The majority of binary options traders mistakenly believe that they cannot trade binary options on weekends. The Western world, of course, presents ample evidence to back up this claim. Fortunately, the Western world is not the only one.
Workweeks in other cultures vary. As a result, their stock markets operate on a weekly basis. The workweek in certain parts of the Middle East, for example, runs from Sunday to Thursday, while in others, it runs from Saturday to Wednesday. This is followed by the stock exchanges.
An open stock market is required to trade binary options. You can predict where the market will go if it moves. You can trade binary options as long as there are open markets throughout the world.
The Middle East alone is sufficient to ensure a weekend market. The weekend is full of trading chances, with some stock markets operating on Saturday and others on Sunday.
Weekend trading can be used by traders who trade binary options based on currencies and commodities to follow trends discovered on Friday or complete other trading objectives. Because currency pairs are not traded on a central exchange, the traders can gamble on foreign exchange rates as long as at least one primary market is open (e.g., Hong Kong, Sydney, New York).
Even courses dedicated to trading tactics take advantage of the ‘weekend impact,’ demonstrating the popularity.
Why should one trade on the weekend?
Traders chose to trade on weekends for three significant reasons. It’s as follows:
1. Some trading techniques benefit from the weekend trading environment. The trading market runs quite different unlike the weekdays when all the European and American markets are open for traders.
Some traders benefit from a diverse market environment because it allows them to implement their strategies more effectively. We will discuss a number of these tactics later.
2. Increased trading time equates to higher profits. More trading time equals more money with a winning plan. For example, traders with free weekends might utilize binary options to make money instead of watching TV. Traders that are serious about their business may deal seven days a week.
3. For some, the weekend is their only option. If you’re too busy throughout the week to make any transactions, the weekend may be your only option. You may combine a trading career with a busy schedule by using a broker that allows you to trade when you have free time.
These are some of the reasons why so many traders enjoy trading on weekends. Weekend trading, on the other hand, has some constraints as well. So let’s look at the downsides of weekend trading to help you assess both sides.
Strategies for Binary Options trading on weekend
During weekend trading, the market atmosphere differs from that of weekday trading. While this does not necessitate the development of entirely new trading techniques, it does necessitate an understanding of the market’s specific characteristics and matching them to the appropriate trading tactics.
Here are three strategies that can help any trader to catch up the best return on their deposits:
#1 Trading closing gaps in currencies
Trading Gaps must be closed in a market that is conducive to weekend trading. You obtain the most pleasing environment for this type of strategy during the week by trading exhaustion gaps in currencies over the weekend. Weekend forex gap trading is a well-liked strategy.
Price surges are referred to as gaps in the market. This is because something strongly moved the market from one period to the next, causing the price to soar from one price level to another, missing the prices between.
There are a variety of reasons why gaps develop. They can occur as a result of starting or accelerating new movements, for example. However, a large trading volume is required to close these gaps. Many traders must support the change in order to initiate or accelerate it. It will quickly run out of energy if this does not happen. There are just too few traders available on weekends to fill these voids.
The Western central banks are closed during the weekend. Small investors are taking a break, and most day traders are out with their families. The emergence of new movements is unlikely without these key actors. Closing gaps are more likely.
When a small number of traders establish a gap, it closes. Occasionally, a group of investors will invest in the same direction, either by chance or because they were all drawn to the same signal.
The market fluctuates in price, leaving the other merchants perplexed. They believe the advancement was a mistake, feeling that the new price is either too high or too cheap, depending on the direction of the gap. These traders will quickly invest in the other direction, hoping to profit from the error.
- Traders will sell their assets in the event of an upward gap.
- In the event of a downward gap, traders will buy the market and close the gap. The market will recover, and the gap will be closed.
There’s a good possibility that gaps will close in low-volume markets. Weekends are low-volume trading days, making them ideal for this technique.
You have everything you need to trade a binary option with a large reward if you know that a gap will close.
- You know how much you want to spend. The market will move in a zigzag pattern until it hits the price level of the first gap-closing candlestick. Then, it will most likely fall to the first candlestick’s high following upward gaps and rise to the preceding candlestick’s low after downward gaps. Within the next term, the market will most likely hit the goal price.
