Weekend Trading Strategy

Weekend Trading Strategy (Backtest, Settings and Performance)

When the weekday markets close, weekend trading springs to life, offering distinct opportunities for those ready to tackle its unique challenges. Our guide demystifies the weekend trading strategy, detailing concrete measures to handle the peculiarities of trading cryptocurrencies, commodities, and more during these less-traveled trading hours. Here, you’ll discover how to adapt to unusual market movements, manage risks effectively, and identify the markets ripe for weekend activity, setting you up to potentially profit while others rest.

Key Takeaways

  • Weekend trading offers opportunities to capitalize on market movements with extended hours due to technological advancements and globalization, but it also presents challenges such as lower liquidity and higher volatility.
  • A successful weekend trading strategy consists of a five-step plan including trade setup verification, identifying trade triggers, setting stop losses, establishing price targets, and assessing reward-to-risk ratios, which requires adapting to weekend market conditions like decreased volume and potential price gaps.
  • Cryptocurrency markets permit 24/7 trading including weekends, which contrasts with traditional markets like forex and commodities that have more limited weekend hours, though platforms like Morpher offer extended accessibility for various markets.
  • We show you a weekend gold strategy complete with trading rules.

Unlocking the Potential of Weekend Trading

Weekend trading concept illustration

Trading isn’t just a nine-to-five affair anymore. The financial landscape has evolved, and so have the opportunities for traders. Weekend trading, once seen as unconventional, has gained popularity over the years.

Thanks to the rise of advanced technology and globalization, markets have extended their operating hours into the weekend, catering to traders with weekday commitments. This means that traders can now take advantage of extended trading hours to react to global events in real-time, providing an opportunity to capitalize on market movement before the new week begins. This is especially true for the crypto market.

However, weekend trading is not without its challenges. The weekend markets often come with:

  • Lower liquidity
  • Higher volatility
  • The potential for market gaps
  • Wider spreads and low liquidity across different time zones

These are substantial risks that traders need to navigate while trading over the weekend. But with the right knowledge and preparation, traders can gain on the weekend’s unique dynamics – such as the possibility of gap trading at market opens – to capitalize on volatility and make the most of their trading strategy.

Crafting Your Weekend Trading Plan

Crafting a weekend trading plan

To successfully trade the unique challenges that weekend trading presents, you need a clear and established trading strategy. This strategy is your roadmap, guiding your decisions, and helping you react smartly to market movements. But how do you craft an effective weekend trading strategy? The answer lies in a robust five-step test:

  1. Verify your trade setup
  2. Identify trade triggers
  3. Set stop losses (?)
  4. Establish price targets (?)
  5. Assess reward-to-risk ratios
  6. Then backtest your trading rules

These steps form the backbone of your weekend trading plan, ensuring that your potential weekend trades align with your overall risk management strategy.

But crafting your plan doesn’t stop there. You’ll also need to learn how to analyze market trends and conditions, adapt to weekend market dynamics, and you might want to set strategic stop loss orders and profit targets. All these elements come together to create a comprehensive weekend trading plan that can help you trade the markets successfully and profitably.

Let’s look deeper into these elements, starting with major market analysis and preparation.

Market Analysis and Preparation

Understanding the market is important for any trader, and this holds true for weekend trading as well. Over the weekend, traders should remain alert for unexpected events such as natural disasters or geopolitical changes, as these can significantly impact market prices when trading resumes. To anticipate these shifts, traders should learn to determine whether a significant and tradable trend exists to inform their trading strategy.

An important part of weekend market analysis is fundamental analysis, where traders anticipate events such as earnings releases and economic data releases. By doing so, traders can set more effective stop-loss points. With careful market analysis and preparation, traders can make decisions and strategize effectively for their weekend trades.

Setting Profit Targets and Stop Loss Orders

Setting profit targets and stop loss orders is an integral part of any trading plan, including weekend trading. However, if you backtest your trading rules, you might find out that stop losses are not very efficient! We at Quantified Strategies prefer to trade smaller instead of using a stop loss.

