Weekend Trading: What Is It | Pros and Cons Explained

Weekend trading has gained great popularity in recent years due to the rise of online and mobile trading platforms that provide retail investors easy access to markets outside of regular working hours. For traders with Monday-Friday, 9-to-5 jobs, trading on weekends allows them to be active in markets at convenient times. Additionally, major news events that occur over the weekends often lead to increased volatility and price gaps when markets reopen, providing opportunities for quick profits. The lower trading volume and lack of new economic data on weekends also leads to tighter price ranges that can be advantageous for certain trading strategies. The 24/7 availability of cryptocurrency markets also appeals to those interested in weekend trading. And the ability to trade Asian, Middle Eastern, and other foreign markets over the weekends provides expanded trading opportunities. With flexible hours, potential volatility, and access to global markets, it's clear why weekend trading has surged in popularity among individual traders and investors.

What is weekend trading？

Weekend trading refers to the buying and selling of financial assets on weekends when major markets like stocks and forex are closed. While the underlying assets may be unavailable, traders can still access related markets like futures, options, CFDs, and cryptocurrencies which remain open. Weekend trading allows individual investors to react to news events and capitalize on short-term opportunities when traditional markets are closed. It provides more flexibility for those with weekday job commitments. The lower volatility on weekends also lends itself well to certain trading strategies. In essence, weekend trading enables retail traders to be active in global financial markets on their own schedules. The expansion of trading platforms and hours has made this accessible even outside traditional working hours.

Weekend Trading Hours

Here are some more specific details on weekend trading hours for major markets:

• Stocks - Major stock exchanges like NYSE and Nasdaq are closed from Friday 4PM ET to Monday 9:30AM ET. No regular trading sessions.

• Forex - Closes Friday 5PM ET and reopens Sunday 5PM ET. Almost 48 hours with no forex trading.

• Futures - Varies by exchange, but major ones like CME are open Sun-Fri with ~60min break each day. So limited trading continues.

• Options - Also trade when underlying futures markets are open. So trading on broad indexes continues.

• Cryptocurrency - Exchanges like Coinbase and Binance operate 24/7, so bitcoin et al. can be traded anytime.

• Foreign Stocks - Some international exchanges open 6-7 days a week like ASX (Australia) and TSE (Japan). Provides options.

• CFDs - Can trade on indices, commodities, cryptos over the weekends provided the CFD provider is open.

So while major assets see limited or no trading, related options remain open worldwide. And cryptocurrencies can be traded freely without restrictions. The growth of global online trading provides investors access to these weekend markets.

Pros and Cons of Weekend Trading

Every coin has two sides, and weekend trading is no exception. Specifically, weekend trading provides additional flexibility and opportunities but also comes with the limitation of fewer assets trading and potential volatility gaps. Here, let's explore some pros and cons of weekend trading.

Pros of Weekend Trading Explained:

• Flexible hours - Weekend trading allows people with regular weekday jobs to be active in the markets on their own time.

• Ability to react to news - Major news events and announcements that happen over the weekends can lead to price gaps and volatility when markets open. Trading on weekends allows traders to capitalize on these moves.

• Range trading opportunities - Lower volatility and volume on weekends provides range trading opportunities not available during regular trading hours.

• Access to global markets - Weekend trading provides access to markets like foreign stocks, cryptocurrencies, and futures that remain open while other major markets are closed.

• Preparation for the Week Ahead: Trading on weekends can be a strategic time to analyze markets and plan trades for the upcoming week, giving traders a potential edge.

Cons of Weekend Trading Explained:

• Limited assets available - Major markets like stocks and forex have no regular trading sessions over the weekends. Only related derivatives remain open.

• Higher spreads - Illiquid weekend trading conditions can sometimes lead to higher bid-ask spreads, increasing costs.

• Volatility gaps - Not being able to trade during weekends means inability to exit positions before volatile gaps up or down.

• Limited analysis - With key markets closed, less new data to base analysis on over weekends compared to weekdays.

• Reduced Market Participation: With fewer participants in the market, theres a decreased flow of information, which can lead to less predictable market movements.

• Risk of Overtrading: The allure of weekend trading might encourage some traders to overtrade.

