Trading on the Weekend – Tips, Strategies and Markets

Weekend trading refers to the act of buying and selling financial instruments, such as stocks, currencies, and commodities, outside of traditional market hours. While many exchanges and markets are closed on weekends, some traders take advantage of the additional time to enter or exit positions or to prepare for the upcoming trading week. In this article, we will explore the benefits and drawbacks of weekend trading, from the potential for increased profit to the risk of lower liquidity and volatility. Whether you’re an experienced trader or just starting out, it’s important to understand the pros and cons of weekend trading before diving in.

Recommended Markets to Trade During the Weekend

Trading hours across financial markets and asset classes vary. Tracking the opening hours of various markets can be a challenging task, but it is essential for traders and investors. For those seeking a quick overview, we recommend checking the visualizations available on the Stock Market and Forex Market opening hours. Also, traders should note that liquidity and trading volumes may differ during various times of the day and on weekends. This section will highlight recommended markets to trade during weekends.

Determining a one-size-fits-all recommendation for traders can be difficult, as each market has its unique characteristics and every trader has their preferred asset class and strategy. However, in terms of opening hours, liquidity, and spreads, the Stock Market, Forex Market, Commodities Market, and Cryptocurrency Market can be ranked as follows. Taking into account these three key factors, traders can make informed decisions about which market to trade in and maximize their potential for success.

1.  Cryptocurrency Market

Cryptocurrency markets are the most convenient to trade during the weekends, as they are open 24/7 and provide continuous access to the market. Additionally, even though liquidity tends to be lower on weekends, it still has some liquidity, so the spreads might be lower compared to other markets. 

2.  Forex Market

Forex is the largest and most liquid financial market in the world, with an average daily trading volume of around $7 trillion. It is open 24 hours a day, five days a week, as there’s always at least one financial center in the world open for business. The market is open from Sunday 5pm EST to Friday 4pm EST with key trading sessions taking place in London, New York, and Tokyo. If you are looking to find exact liquidity levels, you will have a hard time as calculating volume in forex trading is complex as there’s no one source of data on currency market transactions. So, it has higher liquidity than the cryptocurrency market, however not seven days a week, limiting traders to place trades on weekends.

3.  Commodities Market

Commodity exchanges, such as the New York Mercantile Exchange, have varying trading hours but are mostly open 24 hours a day, with some exchanges having shortened hours or being closed on weekends. This limits the opportunities for traders to access the market. So, even though commodities markets have similar opening hours to forex markets, liquidity is usually much lower.

4.  Stock Market

Official trading sessions for US stocks starting at 9:30 a.m. and ending at 4:00 p.m. EST. The market operates on a schedule that includes limited pre-market and after-hours trading outside of the official trading session, but it is closed on weekends. Despite the potential for volatility during these extended hours, the low liquidity and wide spreads can make trading these hours in the U.S. stock market less attractive compared to other markets. 

As you can see, all markets, except the cryptocurrency market, are very difficult to trade on the weekends. Spreads and Fees are higher, liquidity is lower and many assets are simply not accessible to the majority of investors. Hence, traders should always check the specific trading hours, liquidity, and spreads for the market they are interested in trading.

However, there are great alternatives that allow weekend trading. On Morpher, it is very easy to access markets on the weekend. You can trade Commodities, Forex, and Cryptocurrency 24 hours a day, 7 days a week. As Morpher is able to create a virtual copy of almost any underlying asset on Earth, you are able to trade, even when others are not. So even if you are busy during the week, you can always trade during the weekend, without fees, infinite liquidity, and no-counterparty risk. 

Trading Strategies for Weekend Trading

Natural Disasters & Unexpected Events

Recent research has shed light on the impact of unexpected events on the stock market, including natural disasters, terrorist attacks, and executive deaths. The results indicate that natural disasters have the greatest impact on the economy, while terrorism has the least. On the day of a natural disaster and the two subsequent days, the stock index decreases, offering an opportunity for arbitrage profits through short selling. In the case of artificial disasters or terrorism, the stock index drops only on the day of the event and the next day, providing a similar short-selling opportunity.