- You should only choose a longer expiry if you have a minimum term.
You can trade a high/low option using this information or invest in a one-touch option for a bigger reward. First, select an option with a target price that falls within the gap and a less than one-period expiration date. Then, choose a high/low option with a one-period expiry if your broker does not provide this choice.
With currencies or commodities, we recommend employing this technique. Because most of the globe is on vacation, the trading volume for these asset classes is lower on weekends than during the week.
The stock market in the Middle East, on the other hand, may still see a significant volume of trading because traders in these nations are still working. As a result, the trade volume in the West is less affected by the weekend.
#2 Trading Pullbacks after a breakout with currencies
This technique follows the same principle as the first, but it is tailored to two separate market phenomena: breakouts and pullbacks. When the market completes a price pattern or breaks through a barrier or support level, it is called a breakout.
Many traders place orders in the same direction at these price levels, resulting in swift and decisive changes.
The breakout requires a high trading volume to establish a long-term trend. The majority of traders do not back the breakout when the volume is low. There is inadequate faith in the trend, prompting traders to invest in the other direction and bringing the market back – referred to as a pullback.
Consider an asset that is locked in a sideways price channel, for example. It had previously attempted to break out of the channel, but it reversed each time the market approached the top or lower channel boundaries.
The market tries to break out of the pattern once more during the weekend. Unfortunately, it crosses the line this time. This incident could bring the formation to an end and a new movement to begin during the week. However, because currency trading volume is so low during the weekend, the market is more likely to retreat.
A significant volume is usually associated with reliable breakouts. False signals are movements outside of a formation’s limits that are accompanied by low loudness. Because the risk of false signals is significant during the weekend, it’s prudent to forecast a pullback for each payout.
There are a variety of approaches to trade the pullback. These are some of the possibilities:
- There are possibilities for high and low. Invest in a high/low option that predicts the market will pull back inside the structure when you detect a breakout on the weekend. Use a two-to-four-period expiry time. An expiry of 20 to 40 minutes, for example, would be used on a 10-minute chart.
- This method can help you win a higher percentage of transactions, but it has a modest payoff per winning trade. Risk-averse traders will appreciate this method.
- One can activate some choices with only a single touch. When the market hits a predetermined target price, you win a one-touch option. You can utilize the price formation’s boundary as your target price after a breakout on the weekend. At this point, the market is likely to retreat.
- You have a decent probability of winning the trade if you use the longest expiry that still allows you to reach your target price. This technique is a little riskier than utilizing high/low options, but it should result in a larger payment. Traders who wish to take a little more risk should consider it.
- Options for a ladder One-touch and high/low options are available on the ladder. When your option expires, you can predict whether the market will move above or below your target price.
- When you identify a weekend breakout, you may utilize ladder options to estimate when the market will return to trading within the formation’s borders. Use a two- to four-year expiration. This technique is the riskiest of the three, but it also has the largest payouts.
Each of these three approaches has the potential to be effective. Select the option that best represents your personality.
#3 Trading currencies with Bollinger Bands
Bollinger Bands create a price channel that is unlikely to be broken. This price channel produces very accurate predictions over the weekend, making it an ideal trading strategy foundation.
Three lines make up the Bollinger Bands:
- A line in the middle. Moving average with a period of 20.
- A line on the top. The standard deviation multiplied by the moving average
- A decrease in the line. Two times the standard deviation divided by the moving average.
The lower line serves as a support, while the top line serves as a barrier to overcome. If the market is currently trading up or down, the centerline might be a support or a resistance. When a market approaches a Bollinger Band, it is more likely to reverse direction.
Bollinger Bands are useful at any time of the week, but they’re especially useful on weekends. This is because unexpected news might modify the market situation over the week, and the many active traders can initiate new trades or terminate old ones at any time. As a result, the trading range is more fluctuating.
These occurrences aren’t always undesirable, but they complicate the application of Bollinger Bands. The upper and lower Bollinger Bands will move in lockstep with the standard deviation.
Due to these occurrences, Bollinger Bands will stretch, and their limits will be taken along for the ride if there are strong rising or downwards movements. As a result, predictions based on these bands will soon become obsolete.
