Is Holding Positions Over the Weekend Really Safe? Can You Trade on Saturdays and Sundays?

The foreign exchange market, with its characteristic of operating 24 hours a day, five days a week, attracts countless traders worldwide. This nearly continuous trading environment often leads one to consider the possibility of extending market exposure into the weekend. Holding a position over the weekend, which means maintaining a forex position after the market closes on Friday until it reopens on Monday, involves considerations that are distinctly different from weekday trading. Although the forex market exhibits high continuity, starting from early Monday morning in Asia and passing the baton all the way to Friday evening in New York, the weekend closure introduces numerous variables that can turn potential opportunities into unforeseen challenges. This article aims to deeply analyze the multiple facets of holding positions over the weekend. Understanding these dynamics is crucial for any trader hoping to operate soundly in the complex global currency market.

Why Does the Forex Market Close on Weekends?

Before delving into the specific risks and considerations of holding positions over the weekend, it’s essential to understand the fundamental reason for these special circumstances: the mechanism of synchronized rest for global markets. The seemingly perpetual operation of the forex market during weekdays can sometimes obscure the fact that it also adheres to global closing periods.

Synchronized Rest for Global Markets

The secret to why forex trading can, in principle, operate 24 hours a day on weekdays lies in the sequential opening of major financial markets around the world: first, the Oceania market (like Sydney) awakens, followed by Tokyo in Asia, then London in Europe takes over, and finally, New York in North America concludes the day, in a continuous cycle. However, on weekends (Saturday and Sunday), the vast majority of major financial centers and their participating banks are closed. Although some markets in the Middle East may have different rest days due to cultural differences (e.g., closing on Fridays), the prevailing global financial practice dictates that the forex market pauses trading on Saturdays and Sundays.

This global synchronized rest is necessary for the operational maintenance of the financial system, the strategic planning of market participants, and even a brief respite for the global economy. On a deeper level, the so-called “24-hour market” is actually a relay race completed by different market participants, not a solo performance by a single market. The complete closure on weekends is equivalent to all major runners in this relay race stopping simultaneously, causing an interruption in continuity. It is this interruption that forms the fundamental premise for all weekend-specific risks (such as the price gaps detailed later), because during this period, the market loses its continuous price discovery mechanism.

Market Closures Outside of Weekends

Besides the regular weekends, the forex market is also typically unavailable for trading on New Year’s Day (January 1st). While national holidays in other countries may lead to reduced liquidity or brief closures in specific regional markets, during the period near the end of the year (like Christmas) and the beginning of the new year, even if trading is technically possible, market participation and liquidity tend to drop significantly.

Traders should be aware that even if their broker allows trading on certain holidays, the market environment can become quite unfavorable. In fact, during these extremely thin trading holidays, even if the market is nominally “open,” some of the risk characteristics it presents, such as an increased likelihood of erratic price movements due to low trading volume, can be similar to weekend market conditions. This reveals an important point: an “open” market is not equivalent to a market that is “tradable under normal conditions.” Risk stems not only from the market being closed but also from a lack of market depth. This also means that even on some weekdays, if there is a major bank holiday in a key financial center, traders may face trading conditions similar to those on the fringe of the weekend.

To more clearly illustrate the rhythm of the weekday forex market, the table below lists the regular trading hours of major forex markets (based on Taiwan Time, GMT+8) and highlights key market overlap periods. Understanding these sessions helps to grasp the moments of highest liquidity during the week, thereby better contrasting the state of liquidity scarcity over the weekend.

Note: The switch between Daylight Saving Time (DST) and Standard Time (ST) affects the specific opening and closing times for the London and New York markets. The overlapping periods in the table are approximate, with the London-New York overlap typically being the most active and liquid period for global forex trading. 

What is the “Gap” Risk You Must Know About When Holding Positions Over the Weekend?

Having established the fundamental reason for the forex market’s weekend closure, we will now explore one of the most significant impacts for traders who choose to hold positions over the weekend: the phenomenon of a price “gap.” This abrupt price discontinuity between Friday’s closing price and Monday’s opening price can catch many unprepared traders off guard.

What is a “Gap”?