In the case of executive deaths, this research found that stock prices and returns are negatively affected. If the executive’s death occurs over the weekend or after work hours and is not disclosed until the next day, the stock may not show statistically significant results until the next business day.

These findings underscore the importance of staying informed about current events and their potential impact on the stock market, as well as regularly monitoring market conditions and trends.

News & Economic Indicators

Trading during the weekend can offer unique opportunities for investors to take advantage of global news and events that may impact market sentiment. Traders can monitor key releases and economic indicators, such as trade balances or federal reserve decisions during crises, adjust their positions, and potentially profit from sudden price changes. In addition, traders can use hedging strategies, such as options, to mitigate risk and capitalize on sudden price movements.

Example: Successful Weekend Trade

A recent example of the potential benefits of weekend trading was observed on the Morpher platform. The trade, which was shared on Twitter, showcased the impact of unexpected events on the financial market.

On February 28, 2022, the trader executed a short of the Russian Ruble against the US Dollar. The trade was entered with two buy orders while the markets were closed at a rate of 83.86 RUB/USD. The trigger for the trade was the Russian troops entering Ukraine over the weekend. After that unexpected event, the unofficial rate spiked to 152 RUB/USD. 

When the markets reopened after the weekend, the official exchange rate dropped to 105 RUB/USD and the trade was closed three days later with a total profit of $37,441.49. Morpher’s infinite liquidity enabled the trade to be settled with a significant profit for an otherwise illiquid asset. 

This trade highlights the potential for traders to profit from unexpected events, even outside of regular market hours. It also showcases the capabilities of platforms like Morpher that facilitate weekend trading and offer infinite liquidity for assets that may otherwise be difficult to trade.

Earnings 

One strategy that has gained significant attention in recent years is the use of pre-market advantage to make informed decisions regarding earnings releases. Many major tech companies release earnings reports after the close of Wall Street trading, providing an opportunity for traders to capitalize on market reactions to this new information. Especially, for those able to act on this information before the wider market as seen in the Example below.

Example: “Investing in the stock market can be very profitable. Especially if you can see into the future.”

This strategy is exemplified by a story documented in the podcast “Darknet Diaries,” in which a group of traders and hackers worked together to develop a method for gaining access to information prior to its public release. The story, also reported on by The Verge under the title “How an International Hacker Network Turned Stolen Press Releases into $100 Million,” highlights the profitability of using pre-market advantage in stock market trading.

While this strategy does carry risks, such as the potential for legal consequences for obtaining privileged information, the story of the traders and hackers documented in “Darknet Diaries” serves as a testament to the potential for substantial profits through pre-market advantage in stock market trading.

What Are the Risks to Consider?

Weekend trading in the markets has become a challenging endeavor for many traders due to the lack of liquidity and increased risk. To mitigate these issues, brokers have had to employ additional staff and increase spreads, making weekend trading less attractive and potentially leading to losses. This has caused many traders to express caution, with statements such as “never trust the weekends”.

The risks associated with weekend trading include higher costs, the potential for losses, and the lack of major counter-parties. To add to this, there is the real possibility of market gaps on Monday mornings, making it difficult to make profits. Many traditional platforms do not even offer weekend trading, or only offer it in a limited capacity.

However, there is hope for trading on weekends in the form of Morpher. Morpher offers weekend trading on steroids, as it has infinite liquidity and no-counterparty risk. This means traders can always be sure to execute their trades without gaps and no slippage. Plus, traders can short anything from stocks, commodities, cryptocurrencies, and forex in any direction with up to 10x leverage.

Conclusion

In conclusion, weekend trading can be a lucrative and exciting way to make money with the potential to make profits even during times of low liquidity. In this article, we have explored recommended markets to trade during the weekend, trading strategies for successful weekend trading, and the risks to consider when making trades. We have also provided real-world examples of how traders have used weekend trading to their advantage. By being aware of the markets, the strategies, and the risks involved, you as a trader can now make more informed decisions when trading on weekends.

Disclaimer: All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs. This post does not constitute investment advice.