Weekend news and the Monday morning price

[Fairman]

Weekend news and the Monday morning price

Between Friday's close and Sunday's open, the world keeps turning. Elections happen, wars start, central bankers speak, companies collapse. None of it can be traded until the market reopens.

The result is the weekend gap: the difference between Friday's last price and Sunday's first. Most weeks it is small. Occasionally it is huge, and anyone holding a position through the weekend takes the full jump with no chance to exit.

Stops do not protect against it. A stop placed 30 pips from the current price fills at the first available price after the gap, which could be 100 pips away.

Scalpers usually close positions before the weekend for this reason. The few who hold must accept gap risk, and most should size accordingly.

Even for traders who are flat, the gap shapes the start of the week. Large gaps often set the tone for several days, and the first hours of Monday trading are volatile as the market digests the news.

A good Sunday routine is scanning the weekend headlines before the open, noting which pairs are exposed, and planning to stay out of those until spreads normalise. The first fifteen minutes of the week rarely repay the risk.

Has a weekend gap ever caught a position, and how was it handled afterwards?