A “gap” refers to a noticeable price interval on a chart between two adjacent trading sessions, during which little to no trading occurred, thus forming a visual void on the price chart. In the forex market, this phenomenon is most common between the market close on Friday and the market reopen on the following Monday. When the market reopens after the weekend closure, its first traded price may be significantly different from the last traded price before the close. If the opening price is higher than the previous session’s high, it is called a “gap up”; conversely, if the opening price is lower than the previous session’s low, it is called a “gap down.”

This phenomenon occurs mainly because significant news or events that can alter market participants’ valuation of a currency pair may happen over the weekend while the market is closed. When the market reopens, the price quickly adjusts to reflect this new information or shift in market sentiment. You can think of it like an auction: a piece was valued at $100,000 yesterday, but after a night of major positive news, buyers start bidding at prices far above $100,000 as soon as the auction opens today, creating a gap in the intermediate price range.

On a deeper level, a price gap represents a fundamental discontinuity in the price discovery process. During continuous trading sessions, price discovery is a gradual process where the market progressively digests new information. However, the weekend closure interrupts this process. During this time, new market-related information continues to accumulate, but the market cannot price it in real-time. When the market reopens on Monday, the accumulated information and sentiment are released instantly, causing the price to “jump” to a new equilibrium level rather than transitioning smoothly. This discontinuity is the core of gap risk—the market’s inability to weave new information into the price gradually and continuously as it does during normal trading hours.

What are the Common Types of Gaps?

Price gaps are not all the same; technical analysts categorize them into several types based on their position within a market trend and their potential implications. Understanding these types can help in forming a framework for interpreting the price action that occurs after a weekend, but it must be emphasized that this is not a method for predicting future movements.

Generally, gaps can be divided into four main types:Breakaway Gaps,Runaway/Measuring Gaps,Exhaustion Gaps, and Common Gaps.

• Breakaway Gaps: These gaps typically occur when the price successfully breaks out of a consolidation pattern (such as a trading range, triangle, or wedge), often signaling the beginning of a new trend. They are frequently accompanied by higher volume, and the gap itself is not easily filled in the short term. If the market opens with a breakaway gap after major weekend news, it may suggest strong conviction in the new price level.
• Runaway Gaps (or Continuation/Measuring Gaps): These gaps tend to appear in the middle of an established trend and can be seen as a sign of trend continuation. The gap itself may become a significant support or resistance area for subsequent price action. If the market was in a clear trend before the weekend and opens on Monday with a runaway gap in the same direction, it could be interpreted as a reinforcement of the original trend.
• Exhaustion Gaps: These gaps are common at the end of a long-term trend. They may appear with extremely high volume, which might then dwindle. Exhaustion gaps are often filled relatively quickly and are sometimes considered a signal that the original trend may be about to reverse or at least face a deep correction. If the market shows an exhaustion gap against the prevailing trend after the weekend, it could mean the momentum of the original trend is waning.
• Common Gaps: These gaps often occur in consolidating or trendless markets. They are usually small and are filled quickly. They generally do not have significant trend-indicating implications. After a quiet weekend, if the market opens on Monday with a small common gap that is quickly filled, it might simply reflect a minor order imbalance at the open.

The “informational content” of a weekend gap can be descriptively inferred from its type and the market conditions preceding its appearance. For example, if a major, unexpected economic policy adjustment is announced over the weekend, and the market responds on Monday with a strong breakaway gap, this describes the market’s decisive reaction to this new fundamental information. Conversely, if there is no significant news over the weekend and the market opens with a small common gap that is quickly filled, it may reflect more of a technical micro-adjustment at the open. This is not a prediction, but a description of how the market, in a discontinuous information-processing environment like the weekend, uses different types of gaps to initially digest and interpret the net impact of accumulated weekend information.

How Does Major Weekend News Create Gaps?

When the market is closed, any sudden and significant event—such as an escalation of geopolitical conflicts, an unexpected natural disaster, a major economic policy announcement, or a so-called “black swan” event—can dramatically change market sentiment, leading to a price gap when trading resumes on the next day. Throughout the weekend, traders and institutional investors re-evaluate their existing positions and desired entry/exit points based on any new information they receive. When the market reopens on Monday, this collective shift in perception can trigger a flood of orders at prices significantly different from Friday’s close, thereby creating a price gap.