For starters, traders should aim for a reward-to-risk ratio where the potential profit is at least 1.5 times greater than the potential loss before entering a weekend trade. This strategy ensures that even if not all trades are successful, the successful ones can cover the losses and potentially provide a net gain.

Stop loss orders for weekend trading should be strategically placed to manage risk. For long trades, these orders are typically placed just below a recent swing low, and for short trades, they are placed just above a recent swing high. During weekends, the risk of market gaps and wider spreads increases, making it crucial for traders to have a clear trading plan with defined profit targets and stop loss orders to manage potential losses.

Adapting to Weekend Market Conditions

Weekend markets pose unique challenges that traders, as market participants, need to understand and adapt to. For example, lower liquidity and the possibility of price gaps upon market opening are key factors to consider. To navigate these challenges, setting specific trade triggers can help you maneuver through price fluctuations and trends unique to weekend trading.

Moreover, some traders may opt to not leave positions open over the weekend to prevent losses that can arise from overnight market gaps. Alternatively, adjusting strategy tools to accommodate lower weekend volumes, such as modifying Bollinger Band parameters, can lead to improved signal quality for trades. By understanding and adapting to these weekend market conditions, traders can better position themselves for success in weekend trading.

Strategies for Weekend Forex Market Success

Forex market weekend trading strategy

Now that we’ve covered the basics of crafting a weekend trading plan, let’s look into some specific strategies for weekend forex trading. Forex markets offer weekend-specific pairs, including major currency pairs, allowing traders to engage in market speculation distinct from their weekday positions. Weekend trading hours for forex pairs span from the weekend into early Monday, before transitioning into weekday positions.

One effective strategy for weekend forex trading is gap trading, which involves aiming to profit from differences in closing prices between Friday and Sunday’s open.

Another strategy involves the use of Bollinger Bands, a tool that can establish price channels based on reduced intraday volatility and guide overbought and oversold levels for weekend trading. With these strategies in hand, traders can better navigate the weekend forex market and maximize their potential for success.

Gap Trading Mastery

Gap trading is a popular strategy in forex trading that involves capitalizing on price discrepancies caused by a gap between the Friday close and the Sunday open. Traders often expect the market to fill the weekend gap, anticipating prices to revert to the Friday closing levels, making the gap trading strategy an attractive approach.

To successfully execute a gap trade, traders need to identify the presence of a gap at the Sunday market opening, initiate trades aimed at closing this gap, and set proper stop loss orders and profit targets. Continuous monitoring is vital in gap trading due to the rapid closing of gaps or the possibility that they may not close at all, which can expose traders to substantial losses. Therefore, gap trading requires a high level of vigilance and a well-crafted trading plan.

Utilizing Bollinger Bands

Bollinger Bands are a powerful tool that forex traders can use to identify market volatility and potential entry and exit points during weekends. These bands consist of a set of three curves drawn in relation to securities prices. The widening of Bollinger Bands is an indication of increased market volatility, whereas narrowing bands suggest decreased market volatility.

During periods of low trading volumes, such as the weekend, Bollinger Bands can help traders discern the level of market volatility present. They can also aid traders in identifying overbought or oversold conditions in the market, which can serve as signals for entry and exit points.

By understanding when prices move outside the boundaries of the Bollinger Bands, traders can identify good moments to enter or exit the market, depending on their analysis and strategy.

Weekend Trading in Cryptocurrency Markets

Cryptocurrency weekend trading

Cryptocurrency markets present another engaging arena for weekend trading. Unlike traditional financial markets that operate within specific trading hours, cryptocurrency markets operate 24/7, providing continuous access for trading over the weekend. This means that traders can execute stops and limits on their trades at any time during the weekend.

However, the dynamics of the cryptocurrency market can shift during weekends. The volume of trades often decreases due to fewer active traders, as many professional traders take a break, leading to a prevalence of retail traders. This shift necessitates a diligent approach to executing exit strategies to better manage the unique conditions of the cryptocurrency markets.

Bitcoin has proven to have a positive weekend bias. We did a backtest and the performance per weekday is better at the end of the week and in the weekend.

