Should I Hold Trades Over the Weekend?
Deciding whether to keep a trade open over the weekend can feel like a bit of a gamble. The answer mostly depends on what kind of trader you are and how long you plan to hold onto your trades. Let's break it down.
Short-Term vs. Long-Term Trades
If you’re focused mainly on day trading (where you open and close trades within the same day) or short-term trading, the rule of thumb is simple: don’t hold trades over the weekend. Since day trading is trading smaller movements, keeping trades open when the market's closed just isn't worth the risk of the price gapping through your stop loss resulting in a bigger loss.
But for longer-term trades, like those you plan to hold for weeks or months, the decision isn’t as clear-cut. It really comes down to your own judgment. Sometimes, holding over the weekend is no big deal, but there are a couple of things you should consider first:
Keep an Eye on Your Stop Loss
Check how far the current price is from your stop loss. You want to make sure there’s enough of a buffer, basically, some wiggle room, between your stop loss and the current price.
Why? Because when markets close on Friday and reopen on Monday, prices can gap. That means they might jump through your stop loss, which could lead to bigger losses than you planned. If your trade is still hovering around the entry point with not much room between the price and your stop loss, it might be safer to just close it out.
Look Out for Big News Events
Always do a quick check to see if there are any major news events expected over the weekend.
Things like economic reports, political announcements, or global events can cause markets to swing wildly. If something big is happening, it might be better to avoid holding your trade. After all, the last thing you want is to get caught on the wrong side of a market because of some expected news.
When in Doubt, Play It Safe
If you’re ever feeling unsure about whether to hold a trade over the weekend, remember that you always have the option to play it safe. You can always close the trade on Friday and reopen it on Monday when the markets are back open. This way, you avoid any weekend surprises.