For example, if a country’s central bank suddenly announces a surprising monetary policy over the weekend, or if the election results of a major country are vastly different from general market expectations, these events can significantly alter the intrinsic value of the relevant currencies before trading resumes. The market is unable to react to this information in real-time while it is closed, and this “information pressure” builds up. When the market’s “valve” reopens on Monday, the price adjustment is often sharp and immediate, rather than a smooth, continuous digestion process. The longer the market is closed and the more profound the impact of news events during that time, the larger the potential gap may be.

Historical Warnings: Moments of Major Turmoil Caused by Weekend Positions

History is replete with cases where major unexpected events caused severe market volatility, posing a stern test for those holding positions over the weekend. These events clearly demonstrate the severe price fluctuation risks traders face when they cannot actively manage their positions while the market is closed, should a market-shaking piece of news break.

• Swiss Franc “Black Swan” Event (January 15, 2015): The Swiss National Bank (SNB) unexpectedly announced the removal of the 1.2000 EUR/CHF exchange rate floor. Although this event occurred on a Thursday, the immense market shock, instantaneous liquidity drain, and the resulting violent surge in the Swiss franc’s value (USD/CHF plunged nearly 27% at one point) fully demonstrated the extreme volatility that a sudden major policy shift can trigger. The nature of this volatility is quite similar to the huge gaps that unexpected weekend news can cause at Monday’s open. The event led to massive losses for many forex brokers, some of whom went bankrupt as a result.
• Brexit Referendum (June 24, 2016): The UK voted to leave the European Union. As the results were revealed progressively on Friday (from a global trading perspective, the impact of some key results fermented over the weekend in Asian time zones or during the closing hours of European and American markets), the British pound experienced extreme volatility and a sharp depreciation against other major currencies, with the pound plummeting by 6% in an instant.
• Pound “Flash Crash” (October 7, 2016): This event happened during the early Asian trading session, a time of typically lower market liquidity, especially for Western markets, which could be near the close of Friday or the start of a new week. The pound plunged dramatically against the US dollar and other currencies within minutes, partly blamed on a lack of market depth and possible triggers from algorithmic trading.

These historical events are not just abstract textbook cases; they represent real and often severe financial consequences for traders holding positions. Extreme weekend events not only test the risk management capabilities of individual traders but also pose a severe challenge to the entire financial market infrastructure. Even if a trader correctly judges the market direction, they could still suffer losses if their broker runs into trouble under the impact of an extreme event. This is an often-overlooked but crucial layer of risk associated with holding positions over the weekend.

What Other Details of Liquidity and Price Changes Should You Note for Weekend Positions?

Besides the potentially dramatic impact of large price gaps, holding positions over the weekend also involves dealing with more subtle, but equally important, changes in market liquidity and price behavior, especially around the market close on Friday and during the initial phase of the market reopening on Monday.

The Phenomenon of Friday Position Adjustments

A common market phenomenon is that many traders, wary of the uncontrollable risks of holding positions over the weekend, such as price gaps, tend to close out their positions before the weekend arrives. Therefore, on Friday afternoon, especially nearing the closing hours of major markets like London and New York, a wave of position-adjusting trades often occurs. This concentrated closing or reduction of positions can lead to a short-term increase in market volatility, and price movements can become relatively unpredictable as a result. Furthermore, some important economic data, such as the highly watched U.S. Non-Farm Payrolls (NFP) report, is typically released on the first Friday of each month, and the release of such data itself brings significant volatility to the market.

This increased volatility in late Friday trading is, in fact, a collective, forward-looking behavioral response of market participants to the anticipated weekend risks. Ironically, the common action of numerous traders trying to avoid weekend uncertainty can create short-term trading difficulties for those who remain active or try to enter/exit the market late on Friday, such as amplified volatility and potentially wider spreads.

Liquidity Changes and Potential Sharp Volatility at Monday’s Open

Corresponding to the position adjustments before Friday’s close, when the market reopens early on Monday morning (e.g., during the time when the Wellington, New Zealand, and Sydney, Australia, markets are the first to start trading), market liquidity is usually quite thin, far less than the levels seen later when major Asian markets (like Tokyo) and European/American markets become active. If significant market-moving news or events occur over the weekend, this combination of breaking news and relatively low initial liquidity can easily trigger sharp price fluctuations. Bid-ask spreads may also widen significantly, and the difficulty of getting orders filled increases, or the execution price may be much worse than expected.