Effective Risk Management Strategies

Effective risk management strategies

While the prospect of weekend trading is enticing, it’s vital to remember that trading involves risks. Effective risk management strategies can help traders avoid substantial losses and protect their trading accounts. This might include practices such as strategic stop orders, taking profits at predetermined levels, and using protective options strategies.

One notable risk management practice is the adherence to the one-percent rule, which ensures that traders do not risk more than 1% of their trading capital in a single trade, thereby managing their exposure to risk.

Further, diversification and the use of hedging strategies can help spread risk and explore different investment avenues in weekend trading.

However, weekend trading introduces unique risks, such as price gaps and reduced liquidity, and traders must be cognizant of these when managing risk. From limiting risk per trade to staying vigilant towards correlation risks and significant weekend news, risk management in weekend trading requires a comprehensive approach that is both strategic and responsive.

Importance of Practice with a Demo Account

Practicing with a demo account is an excellent way for traders to refine their strategies and gain experience without risking real money. Many brokers facilitate new traders by simplifying the process of opening a demo account, offering an attractive opportunity to practice trading with considerable amounts of ‘paper money’.

While demo accounts offer a valuable learning experience, traders need to remember that they may not fully replicate the realities of trading, with factors like slippage and commissions often omitted, not to mention the lack of fear and greed that lead many traders to irrational behavior.

Nevertheless, demo accounts can be a powerful tool for traders, allowing them to develop and refine trading strategies, create a statistical performance record, and experiment with various strategies risk-free using trading simulators.

Staying Informed and Prepared

Staying informed and prepared is vital for successful weekend trading. By monitoring news events, traders can:

  • Stay abreast of significant events
  • Understand how these events can significantly influence market movements
  • Implement careful risk management strategies

By staying informed, adaptive, and always learning, traders can make better decisions, adapt their strategies to changing market conditions, and ultimately increase their chances of success in weekend trading.

Maximizing Learning Through Educational Resources

Weekends are not just for trading. They can also be an excellent time for traders to:

  • Learn more about trading strategies and market dynamics
  • Engage in educational and analytical tasks
  • Improve trading performance
  • Gain cleaner insights and practiced skills

Utilizing weekends in this way can significantly enhance your trading abilities.

There are many educational resources available for traders, from webinars led by experts to high-quality educational videos on YouTube. Additionally, participating in online trading communities can provide a platform for traders to exchange strategies and gain new insights, while teaching them to critically assess the advice and information they receive. By leveraging these resources, traders can maximize their learning and enhance their trading skills.

What is best to trade on weekends?

So, what’s the best market to trade on weekends? The answer depends largely on your trading strategy and the specific dynamics of the market.

Here are some options to consider:

  • Cryptocurrency markets operate 24/7, providing continuous access for trading over the weekend. Crypto seems to have a weekend bias.
  • Forex markets are not available for trading during the weekend.
  • Commodity markets have limited weekend hours, reducing opportunities for traders.

However, there are platforms like Morpher that allow for weekend trading of commodities, forex, and cryptocurrencies without fees and with infinite liquidity. Moreover, unexpected events, such as natural disasters or geopolitical developments, can create arbitrage opportunities over the weekend, even when traditional investment banks are closed.

Ultimately, the best market to trade on weekends will depend on a variety of factors, including your personal trading goals, risk tolerance, and market knowledge.

What is the trend trader strategy?

The trend trader strategy is a popular trading method where traders analyze the direction of trends in financial instruments. In this strategy, traders take a long position to buy when the asset exhibits an upward trend and go short to sell during a downward trend. The expectation is that the current price direction will persist and not quickly reverse.

Trend trading can be applied to both short-term and long-term trends, depending on the trader’s goals and analysis. For example, intraday trend traders focus on trends that develop within a single trading day, whereas long-term trend traders hold positions for weeks, months, or even years based on fundamental analysis.

By using indicators like Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), and Parabolic SAR, traders can develop effective trend trading strategies.

Can you trade on weekends?

