Trading The Friday To Sunday Extension

Trading Strategy
This is a guest post by Ahmad Hassam

As a forex trader, you can exploit the Friday to Sunday Price extension to make 10-30 low risk pips during the weekend while the markets are closed. This trading strategy works very well when there is high volatility on Friday like that what happens on the release of NFP Report.

This is what happens when a big economic number is released on Friday. Market moves wildly in both directions before it settles down in one direction and proceeds to follow that direction for the rest of the day. Once the European Market closes, the liquidity in the market thins our pretty fast.

Everyone is preparing for the weekend in NY. So in this 3-5 PM EST window the market will keep on moving in the same direction that it had settled after the release of the big economic news.

Now, the assumption is that the market will keep on moving in the same direction during the weekend. When Sydney opens after the weekend, the Sydney traders have to process the outstanding orders that were created after the NY move on Friday.

This often shows up as a Sunday morning bump when dealers try to fill those outstanding orders in a thin market. So, the market will keep on moving in the same direction till Tokyo opens when the chances are it can get reversed.

So Trading the Friday to Sunday Price Extension is simple. Enter in the direction of the market during the 3-5 PM EST window on Friday and return on the Sunday evening EST to close the trade and collect your low risk 10-30 pips. Talk about making money during the holiday when the markets are closed.

Now this strategy works with only those pairs that involve USD as either a base or a counter currency since the economic news impacts the USD pairs. Make sure you get out of the market before Tokyo traders become active. Don’t trade AUD or NZD crosses as they have high liquidity during these times.

Now why this Friday to Sunday Price Extension strategy works is because after a big day in NY, the Sydney dealers are left with a mountain of orders that they are forced to take in a thin market. This dynamics limits the downside of this trading strategy giving it excellent risk to reward characteristics.

Just make sure when you enter the trade that no major news event like elections or G7 meeting is scheduled over the weekend. This can have major impact on the prices.

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Comments

What is the direction of the market ? Because often fraday there is rangebound market so what direction to trade??

Thanks

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