Even if no major weekend news occurs, the market may appear “jumpy” or unstable at the Monday open simply because it needs to find a new equilibrium point. It’s worth noting that the Monday “opening price” is not a single, clear price point but rather a price discovery process fraught with execution uncertainty. The “gap” or opening price that traders see on a chart may not be a price at which they can actually execute a trade due to liquidity constraints. In moments of extremely low liquidity, it may be impossible to get a quote at all, or if a quote is available, the huge spread makes the transaction cost prohibitive. Therefore, the so-called “official opening price” may differ from the price an individual trader can actually get filled at.

What is the Connection Between Weekend Positions and Forced Liquidation?

If the market experiences a significant price gap against a trader’s weekend position after the weekend, their account equity can shrink rapidly. Once it falls below the broker’s required maintenance margin level, it may trigger a margin call or even lead to forced liquidation (commonly known as a margin call or stop-out). Forced liquidation is a risk control measure taken by brokers to prevent a trader’s losses from exceeding their account funds.

While brokers typically do not execute forced liquidations over the weekend when the market is closed, if a huge gap at Monday’s open causes an account to meet the liquidation conditions, the broker will execute the closing order as soon as possible after the market reopens. In extreme cases, if the size of the price gap is so large that losses exceed the trader’s entire deposited margin, it could even result in a negative account balance, meaning the trader would owe the broker additional funds.

A key point is that a price gap that occurs over the weekend essentially bypasses the protective mechanism of regular stop-loss orders set during weekday trading sessions. A stop-loss order is designed to automatically close a position to limit losses when the price reaches a preset level during continuous market trading. However, if the market “jumps” directly past a trader’s set stop-loss price during the weekend closure, then when the market opens on Monday at a price much worse than the stop price, the stop-loss order will be executed at the first available market price. This means that the effectiveness of the stop-loss, a vital risk management tool, is greatly diminished in combating weekend gap risk. The “guaranteed” effect of a stop-loss can only be fully realized when the market maintains continuity.

The Hidden Cost of Weekend Positions: What is Swap (Overnight Interest)?

In addition to the risks from direct price fluctuations and liquidity changes, holding positions over the weekend also involves a financial component often overlooked by some traders: swap (overnight interest), also known as the rollover cost. This fee can be a debit or a credit to a trader’s account, and it has special calculation rules when it involves holding positions over the weekend.

Why is Triple Swap Settled on Wednesday?

For most forex currency pairs, a well-known but often questioned rule is that typically at the end of the trading day on Wednesday, when a position is rolled over to Thursday, a triple swap (three times the daily swap) is calculated and charged or paid. This rule is particularly important for traders planning to hold positions over the weekend, as it significantly affects the cost of holding the position.

The root of this “Wednesday triple swap” rule lies in the T+2 settlement convention of the spot forex market. T+2 means that a trade is officially settled with funds and currency exchange on the second business day (T+2 day) after the execution day (T day).

• If a position is held overnight from Wednesday to Thursday, according to T+2 settlement, its normal settlement day would be Friday.
• However, since the following Saturday and Sunday are bank holidays and normal fund settlement cannot occur, market convention is to account for the interest for these two days by including it in the overnight swap calculation on Wednesday.
• Thus, the swap settlement after the close on Wednesday actually includes three days of interest: one day for holding the position on Thursday (normal settlement), and two additional days for the upcoming Saturday and Sunday (settled in advance).

Traders must be aware of this when considering holding positions over the weekend, as this triple swap can significantly increase or decrease the cost-effectiveness of holding the position, even if the trader plans to close it before the actual weekend arrives. It should be noted that the triple swap settlement day may vary for different financial instruments. For example, some indices or commodities (like copper) may have their triple swap settled on Friday. And for currency pairs with T+1 settlement, such as USD/CAD, the triple swap day might be on Thursday.

How to Check and Understand Swap Rates?

The long (buy) and short (sell) swap rates for different currency pairs can usually be found in the Contract Specifications or product details section of the trading platform you are using, or they can be checked on your broker’s official website.

These rates are generally quoted in “points” or as an annualized percentage, and they may change daily due to fluctuations in interbank lending rates and adjustments by the broker. Therefore, traders need to clearly understand whether the swap for their held position is positive or negative.

