While FX is a 24-hour market, this doesn’t extend to weekends. As you may know by now, this is because institutional forex traders and large banks (the main buyers and sellers of foreign exchange) only operate during working hours in the week like many other service providers.
However, just because the forex market is offline, it doesn’t mean you have to be. The weekend presents a great opportunity for traders to learn, reflect and plan for the upcoming trading week.
In this lesson, we’ll give you a few tips on how you can deal with forex during weekends to improve your trading strategy.
Explore free forex trading education
This is one of the more common ways to spend trading-time over weekends when most FX brokers are closed for trading. There’s a wealth of online educational content that enables you to improve your knowledge over the weekend.
The forex market, like many other financial markets, changes as the world does. It can be very useful to keep abreast of current market trends and learn new strategies that you can use in your trading.
Make the most of your trading platform
Weekends are the ideal time to learn the ins and outs of a trading platform and find out how it can support your trading style and strategy.
A selection of advanced trading platforms enable traders to analyze a number of different strategies, applied to past data, for a better understanding of how these strategies would have played out. This process is called back-testing and can be a good way to test a strategy before employing it in live conditions.
The process of back-testing involves selecting an earlier date and time on a trading chart to a period whose price action you’re unfamiliar with, ‘locking the view’ and analyzing the detailed report afterwards to gauge how well the strategy would have done.
Popular platforms with this capability include ProRealTime and MT4 charting packages.
It’s worth mentioning that just because a strategy worked in the past, it doesn’t mean that it’ll work in the same way in the future. The goal of back-testing is to simulate how a strategy would have played out and observe the variability of expected versus actual results.
This is perfect to do when the market isn’t actually moving, giving you a stable environment to better manage the emotions associated with trading (eg greed and panic).
Strategize for the week ahead
One of the benefits of FX trading being closed on weekends is the fact that it gives you room to take a step back and evaluate the week that has just passed. This can be a good time to account for the week’s trading activities and update your trading journal.
Many online trading platforms show you a list of your trading history. While this can give you a good impression of which trades were successful and which ones weren’t, you won’t always remember the reasons why it was so.
By keeping a journal, you’ll be able to better analyze what decisions work best under specific conditions. Bear in mind that past results aren’t indicative of future performance.
Many traders following a trading plan may use this time to review, edit, and modify it based on recent observations. If you don’t yet have a trading plan, the weekend can be a great time to build one.
For traders that are already comfortable with their plan, they can look to the week ahead to focus their approach, given the expected economic data releases. You can use economic calendars, which will normally be available 24/7, meaning you can strategize for the week ahead even when the market is closed.
Lesson summary
- Forex trading is exchanging foreign currencies to try and make a profit from movements in their prices
Lesson complete
