Holding Forex Trades Over the Weekend

  • July 18, 2022
Holding Forex Trades Over The Weekend

Whether to hold a forex trade over the weekend or bag your profit on Friday is a dilemma forex traders have been facing since the retail markets first opened. Whilst it’s entirely possible to hold a trade over the weekend, it may not be the best idea to do so. Whilst the forex market shuts for retail traders on Friday evening, banks, geopolitical events, and institutions are still moving the price of currencies during the weekend. Sadly for us, we aren’t able to get involved with these movements, or even see them, until the market reopens on Sunday evening.

Whilst entirely possible to do, whether you actually should hold a forex trade over the weekend depends on many factors including the instrument, your trading strategy, the overall trend, your risk profile, and many more.

Should You Hold Forex Trades Over the Weekend?

Holding forex trades over the weekend is something that cannot always be avoided. For intraday traders and scalpers, I would highly recommend not to hold trades over the weekend. This is due to the potential price gaps when the market reopens. However, for swing traders and position traders, holding trades over the weekend is going to be crucial and extremely important to your success! Unless there is a black swan event, it’s incredibly rare to have a swing trade or a large pip move complete within just one week. With that being said, there are a few factors you need to consider when looking at whether to hold a trade or whether to secure the profits…

Checklist For Holding Forex Trades Over the Weekend

Let’s look at everything you need to consider when you’re making the decision about whether to close your positions or hold them for the long run…

1. What Is The Trend?

If the trade in question is going with the overall trend and the market is moving in that direction, I would most likely stay in the position and hold this over the weekend. There is no guarantee that when the market opens, it’s going to be in favor of the existing trend, but we know that this is an important factor in trading and something that needs to be taken into account with your swing trading risk profile. Ignoring the overall trend is an easy way to reduce potential returns within the forex market and is one of the most common causes why traders fail in forex.

2. Are You Being Emotional?

If your trade is 5 pips away from the take profit values, and you’re already 2000 pips in profit, I would not hold over the weekend just for the sake of a few extra pips. Greed and fear are two extremely powerful emotions that need to be considered when you’re looking at why you want to hold a trade over the weekend. If your trade is only slightly in profit, you aren’t being greedy. However, if you’ve taken 99% of a large move in the markets, and you’re hoping for slightly more when the market opens, I would argue that you’re being driven entirely by greed. If you are being emotional in your decision-making, it’s worth implementing some objective rules for you to stick to, to avoid this happening in the future. For example, when we fund forex traders, we set objectives in terms of drawdown and position size. This greatly reduces the emotional burden as the trader just has to follow the criteria already set out.

3. Are We Expecting Important News?

If there is going to be a high-impact news release over the weekend, it’s important to weigh up the risks and potential rewards of staying in the position. It’s not always possible to understand the complete picture of a fundamental event ahead of time, but usually, analysts have a good idea of where the market will be heading. Remember that once the market shuts on Friday, it’s impossible for you to close your positions, so you will be stuck in the trade during the news, for better or for worse. Our Elite Club funded traders have access to a risk desk, where they’re able to access all relevant data and analysis on these fundamental events. Having access to something like this as a retail trader is incredibly important, to level the playing field with institutional traders. Ignoring simple fundamental factors in the markets is actually one of the most common reasons why most forex traders fail.

However, I will say that it’s very rare for news to be coming on the weekend, rather than during the week!

4. Is Holding A Trade Over The Weekend Going To Ruin Your Weekend?

In an ideal world, you should be completely emotionally void when it comes to trading, and you should be able to make objective decisions in the market, then relax. However, we don’t live in an ideal world and I know that many traders are unable to relax and switch off from the markets during the weekend. Swing traders are typically more emotionally void as they know their positions are going to take a huge amount of time to play out, whereas day traders like to be much more involved with price. Although trivial, it’s worth weighing up the risk to your actual wellbeing and psychology if you’re looking to hold a trade over the weekend.

What Happens When You Hold Onto a Forex Trade Over the Weekend?

At 10 pm GMT on Friday, the market will close. This means that we, as retail traders, have no access to the forex markets for the rest of the weekend, thus meaning that you’re unable to edit your live market positions. This traps you into keeping the trade live until the market reopens on Sunday night at 10 pm GMT. During this time, no matter what happens in the world with news events or geopolitical factors, you won’t be able to exit the trade, or even see where the current market prices are! Although this sounds quite dangerous for a trader; if you’re trading a large move on a large time frame, such as the daily, the majority of the time you are not going to have any issues at all. We actively encourage our funded traders to hold trades over the weekend, as we like to see macro trades with large potential moves, alongside the small intraday plays. It’s very rare that the market creates a huge gap when it reopens on a Sunday night. However, if you’re trading on a very small time frame like the 1 minute, when the market reopens, even a 10 pip gap in price is going to cause you some fairly substantial losses. It’s also worth noting that when the market does reopen, although you’re now able to exit the trade, the liquidity in the market will be very low meaning the spreads are going to be large, further eating away at any profits, or increasing the losses. 

So, in short, nothing happens when you hold onto a forex trade over the weekend – you’re unable to touch the position and won’t have visibility on any changes in market price until the market reopens!

How Long Can You Hold a Forex Trade?

In theory, you could hold onto a forex trade for as long as you like. Typically, you will see intraday traders holding trades for anywhere from 30 seconds to 8 hours. Then you will see position traders and swing traders holding trades for as much as several years.  

How long you hold a forex trade really depends on your trading strategy and what you are trying to accomplish from the position. No reputable broker will put any restriction on the amount of time you are allowed to hold a forex trade, providing the margin is in your account. The only aspect to bear in mind is the cost of holding trades. Depending on which side you’re taking, you will potentially have to pay a swap fee and even a rollover fee, depending on the instrument. These fees are usually minimal, and should not dissuade you from swing trading, but it’s still important to consider as, over the years, small fees can add up. I am good friends with a swing trader that ended up paying $18,000 in swap fees in one trade!

With our funded forex accounts, we put no limit on the duration of trades and actively encourage lengthy swing trades!

In Conclusion – Is Holding Forex Trades Over the Weekend a Good Idea?

In summary, holding forex trades over the weekend is a great idea if that’s what your strategy dictates. For holding over the weekend to make sense, you must look at the position, trend, risk profile, and the psychology behind the decision to make sure that you aren’t being motivated to hold the position, for greed.  

If you’re interested in swing trading, feel free to check out our funded forex accounts for swing traders, with funding up to $10,000,000!