The [B]retail[/B] forex market (our market) is closed over the weekend. But, retail forex represents only 3½% of the overall, worldwide foreign exchange market. The major portion of the worldwide market — the portion that drives everything else — is never closed, although generally it slows to a crawl over the weekend.
As you can probably imagine, if the Bank of England (or Toyota, or George Soros, or any other heavy-hitter in the currency market) wants to move money late on a Saturday evening, they [B]will[/B] have access to the market, and they [B]will[/B] get the deal done.
Meanwhile, you and your retail broker are watching Saturday Night Live.
Whatever the heavy-hitters do over the weekend will be reflected in the Sunday Gap which you see on your chart, when your broker comes back online on Sunday afternoon (New York time).
Retail brokers could stay open over the weekend, if they wanted to, and at least one that I know of (Oanda) tried that for a while. But, apparently, it didn’t make business sense to them to continue the practice. The thin liquidity over the weekend, coupled with the extraordinary volatility created occasionally when geo-political events impacted the market over the weekend, made it necessary for Oanda to widen weekend spreads to the point of killing off most retail business. Oanda’s weekend trading experiment didn’t last very long.
[B]Most short-term traders[/B] find that holding retail positions over the weekend is an unjustifiable gamble — because of those Sunday Gaps. If the larger market gaps past your stop-loss over the weekend, that’s just too bad. Your stop-loss will become a market order, and you will be stopped out, [B]at whatever price is available[/B] after your retail broker reopens on Sunday — even if that available price is far beyond the price you intended.
[B]Long-term traders[/B] (position traders and most swing traders), on the other hand, are better able to absorb price spikes of 50 to 100 pips (the typical upper limit of Sunday gaps), and therefore they typically hold positions over weekends.
Unless you’re a long-term trader, you probably should close all your positions no later than noon (New York time) on Friday, and then re-evaluate the market for a possible re-entry on Monday.