My weekend mistake

Friday, the EURUSD looked like it was going to take a quick dip right before close. I was right, it dipped just like my system predicted it would, and I took a short position. Then, of course, the market shut down.

Its now sunday, not even 7pm est, and of course the market shot back up before I could get my position closed and I ate a small loss. No biggy, but I certainly want to uh, never do that again.

so ...

A) Is it common for the markets to drop late friday and quickly recover on sunday right before open? I'm assuming its because everyone is closing their positions before the forex closes for the weekend then rebuying, but I'm very new and its my first weekend papertrading.

B) If it is common -- is it regular enough that it can be exploited? (Taking a long position late friday just before close and then exiting sunday?)

C) If it is *not* common, um... I feel like I should have a question, but I dont know what that question is right now.

Hi there - what's known as 'gapping' between prices from end of day Friday and start of business Sunday afternoon is very common, as news from over the weekend has been priced in while the market was closed. These spikes can knock out your stops, so you have to be careful with open positions when the market opens.

In general, prices have a tendency to retrace to fill gaps, so it's possible to see the price return to its previous level once you've taken a loss. This can be very aggravating!

You are ABSOLUTELY right!!! The reason the market dips on Friday Afternoon IS because most EXPERIENCED traders are PULLING OUT of the market at that time -- Not making new trades.

Parameswara is right, too "gapping" is pretty common, too.

But, trading against the trend -- and just as the market is falling off and about to close -- is pretty risky for my (semi-newbie) skill level!

Starting a new trade WITH the trend at the start of an active time is a MUCH easier way to make $$$ for me.

I'm GROWING my account by sticking to the easy money stuff at this point in my career -- and will probably will forever.

Friday is a lot better golf day anyway!

Wishing you all the best, and a VERY successful future with your account!

TG

As the weekend approaches less traders are in the market because the banks can move it around during the weekend. Less people in the market means less liquidity which in turn allows large erratic movements which can stop you out.

From this weekend, in Japan, Golden Week will start.
Golden Week usually refers to the period from April 29th to May 5th when there are four national holidays(April 29, May 3rd, 4th and 5th). Including Saturdays and Sundays many Japanese(manufacturing industry mainly) have more than a week of holidays at this time. Toyota Motor Corp's employees will have holidays from April 28th to May 6th.

Japanese FX brokers said that USDJPY might not rise because export companies would place limited orders during this period. However, I think simply that many Japanese going for foreign travel will sell the yen or change yen into foreign currencies therefore USDJPY will rise.