What is a Weekend Gap in Forex?
Quick Answer: A weekend gap is the price difference between Friday’s close and Sunday’s open, caused by news released while forex markets were closed.
Understanding Weekend Gaps
A weekend gap appears when forex markets reopen on Sunday and price jumps above or below Friday’s close. Because spot FX trading pauses over the weekend, any news released during the break—elections, geopolitical shocks, surprise economic data—gets priced in instantly at the open.
Managing Gap Risk
Gaps can trigger stop losses far from intended levels. Mitigate the risk by reducing leverage on Friday, hedging with options or correlated assets, or exiting positions ahead of known event risk. Carry positions with ample free margin in case price reopens beyond your stop.
Fade or Follow?
Some traders fade gaps once liquidity stabilizes, targeting a partial fill back toward Friday’s close. Others ride continuation gaps if the news materially changes the macro outlook. Confirm direction with early session order flow before committing.
Operational Considerations
Brokers reopen at slightly different times and may widen spreads dramatically during the first minutes of trade. Monitor multiple price feeds, avoid market orders until spreads normalize, and be cautious with automated strategies that trigger immediately at the open.
Events That Trigger Gaps
- Elections and referendums
- Geopolitical escalations or peace deals
- Unexpected OPEC or central-bank moves
- Corporate or regulatory announcements affecting specific currencies
Prepare for the Worst
Assume unexpected news can occur. Keep emergency plans—such as hedging instruments or manual close-out procedures—so a single gap doesn’t derail your trading month.
Related Terms
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