Knowing these rates is crucial for calculating the true cost of holding a position over the weekend. For traders who want to effectively manage their trading costs, in addition to providing financial trading rebate services, Cashback Island’s website offers professional calculators and timely updated information, which can also help in understanding such trading parameters.

How Should Traders Prepare for the Uncertainty of Holding Weekend Positions?

Understanding the mechanics of market closures, the risk of price gaps, shifts in liquidity, and the swap costs associated with weekend positions is the first step in dealing with weekend uncertainty. Next, it is necessary to recognize the importance of continuously monitoring market information and being familiar with one’s own trading parameters. This section is not intended to provide specific trading strategies, but rather to highlight areas of knowledge that contribute to a more comprehensive and cautious perspective.

Pay Attention to Market Dynamics and the Economic Calendar

When considering holding a position over the weekend, it is crucial to maintain a high level of sensitivity to scheduled economic data releases, potential geopolitical events, and overall market sentiment. The release schedules for many important economic indicators, such as Gross Domestic Product (GDP), unemployment rates, retail sales data, and central bank interest rate decisions and policy statements, are announced in advance and can be tracked using an economic calendar. At the same time, one must remain vigilant for unscheduled breaking news, such as unexpected political developments or major natural disasters.

While it is impossible to predict all news that could affect the market, staying informed about known upcoming events helps in assessing potential drivers of market volatility. For instance, if a major economy is set to announce key election results over the weekend, or if an important international conference (like a G7 summit) is taking place, the likelihood of a price gap at the market open on Monday undoubtedly increases. Cashback Island is committed to supporting traders, and its timely updated intelligence can serve as an auxiliary tool for traders to stay informed.

Understand Your Broker’s Rules for Weekend Positions

Traders must be aware that different forex brokers may have varying trading conditions, including but not limited to margin requirements, specific swap rates, the exact closing time for the market on Friday, and the opening time on Monday. Therefore, it is essential to thoroughly understand and be familiar with the relevant policies of your chosen broker before holding positions over the weekend.

This includes understanding how and when the broker executes forced liquidation procedures when a major price gap leads to insufficient account margin. You should also pay attention to whether the broker temporarily adjusts margin requirements near the weekend or in anticipation of high market volatility. Additionally, the extent to which bid-ask spreads widen during the Monday opening session can vary between brokers, and their server time settings will also affect the precise calculation point for daily swaps.

Conclusion: Prudently Evaluate the Uniqueness of Holding Positions Over the Weekend

In summary, holding positions in the forex market over the weekend undoubtedly carries its own unique risk and reward characteristics compared to trading during the week. The temporary interruption of market trading, combined with the potential for major news to break during the closure, forms the basis for price gaps, changes in liquidity conditions, and the incurrence of specific costs like triple swaps. From exploring why the market closes on weekends to reviewing historical instances of volatile Monday openings, this article has aimed to provide a descriptive overview of the core elements that constitute the complexity of holding weekend positions.

A thorough understanding of these factors is crucial for any trader considering holding a forex position over the weekend. Ultimately, navigating the challenges of weekend positions requires traders to make prudent considerations based on sufficient information and a clear understanding of the market’s underlying mechanics. Platforms like Cashback Island are dedicated to supporting traders on this journey by providing financial trading rebate services, professional auxiliary tools, and timely market intelligence, helping them make more informed decisions.

Cashback Island continuously updates its forex trading educational resources. Traders can visit the “Cashback Island Educational Guides” section to master more forex knowledge and investment skills.

Frequently Asked Questions

Q1. Is it truly impossible to trade forex on Saturdays and Sundays?

In principle, the forex market is paused on weekends because major global trading centers are closed. However, some platforms offer limited weekend order placement services, allowing traders to set conditional orders in advance to capture opportunities at the Monday open.

Q2. What are the biggest risks to watch out for when holding positions over the weekend?

Price gaps are the key risk. International events can cause a discontinuous price difference between Monday’s opening price and Friday’s closing price.

“Forex trading involves high risk and may result in the loss of funds. The content of this article is for informational purposes only and does not constitute any investment advice. Please make decisions carefully based on your personal financial situation. Cashback Island assumes no liability for any trading-related outcomes.”