weekend and lose an opportunity to have a profitable trade. Imagine that after the weekend the price continues moving your way, but there is no longer point to enter this trade and as a good entry point is lost.
So, should you keep a trade open over the weekend? If you expect an accurate answer, you won’t find it here. There are many factors that you will have to take into consideration before keeping the trading open.
If you read our previous articles, you could notice that timeframes play an important role in different trading issues. And this case isn’t an exception.
If you are a long-term trader, you keep your positions open during weeks and months, this issue isn’t for you. Any temporary volatility won’t affect your trading. If you are a day trader, your trades last from several minutes to several hours, this question isn’t for you as well. You will consider keeping trades open over a weekend if you are a swing trader who has one trade last for up to several days.
To keep the trading over the weekend, be sure you trade on the right timeframe. H4, daily timeframes may provide you with this opportunity.
2. Risk/reward ratio
Always take into consideration the risk/reward ratio (how much you can afford to lose relative to your potential gain). The optimal risk/reward ratio is 1:3. It means that the potential profit is 3 times higher than the possible losses. Be sure that even if the trading will go against you after the weekend, you will have a safety mechanism in place.
Even if you don’t believe in fundamental analysis, it’s worth checking events that may happen on the weekend. If such important events as Brexit negotiations, Trump’s speeches, NAFTA negotiations, etc are planned on the weekend, it’s wise to think about closing the trades. You never know what news will be out and how the market will react to it.
4. Trading diary
Let’s imagine you tried keeping the trade open over the weekend and you lost. Is it a reason not to try it ever again? Of course not. Make a rule of recording your trades. By doing this, you will be able to track all your profits and losses. It will be easier for you to create your own trading strategy that will lead you to success.
There’s one important thing that relates not to the market but to your personality. Imagine you have an open trade over the weekend, you don’t know what news might be released and what mood the market will have on Monday. Are you ready to be stressed over the weekend and wait in a sweat for Monday? If not, better save your nerves and start trading with a clear head on Monday morning. If you are self-confident and risky, trading over the weekend will be just another interesting challenge for you.
Consider your personal qualities and be sure the weekend won’t become a horror for you.
Making a conclusion, we can say that it’s only your decision whether to keep trades open over the weekend and either expect a bigger profit or stay calm and limit your possibilities. When this question comes to your mind, check all the points we mentioned above and your decision will become easier.
In case you wondered, moving averages are not just some colorful lines on your chart. They may actually be a great tool used in your trading strategy.
It is not a secret that it is necessary to place stop losses when you trade. However, it is also important to understand how to place stop orders correctly.