The market is substantially more uniform on weekends due to the low trade volume. As a result, the likelihood of a large group of traders jumping in on a trend and abruptly changing the market environment is significantly lower, making Bollinger Bands use more accessible and more precise.
This is how you implement the strategy:
- Make a chart for yourself. Select an asset, open a price chart, and use the Bollinger bands.
- Watch for the market to get close to the Bollinger Bands. Finally, wait for the market to approach one of the Bollinger Bands’ three lines.
- Make a forecast for the market’s recovery. Invest in a high/low option that says the market won’t break through the Bollinger band.
This is a straightforward approach. It is simple to perform, even for newbies.
Drawbacks of weekend trading
There are several restrictions to trading binary options over the weekend. It’s as follows:
#1 First and foremost, there is a limited range of assets to choose from.
Only a restricted number of assets are available to invest in on the weekend.
For instance, assets that are controlled by western countries like stocks of Apple, Google or McDonald’s can’t be traded if the NYSE or New York Stock Exchange is closed which is usually on the weekends. Thus, the major stocks of American firms can’t be traded on non-weekdays which could have assured a higher return.
A trader can only trade in indexes or stocks of Middle Eastern firms when the market is open.
Professional technical analysts don’t care about the underlying asset and trade price changes.
This, on the other hand, is a difficulty for traders who wish to trade the news or learn about the assets they trade. They may be presented with a list of stocks and indices that they are unfamiliar with. For some traders, this is a challenging circumstance that prevents them from trading over the weekend.
Some of the indexes from Saudi Arabia that you can trade on weekends are:
- Tadawul Index (Dubai, United Arab Emirates)
- DFM Index (Dubai, United Arab Emirates)
- Tel Aviv 25 Index (Tel Aviv, Israel)
- Kuwait Stock Exchange (Kuwait)
Go ahead and use these indices if you’re confident in your abilities. In addition, some previously unavailable markets are now accessible on weekends by brokers.
Weekend trading on the FTSE, DAX and even US indices are now available through IG, for example.
On the other side, a previous ‘weekday’ position will be left untouched during weekend trading (this implies that the platform won’t hold the open orders and stop losses of the weekday trade).
However, a new trade will be commenced for traders from sharp 8 a.m. on first weekend day (Saturday) till 10:40 p.m. of last weekend day (Sunday). *Time of commencement is subjective w.r.t to the broker’s location.
The trading hours for forex on weekends are significantly longer. Currency is traded all over the world without a central market. For example, Hong Kong continues to trade even if London does not. This means that forex trading is available practically every day of the week, 24 hours a day.
The trading markets for gold and oil on weekends are very comparable. However, the volume will be pretty low at times. Markets and charts become flat as a result.
#2 Different time zones are a second constraint
Each stock exchange follows its time zone. There is a considerable time difference because Middle Eastern stock exchanges are so far away from those in the United States and other countries. You must account for these time delays while trading these stock exchanges’ stocks and indices.
This means that binary options traders who invest in equities and indices will have to adjust their trading practice drastically. They may have to get up in the middle of the night to trade, or at the very least trade at different hours during the week. If you can’t or don’t want to do this, stick to weekday stock and index trading.
#3 Broker trading times
During the weekend, some binary options brokers shut down their platforms. They believe that the work isn’t worth it because few traders spend their weekends conducting technical analysis.
Check your broker’s trading hours or contact customer service if you want to trade over the weekend. Unfortunately, you can do little if your broker is closed on weekends until you change brokers. However, if you’re serious about weekend trading, look at our broker list for some helpful hints.
Many brokers will mirror the market’s opening hours – the majority, for example, will remain open when the FX markets do. Metatrader 4 (MT4), for example, may work with historical data or real-time data, but only while the market is open.
Weekend binary options trading provides one-of-a-kind possibilities in one-of-a-kind markets. However, to reap the benefits of weekend trading, you’ll need a broker who is willing to trade both currencies and commodities as well as middle Eastern equities and indices.
With traditional binary options tactics, you can trade equities and indices from the Middle East. However, you must adjust your strategy to account for the weekend’s lower trading activity when trading currencies and commodities. Nevertheless, there are sufficient opportunities to make weekend trading worthwhile.