Lessons on Forex Weekend Gap Trading Strategy

Lessons on Forex Weekend Gap Trading Strategy

Looking for the best Forex weekend gap trading strategy?

Well, even if you got that strategy without reading this Forex lesson, it wouldn’t be of much help to you.

I have been trading for the last 7+ years. Experience has taught me that the weekends are the best time of the week to analyze what the market did in the previous week and what it is likely to do in the upcoming week.

If I were you, I wouldn’t occupy myself with searching ”Forex gap trading simple and profitable strategies”.

To be honest with you, trading the weekend gap is not always a safe thing to do if you don’t understand what the market is doing.

What exactly is the weekend gap, and why do they form?

Forex Weekend Gap Trading Strategy

It’s simple…

Currencies are traded during the weekend in just the same way they are traded during the week.

It is only Forex brokers who choose to close on the weekend because there is less liquidity during the weekend compared to normal trading days.

In fact, if you signed up with a Forex broker who operates during the weekend, you’d notice that the markets are really slow at this time.

It wouldn’t be worth trading at all.

Therefore, the reason why you’re seeing a gap on the chart is because your Forex broker closed down the server, then restarted it on Monday the following week.

Naturally, this has to leave a gap behind. The size of the gap is influenced by a number of underlying factors that drive the price of that asset.

For example, if there were major news announcement or events that happened during the weekend, the affected market would resume with a very big gap on the Monday of that week.

Also, if a market is expecting major announcements at the open of the week, the forces of demand and supply could cause a wide gap to form in that market.

One thing I always tell my students is that they should not see Forex weekend gaps as an opportunity to jump into the market.

Forget about the best Forex weekend gap trading strategy. There is nothing you can gain out of such a strategy if it existed.

You should stick to your trading edge whether or not the market you’re trading is expected to open with a gap.

On the same note, if there is nothing to trade on a Friday evening, don’t enter the market anticipating that a gap will form on Monday.

Instead of trading like the herd, I teach my students to trade like snipers.

The sniper approach is really simple but optimized for good returns. You use logic and analyze the market from an objective standpoint.

You only enter when you are absolutely sure that what you’re seeing on the chart is in line with your trading edge.

Most of the time, I see Forex newbies not using any particular trading plan.

After trying many Forex trading strategies and losing, they search for the ”holy grail” Forex weekend gap trading strategy.

Unfortunately, that’s the wrong approach to trading. Unless you’re planning to use a Forex automated robot, there is no need to enter the casino and risk a large amount of money.

What you should be doing instead of looking for Forex weekend gap trading strategy

 

I do not stay in front of the charts any longer than 10 minutes in any trading day.

I prefer to perform my trading analysis during the weekend when ”noise” has subsided.

That way, when the week opens and I happen to see a trade setup that is line with my weekend analysis, I will place my order and close the chart till the next day.

I don’t stair at the charts all day long because it is detrimental to my health and ultimately performance.

I can go and jump outside or do other things apart from trading or staring at the chart.

Weekend analysis only helps me to anticipate what the market is likely to do when the week opens. It makes my work easier and more fun.

Why weekend-analysis is the strategy to implement

The main reason for adapting a weekend-analysis approach to trading is because it obviously saves you more time than someone who is day trading the Forex market.

Above all, the end of the week chart analysis shows you who won between the bulls and the bears.

During the Friday close, the market will have hinted where it will head to next week.

The data that you’re working with at the Friday close is more important that the one you could have worked with in any other day.

The weekly analysis is important because it enables us to watch previous trends and key chart levels on a given market.

Once we get the big picture, we can formulate our trading approach in relation to what we have just seen.

When you’re more prepared, you’re more likely to act in a rational way compared to someone who jumps into the market without first performing this very important analysis.

How to develop your weekend trading analysis Plan

It’s not a complicated thing to do.

I have developed the habit of analyzing the market during the weekend for the last 7+ plus years of my trading.

I have integrated that habit into my trading routine, and it helps a great deal when it comes to boosting clarity and performance.

Even back then before I had any student, I was performing this analysis every weekend. So this is purely coincidental, don’t you think?

When I perform weekly analysis at the end of the week, it gives me a road map to follow.

When I see a nice trade setup along the way, I don’t have to get confused on whether or not to place that trade. I do it without a second thought.

By the way, one of the reasons why am telling you to form this habit is that analyzing the market during the week can be quite cumbersome.

The Forex charts will form real signals. But most of the time, the market will form traps where newbies just see something that looks like a signal and fall into it.

But if you had performed a weekend analysis for that particular market, you wouldn’t get caught unawares. You’d instinctively know what to do when confronted with these situations.

Step 1

I don’t trade all pairs. I only look at specific pairs which I love to trade. EUR/USD is one of them.

I recently added Bitcoin BTC/USD pair into my arsenal of trading instruments.

I trade with Myfxchoice because they have the best trading conditions for anyone who wants to trade Bitcoin in relation to the USD.

I typically open my chart and look at the weekly time frame for the specific pairs which I am interested in trading.

I can now easily and comfortably get a ”bird’s eye view” of the overall market trend.

If there are any support or resistance zones, I will mark them off accordingly.

Step 2

I turn to the daily time frame to mark any support or resistance zones that were not crystal clear in the weekly time frame.

The reason why am looking at the 24 hour chart is because I want to determine which direction I will be trading next week.

Keep in mind that this can be different from what I am seeing in the weekly chart of the same market.

Finally, I will quickly scan the market to see if there are obvious trade setups that I should be looking forward to in the upcoming week.

A Note

Now that we are no longer interested in the best Forex weekend gap trading strategy, it’s always helpful to use our weekend wisely to find tune our trading strategy by eliminating clutter.

Sometimes the daily time frame will be range bound or trending sideways instead of going upwards or downwards.

What I will do is to seek reference from the weekly time frame of the same chart.

If the weekly time frame says that the market is trending upwards, I will tune back to the 24 hour time frame and look to buy the market during the upcoming week.

Also, there are instances when the market will close on Friday while leaving an entry signal in view.

If this signal is crystal clear, we should plan our next week’s trade around that signal.

If it isn’t clear just yet, we should wait on the Monday of the upcoming week and see if something will form out of that potential signal.

Using the weekly time frame as a reference point, we can enter that trade accordingly.

Conclusion

That is how I plan my trades for the upcoming week.

Instead of wasting time and resources to find the best Forex weekend gap trading strategy, I just find some spare time during the weekend to plan my next week’s trades accordingly.

I hope you can see how simple a task this is. When you make it a habit, it become a part of you.

My hope is that you will be looking to improve on your trades by implementing this routine.

I have also developed a Forex and Cryptocurrency mastery course where I teach my students these techniques and many more.

When you subscribe to join me and my students, you will have the privilege to look over my shoulder while learning how I perform weekend analysis of my Forex trades.

If you have any questions, contact me here.

But if you’d like to air your views and opinion, feel free to drop them below in the comment section. 

About Post Author

Warren

Warren is a swing trader and an investment blogger. He mentors students who want to learn to trade Forex, manages investors accounts and also writes reviews about trading products.