The concept of weekend gap trading is not new. The method is common among stock and forex traders who seek to capitalize on gaps that occur between a market’s close on Friday and its open on Sunday or Monday. With the continuous changes in the markets though, it is evident that many traders are pondering the question: Is there any effectiveness in weekend gap trading in 2025?
In this article, we will analyze the effectiveness of this strategy, its history, what has changed over time, and if it holds any worth today.
What Is Weekend Gap Trading?
“Gap” is the difference between the closing price and the new opening price, which may occur on Friday and reopen after the weekend. This gap exists due to significant news and events that happen while the market is closed, such as the release of economic data, political shifts, or other major global events.
Through the use of the weekend gap strategy, traders attempt to capitalize on these shifts. Some traders will attempt to capitalize on the gap expecting it to be "filled," meaning the price returns to Friday's closing level. Others anticipate the price will continue in the direction of the gap and trade accordingly.
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What Causes Gaps Over The Weekend?
Despite the forex market having a reputation of being open 24/5, it does have a break over the weekends. But even during this break, the world keeps running. Perhaps a political figure makes an unexpected statement. A central bank may release some news. There could be a natural disaster or even military conflict. Any of these events will result in some form of market reaction which would be observable the next time the market opens.
Thus, when investors and financial institutions return to trading on Sunday, they come back with new information - often creating a gap in price as the market attempts to adjust to the new information.
Traders' Approach to Handles Weekend Gaps
There are two major approaches traders take when it comes to weekend gaps.
The first approach is based on gap fill. For example, if a currency pair closed at 1.1000 on Friday and opened at 1.1050 on Sunday, a trader would expect the price to decrease back to 1.1000, so they would take a short position.
The second method is betting on continuation. In the example given, the trader believes that the momentum driving the price gap is strong, and the market will continue moving up. They take a long position with the expectation of profiting from the upward market movement.
In both scenarios, traders focus on the first few hours after the market opens. Here, timing and snap decisions are everything.
What's Changed in 2025?
This strategy used to work well, especially with fewer traders focused on these early-week price movements, but now the landscape has changed.
To begin with, competition has increased. Other professional traders, along with forex trading algorithms, are all trying to take advantage of the same price movement. Retail traders often don’t get the chance to execute their trades because automated systems are closing gaps within seconds.
Additionally, spreads are more pronounced on Sunday evenings. This is due to the major financial centers like London and New York still being closed. For people with smaller accounts, this becomes more costly when trying to make trades.
Another consideration is how large the gaps themselves are. In the past few years, there have not been as many significant gaps. With the exception of major events that occur over the weekend, prices usually open close to Friday’s closing prices.
Lastly, as information is disseminated with greater speed, real-time news coverage is available, and risk control measures are tighter, the chances of large weekend gaps that are unanticipated has reduced significantly.
Is It Possible To Still Make It Work?
The answer is yes, but not every weekend. This strategy will not be helpful as the primary one; rather, it is a tool that one can leverage in the right situation.
Most suitable is when something substantial occurs over the weekend. Significant gaps can still arise due to surprise election outcomes, unanticipated economic policy shifts, or global crises. In such situations, there is the potential, provided you are nimble with your actions while containing risks.
However, attempting to trade the gap every week could be disastrous without a good reason. Prices may not change significantly. You could miss the right moment to enter, get delayed, or fall victim to wide spreads. Even worse, you could end up with a losing trade if the market moves contrary to your position before the week begins.
Step-by-Step: How to Trade Weekend Gaps in 2025
If you’re considering trying out weekend gap trading, you can do so by following this systematic approach.
Step 1: Check Friday’s Closing Price
Prior to the weekend, observe the closing price for the currency pair of interest. Make a note or highlight the value on your chart. That serves as your reference for the trade.
Step 2: Watch the Sunday Open
As the market opens on Sunday evening around 5 PM EST, check the opening price. If it has noticeably increased compared to Friday's close, like by 20 or 50 pips, a gap has formed.
Step 3: Evaluate the Gap's Size
Calculate how much the price has moved using your trading terminal. This will assist in determining whether the gap is suitable for trading. In particular, smaller gaps may not be worth trading due to spread costs.
Step 4: Monitor the Movement of the Price
You should exercise some patience after the market opens. The first 15 to 30 minutes is critical. Price behavior can either hover around the previous close indicating a gap fill or continue moving further away indicating a breakout.
Step 5: Select the Direction of the Trade
Capitalize on price reversals by executing gap fill trades.
Riding the trend can also be a viable strategy as long as the price is moving in a direction with sufficient momentum.
Step 6: Define Target, Stop-Loss and Entry
When you’re confident in your predicted price direction, set your entry order.
Your stop-loss can be placed just outside the new high or low that forms after the market opens.
If the trade is a gap fill, target the previous close on Fridays. In trend trades, aim for a significant support or resistance level that lies beyond the gap.
Step 7: Exit Early
As a target, try to close your position before the London session opens. More trading activity shifts the market, leading to increased volatility, which can quickly reverse the gains you have made. This is a short-term strategy, so ensure not to overstay on the trade. Read about the comparison of the best forex trading sessions to know more.
Is It Beginner Friendly?
While this approach may seem straightforward, it is not suited for an inexperienced trader. It entails quick decision-making, proficient chart analysis, and a willingness to operate in low liquidity environments. If risk management or executing precise trades are still a work in progress, the gap strategy is likely to be more aggravating than rewarding.
That being said, working with a demo account for a few months can help practice the strategy. You will learn how different pairs respond, how gaps develop and subsequently close, and the overall market behavior. Even if you don’t frequently use the strategy later, the experience will ultimately be beneficial.
Which Currency Pair Works Best?
Different pairs gap differently. Some are more volatile and more likely to see weekend movement. GBP/JPY, for example, often displays larger weekend gaps due to strong reactions to both UK and Japanese news.
EUR/USD is also popular for this strategy since it is one of the most traded pairs, which makes price action smoother and easier to read.
Exotic pairs might have wider gaps, but they are usually accompanied by lower liquidity and higher spreads, which increases risk. Unless you have experience trading these, it’s usually better to stick with major pairs.
Weekend Gap Strategy in Stock Markets
While this article primarily focuses on forex, there is a similar concept for stock markets. Stocks also experience gaps up or down with the start of a new week, particularly when there are company updates or earnings reports expected over the weekend.
Unlike forex, stock markets do not operate 24/5. They also do not open on Sunday evening, which means the gaps are often more pronounced at the start of trading on Monday. This can be very beneficial for day and swing traders, especially when conducting thorough pre-market evaluations.
Conclusion
So, is the strategy still relevant in 2025?
If you are selective, time your execution well, conduct adequate prep work, and plan in advance, then the answer is yes. But it would be unreasonable to expect weekend gaps to magically grant you profits without effort. The strategy can still prove effective during certain market conditions, but only if you can outmaneuver the majority.