The answer to the question “Can you trade on weekends?” is a resounding yes. However, the markets you can trade in and the dynamics of those markets can vary.

  • Cryptocurrency markets operate 24/7, allowing for trading during weekends.
  • Forex markets are not open for trading on weekends.
  • Commodity markets have limited weekend hours.

Despite these limitations, platforms like Morpher allow for weekend trading of commodities, forex, and cryptocurrencies without fees and with infinite liquidity. However, it’s important to note that trading on weekends can involve higher spreads and fees due to lower liquidity in some markets. As such, traders should always do their research and understand the dynamics of the specific market they’re trading in.

What is weekend effect trading strategy?

The weekend effect trading strategy, often observed in traditional stock markets, is based on the observation that stock returns on Mondays are generally lower than those of the preceding Friday, a pattern first reported by Frank Cross in 1973. Several theories exist to explain the weekend effect, including traders’ behavioral responses to uncertainty and the release of bad news by companies after the market closes on Fridays.

However, the weekend effect has evolved over time. While it was notably significant prior to 1987, it diminished between 1987 and 1998, and has seen increased volatility over the weekends since then. Some research even suggests a reverse weekend effect, where Monday returns are higher than other days, particularly in U.S. stock markets and depending on the size of the firms.

Finding these patterns is easy. You just need to learn how to backtest!

Weekend effect trading strategy – example and trading rules (Backtest)

Let’s show you an example of a backtested weekend strategy for gold. We make the following trading rules:

  • If today is Thursday, then buy at the close;
  • Sell on Monday’s open

We backtest the gold price and use the ETF with the ticker code GLD.

Weekend trading strategy
Weekend trading strategy

The weekend effect in gold worked best before 2015, though, as the edge seems to have vanished lately.

If we “flip” the trading rules and buy on Monday open and sell at the close on Thursday, we get the following equity curve:

Weekend trading strategy example and trading rules
Weekend trading strategy example and trading rules

As you can see, the returns during the rest of the week has been pretty erratic.

What is weekend trading?

Weekend trading refers to the practice of buying and selling various financial assets such as indices, cryptocurrency, and forex markets on Saturdays and Sundays. This practice has become increasingly popular due to the continuous operation of certain markets like cryptocurrencies, as well as the extension of trading hours into the weekend for forex and other markets.

Positions held in weekend trading can be rolled into regular weekday positions, maintaining any pre-set stops or limits. This allows traders to hedge against potential losses in weekday positions by taking opposite positions on the weekend. With the right knowledge and strategies, weekend trading can be an excellent way for traders to capitalize on market movements outside of standard trading hours.


In conclusion, weekend trading offers a wealth of opportunities for traders willing to explore paths least travelled. From understanding market trends and crafting a robust trading plan to mastering specific strategies like gap trading and utilizing Bollinger Bands, successful weekend trading requires a combination of knowledge, skill, and effective risk management.

Whether you’re trading in the forex market, cryptocurrency markets, or other financial markets, the key to weekend trading success lies in staying informed, being prepared, and willing to backtest.

Frequently Asked Questions

Can I trade on weekends?

Yes, you can trade on weekends, as certain markets such as cryptocurrency operate 24/7, enabling weekend trading.

What is the best market to trade on weekends?

The best market to trade on weekends is perhaps the cryptocurrency market, as it operates 24/7, allowing for continuous access for trading. This can be beneficial regardless of your trading strategy.

What is the trend trader strategy?

The trend trader strategy involves analyzing the direction of trends in financial instruments to make trading decisions, with traders buying during upward trends and selling during downward trends. This strategy helps traders capitalize on market momentum and maximize profits.

What is the weekend effect trading strategy?

The weekend effect trading strategy is based on the observation that stock returns on Mondays are generally lower than those of the preceding Friday, as first reported by Frank Cross in 1973. This strategy involves selling stocks on Friday and buying them back on Monday.

What is weekend trading?

Weekend trading involves buying and selling financial assets like indices, cryptocurrency, and forex markets on Saturdays and Sundays. It’s a way to continue trading outside of traditional market hours.

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