Markets Open for Weekend Trading

Here are some markets and assets that can be traded during weekends:

Forex Options - While the spot forex market is closed on weekends, forex options based on currency pairs continue trading, allowing exposure to major currencies. Popular pairs include EUR/USD, GBP/USD, and USD/JPY.

Cryptocurrencies - Major cryptocurrencies like Bitcoin, Ethereum, Litecoin, and Ripple trade continuously 24/7 on large crypto exchanges like Coinbase, Binance, and Kraken. This allows traders to buy and sell digital currencies over the weekend and react to any news or price movements in this volatile asset class.

Stock Index Futures - Key stock index futures like the E-mini S&P 500, Dow Jones futures, and Nasdaq 100 futures trade nearly around-the-clock, closing for only a one hour maintenance period each day. These derivatives allow traders to speculate on broad market movements over the weekend.

Commodity Futures - Futures contracts on energies like crude oil and natural gas, metals like gold and silver, agricultural commodities like corn and wheat, and livestock like cattle and hogs are all traded electronically on CME Globex and other platforms throughout the weekend with some short breaks.

Foreign Stocks - Key Asian markets like Japan's Nikkei and China's Shanghai Composite are open for a half-day Saturday session, while Australia's ASX200 is open Saturday morning into the afternoon. These provide equity trading opportunities outside regular North American hours.

Global ETFs - Exchange-traded funds that track foreign indexes or assets like emerging markets, commodities, and global equities allow exposure to other markets over the weekends. Popular ones include VWO, GXG, and DBC.

CFDs - Contracts for difference on forex, commodities, indices and other financial assets are available through brokers like IG, CMC Markets, and Plus500 throughout the weekend. These derivative instruments do not require owning the underlying asset.

Some Weekend Trading Strategies to Explore

The advent of global digital trading has unlocked weekend market access for individual traders. Though stocks and forex close, related options across futures, cryptos, and foreign assets remain open. Strategies adapted to lower weekend volume and gapping risks allow seasoned traders to continue generating returns amid the changing conditions. Weekend trading grants accessible opportunities beyond weekday hours.

Range Trading - With lighter volumes and lower volatility, securities like stock index futures often trade in tighter consolidation on weekends. Technical traders look to identify key support and resistance levels from daily charts, and then sell at resistance and buy at support to capitalize on the range-bound action.

News-Based Trading - Major news events like geopolitical developments, corporate mergers, or economic data releases that occur over the weekends can lead to significant gaps up or down when markets reopen on Monday. Traders look to get ahead of these moves by taking positions early in the impacted futures markets that remain open.

Scaling Into Positions - The lower liquidity and higher bid-ask spreads over the weekends allows traders to gradually build up a position at better average prices. For example, they may start with 25% of the total desired position size and scale in chunks over the weekend when prices hit certain target levels.

Fading the Gaps - When a weekend news event leads to an exaggerated gap up or down, savvy traders will look to fade the knee-jerk move at the open. This contrarian approach involves selling into big upside gaps or buying into large downside gaps in anticipation of a reversal.

Cryptocurrency Momentum - The 24/7 nature of the crypto market allows traders to identify trend continuations over the weekends. Using technical indicators on hourly and 4-hour charts can identify overbought/oversold levels to trade from in the direction of the major trend.

Currency Futures Options - Traders can use long calls or puts on currency futures to express directional views on forex pairs based on weekend news or data releases. Buying USD/JPY calls or EUR/USD puts are examples of leveraging options for short-term weekend moves.

Low-Volume Breakouts - Breakouts above key resistance levels or breakdowns below major support on decreasing weekend trading volume have a higher probability of continuing in the direction of the break when liquidity returns on Monday.

Risk Reversals - Constructing opposing long and short positions, like a long futures contract and a short call option, allows exposure to different outcomes from a weekend event while limiting overall risk through hedging.

Some Useful Tools for Weekend Traders

Here is a more detailed overview of useful tools and resources for weekend traders:

Global Economic Calendars - Calendars like Forexfactory, Investing.com and DailyFX provide upcoming events, data releases, elections, and other key announcements over the weekends that could impact various markets. These help traders prepare.

