Political weekends and the Sunday reopen: position sizing

[FXS London Scalper]

Elections, referendums and unexpected government announcements over a weekend can produce gaps at the Sunday open. Positions held over such weekends carry a risk that stops cannot cover, since price may open beyond them.

A practical approach is to size weekend positions on the assumption that the stop will slip by a typical gap distance. If a historical worst gap for a pair around political events was, say, 150 pips, and your stop is 40 pips away, the potential loss is roughly four times what the plan suggests. Sizing for that scenario usually means holding a much smaller position or none.

An alternative is to close before the weekend and re-enter on Monday after the first hour, accepting that some of the move may be missed. For many traders, missing a move is a lot cheaper than a large unplanned loss.

It also helps to check the broker's weekend margin rules, since some raise requirements before major votes. Do you have a rule for event weekends?

[Amanhasnoname]

My rule came from a referendum weekend a few years back. I was holding a modest swing position in a pound cross, nothing silly, maybe half a percent of risk on the stop. The result came out differently from what the polls suggested and the Sunday open printed well over a hundred pips beyond my stop. The fill turned half a percent into a bit more than two, which didn't break the account but did ruin the month.

Since then the rule is simple. If a scheduled vote, election result or big government decision lands between Friday close and Sunday open in a currency I'm holding, I'm flat by Friday afternoon. No partial, no hedge, just out. Scalping doesn't need weekend holds anyway, so the only thing I give up is the odd swing trade.

The Monday side matters too. I don't trade the first hour after the reopen on those weekends at all. Spreads at the Sunday open are often wide for a while, and the first move is frequently retraced once Europe arrives, so I'd rather wait for London and trade whatever structure is left.