Since the opening of the retail markets, traders have been debating whether to hold a trade over the weekend or close it out on Friday. Even while it’s technically possible, it might not be a good idea to hold a position over the weekend. Although most financial markets close to regular trading on Friday night, banks, geopolitical developments, and institutions continue to affect prices over the weekend. Regrettably, until the market reopens on Sunday evening, retail traders are unable to participate in these movements or even observe them.
It is certainly possible to trade over the weekend, but whether you should really do so relies on a variety of criteria, including the instrument, your trading approach, the general trend, your risk tolerance, and many more. You will of course need to make sure you are using a prop trading firm that allows weekend trading like those listed below or else you could fail your trading challenge and not qualify for a funded account, no matter how good your trading strategy is.
If the price is very near to your profit target, you might want to close it before the weekend. It is preferable to take the majority of a trade’s profit as opposed to risking the chance of holding it through the weekend. Never keep a deal open over the weekend just to keep it open for the sake of it. Weekend gaps can be brutal and cause losses greater than expected, especially if there is some major news on the weekend and you are unable to close your open positions.
If you are not using a broker with a guaranteed stop loss, the price could move beyond your anticipated exit point and leave you in large drawdowns. This might even lead to a margin call and blown trading account. If the prop firm allows holding trades over the weekend, it does not mean that you will be able to close any open trades unless the broker they integrate with supports weekend trading.
Most prop firms have strict rules in terms of the maximum drawdown and loss that they allow. Leaving positions open over the weekend might increase the chances of you breaching the rules and needing to start your trader challenge from scratch. A lot can happen in the financial markets over the course of a couple of days and as Gordon Gekko from Wall Street put it, “money never sleeps”.
Here is a list of things to consider which can help you decide if you should leave a trade open over the weekend or not.
What is your trading strategy?
If you are using a long-term trading strategy with a wide stop loss that aims to capture large market movements, then you might not be to concerned about weekend gaps. Even if price moves a significant distance during the weekend, it might not make a huge difference to your open positions. On the contrary, if you are scalping or day trading and have a tight stop loss, then there is a good chance that weekend price changes could cause problems.
Are you being disciplined?
You should have a trading plan in place with clear rules that you stick to. If this involves leaving trades open during the weekend, then you should follow your plan. However, there might be some room for flexibility late on a Friday evening. For instance, is price is just a few points away from your profit target and the market is about to close, it might make sense to take any profits off the table instead of risking a larger weekend gap. It is important to try and not let negative emotions such as fear, anger and greed to impact our trading strategies.
What is the current economic situation?
If the markets have been extremely volatile or there is some major news anticipated during the weekend, it would probably be a wise idea to get out of the market and sit on your hands until things begin to settle down. Whilst you could make unexpected gains if the news was in your favour, you can also experience substantial losses if you are on the wrong side of a major economic event. Whilst it is rare for such news to be released over the weekend, if your prop firm does not allow weekend trading, then you won’t be able to do anything about it.
What are the prop firm objectives?
Think about the trading challenge or funded account rules and objectives. You obviously want to make sure the prop firm allow weekend trading or else you could be in breach of their terms. It is important to think about the maximum drawdown and loss as well. If the maximum drawdown is 5%, this could easily happen with a trade left open for a couple of days over the weekend.
Peace of mind
Perhaps the most important thing to consider is your sanity! If leaving a position open over the weekend is going to make you anxious and sweat, then it probably is not worth the stress. If you can see yourself doing this, then you may want to close all open trades on a Friday and enjoy your weekend in peace.
Prop traders are often divided into two major categories: day traders and swing traders. If you need a prop firm who allows weekend holding then you would probably be considered a swing trader.
Day traders look to catch small price movements during one trading session using short term chart timeframes. This requires a lot of time and attention along with exceptional technical and fundamental analysis. Successful day traders make a large number of trades with small profits.
Swing traders can hold positions for several days or weeks, with a view to catching bigger market moves. This is less stressful than day trading but still requires a good understanding of market analysis, specifically looking at the long-term trend. Successful swing traders usually have a smaller number of trades for larger profits.
Swing traders must be able to maintain their position open for a sizable amount of time, as is clear from the above description. The issue is that many prop trading firms forbid this. Some of these companies demand that positions be closed by the weekend, while others may demand that positions be closed at the conclusion of each trading day. Another frequent necessity is to close positions in advance of a significant event, like the declaration of monetary policy by a central bank or the publication of a significant macroeconomic report. Those restrictions undoubtedly make it impossible to hold positions open for an extended period of time, making prop firms with such regulations unsuitable for swing traders.
It follows logically that a prop firm must not have the aforementioned restrictions in order to be deemed favourable to swing trading. It ought to permit keeping positions over the weekend and at night, along with news trading. Also, it shouldn’t include a time limit on how long a position can be held open or a minimum number of transaction requirements.
You are not required to close positions overnight during the FTMO Challenge or Verification. You are allowed to leave your trades open throughout these times, including on weekends.
They do, however, ask you to settle your positions right before the markets close for the weekend or if the rollover (market break) is more than two hours if you become an FTMO Trader and manage an FTMO Account or FTMO Account Aggressive. The market timings must be respected by FTMO traders who have FTMO Accounts or FTMO Accounts Aggressive.
Every asset class and its respective instruments might have different trading hours that have to be adhered to. Certain cryptocurrencies can be traded if you trade them during specific weekend hours.
Also, FTMO Traders with the account type FTMO Account Swing are exempt from the aforementioned restrictions. The FTMO Account Swing does not have limitations on news trading or holding trades over the weekend, in contrast to FTMO Account or FTMO Account Aggressive.
There are times when holding trades over the weekend is unavoidable. For intraday traders and scalpers, you would probably not need a prop firm that allows holding trades over the weekend. There can be price discrepancies compared to when you placed your trade and when the market reopens. Holding trades over the weekend, however, will be essential and key to your performance for swing and position traders. It’s exceedingly uncommon for a swing trade or a significant pip move to be completed in only one week, barring a black swan event.
Having said that, there are a few things you should think about before deciding whether to hold a trade or whether to protect any profits. If you are trading a financial instrument that is available on the weekend and your prop firm allows weekend trading, then you might feel confident leaving it open as you can still react. On the other hand, if you have no control over what happens during the weekend, then you might feel more comfortable closing any open positions.