Weekend Gap Scanners - Scanners offered on platforms like TradeStation, ThinkOrSwim, and TradingView run gap scans specifically for stocks and ETFs that may gap up or down on weekends due to news events or technical patterns. This identifies potential opportunities.

Cryptocurrency Mobile Apps - Apps like CoinMarketCap, Blockfolio, and Delta provide real-time pricing, news, alerts and portfolio tracking for all major cryptocurrencies. These are essential given crypto trades 24/7.

Global Market Hours Map - Maps available on sites like TradingHours.com and Markets.com visually display the intricate trading hours for stocks, forex, options and futures worldwide. This helps traders identify what and when to trade.

Futures and Options Quotes - Live price quotes for stock index, commodity and currency futures that continue trading on weekends are available through broker platforms like Thinkorswim and barchart.com.

Virtual Trading Accounts - Brokers like TradeStation and IG offer demo accounts that can simulate live weekend trading with fake money to practice strategies risk-free.

Screeners for Foreign Assets - Screening tools from platforms like TradingView and Finviz allow filtering for specific country ETFs, ADRs, and foreign stocks that are open for weekend trading on international exchanges.

News Aggregators - Websites like Benzinga, SeekingAlpha, and FinViz aggregate and compile breaking news over the weekends that could drive price gaps at various market opens.

Online Trading Communities - Active trader chat rooms and forums like Trade2Win and ForexFactory have discussions focused specifically on trading opportunities and tactics over the weekends.

Weekday vs. Weekend Trading: A Comparative Analysis

Weekday trading offers the full suite of financial markets and assets, with higher volatility, volumes, liquidity, and active trading opportunities. Key economic data releases also primarily happen during weekdays. However, adhering to standard work schedules can limit trading activity. Weekend trading provides more flexibility in hours for those with daytime commitments but has fewer assets trading like limited futures, foreign stocks, and cryptocurrencies. Volumes are lower on weekends with wider spreads and tighter trading ranges. While major scheduled data is absent, weekend news flow can still cause volatility gaps. Overall, weekday trading presents the full breadth of markets but restricted hours for many, while weekends offer additional trading flexibility amid reduced liquidity and assets. The choice comes down to whether accessibility or scope of markets is more important.

Conclusion

In conclusion, weekend trading allows investors to access global markets outside of standard working hours. While major assets like stocks and forex are unavailable, other opportunities in futures, foreign equities, cryptocurrencies, and options remain open for those seeking flexibility. Lower weekend liquidity and volume enable short-term trading strategies as well. However, limited assets, wider spreads, and vulnerability to volatility gaps are key downsides to consider. Overall, weekend trading presents experienced retail traders another avenue for generating returns, provided they understand the changing conditions and risks. With the expansion of trading platforms and assets, weekend activity caters well to those unable to trade actively during traditional market hours.

FAQs

Can I trade on the weekend？

Trading over the weekend allows you to engage with indices, cryptocurrency, and forex markets on both Saturday and Sunday. This means if there's breaking news and you spot a trading opportunity, you don't have to hold off until the markets reopen on Monday to make your move. It's important to note that the prices for indices and forex during the weekend are quoted differently than during the week.

Is Saturday a good day to trade？

Typically, the mid-week period is when you'll see the greatest activity, with the pip range expanding for many of the major currency pairs. Trading forex on Saturdays and Sundays often proves to be less advantageous. Many traders choose to steer clear of forex trading during holidays and significant news announcements.

How does Saturday and Sunday trading work？

While major markets like stocks, options and forex are closed over the weekends, other opportunities remain open due to global time differences and assets that trade electronically around the clock. Cryptocurrencies can be traded 24/7 on crypto exchanges, allowing buy and sell orders over the weekends. Certain foreign stock markets like Japan, China, and Australia are open for a half or full day on Saturdays and sometimes Sundays as well. Futures markets across stock indexes, commodities, and currencies only pause for short maintenance breaks so trading continues. Forex options and other derivatives remain active, pricing off futures markets. CFD providers also offer weekend trading on indices and commodities. Overall, savvy traders globally can find accessible tradeable assets over the weekends despite the closure of some major exchanges on Saturdays and Sundays.