What is a weekend gap?
A weekend gap is simply a difference between the closing price of a currency pair on Friday and the price at which it next trades when the market reopens (typically Sunday evening in many time zones). On a chart this appears as an empty vertical space between two candles: the new candle opens higher or lower than the previous close with no trading in between. For example, if EUR/USD closed at 1.1500 on Friday and the first traded price when the market reopens is 1.1440, that 60‑pip drop is a weekend gap. The gap reflects that market participants reassessed value while trading was not available.
Because spot forex is effectively closed over the weekend (exchanges and many liquidity providers pause), weekend gaps are the most common time you will see a true opening gap in currency pairs. The magnitude can vary from a few pips to hundreds of pips depending on what happened while markets were closed.
Why do weekend gaps occur?
Weekend gaps form when new information changes participants’ expectations during the time the market is not trading. Common drivers include a sudden political event, unexpected central bank comments, sharp moves in other markets (equities, commodities), or important macro releases that arrive over the break. Liquidity conditions and broker-specific pricing can also amplify the visible gap.
Typical causes include:
- Major news or geopolitical events announced while markets are closed.
- Shifts in investor sentiment driven by developments in equity or commodity markets.
- Market holidays, local bank closures or changes in liquidity providers.
- Broker feed differences and widened spreads at the re-open that make the apparent open price differ between providers.
These forces combine with the fact that there is no continuous auction during the break, so orders that accumulate in the interim are matched at the first available prices when trading resumes.
How weekend gaps look on charts and why they differ between brokers
On a daily or intra‑day chart you’ll notice the first candle after the weekend starts well above or below the previous candle’s close. On very short timeframes you may also see intraday gaps around major news releases, but weekend gaps are distinctive because they occur during the extended market closure.
Not every broker will show exactly the same gap. Some liquidity providers post a more conservative opening price, others reflect aggressive ECN fills. Spreads often widen at the open and order execution can vary, so two traders looking at different platforms might see slightly different gap sizes. That is a normal outcome of how liquidity and pricing are provided.
Types of gaps and what they can mean
Market gaps are often classified by what they suggest about trend or behaviour. Weekend gaps can belong to any of these categories depending on context.
A common gap is a small price jump that usually fills quickly with little follow‑through. A breakaway gap happens when price opens beyond a consolidation zone and begins a pronounced move; if a weekend event fundamentally changes valuations, the gap may be a genuine breakaway and the market may continue in that direction. A continuation (or runaway) gap appears within an existing trend and signals more of the same momentum. An exhaustion gap occurs at the end of an extended move and may precede a reversal. Which category a weekend gap falls into depends on the surrounding price action, volume (where available), and fundamental backdrop.
For example, if EUR/GBP closes the week in a tight range but opens much higher after a surprise central bank statement, that could be a breakaway gap. If the same pair simply gaps a few pips and then trades back to Friday’s range, it was likely a common gap.
How traders typically respond (illustrative, not advice)
Traders choose different responses depending on their style and risk tolerance. Some avoid trading immediately at the open and wait for the first hour or two of price action to show direction. Others trade the gap itself—entering in the direction of the gap on the assumption that momentum and new information will carry it further. A common alternative is to “fade” the gap: trade against it with the expectation that prices will retrace and fill the gap.
A simple, commonly discussed gap‑close approach (illustrative only) goes like this: observe a substantial weekend gap at the open, wait for the first valid reversal signal on a chosen timeframe, enter with a target set near the original Friday close (the gap fill), and place a protective stop beyond a nearby high/low. Some systematic gap strategies split position sizes and take partial profits at half the gap distance and the remainder at full gap closure. The specifics—entry trigger, timeframes, stop and target placement—vary widely and should be tested on historical and demo data before live usage.
Example (illustrative)
Imagine EUR/USD closed Friday at 1.1500 and opened Sunday at 1.1440 (60‑pip gap down). A trader who plans to fade the gap might wait for the first 1‑hour candle to form and look for a bullish rejection pattern (for example, a long lower wick rejecting the new lows). If that confirmation appears, they might enter a long targeting the 1.1500 area (the gap fill), with a stop slightly below the Monday low. This is an example to show the mechanics; it is not a recommendation or personalised advice.
Practical considerations: stops, slippage and order execution
Weekend gaps introduce execution risk. Stop orders placed below Friday’s close may be triggered at much worse prices if the market gaps through a level—this is slippage. During thin liquidity at the open, partial fills or requotes are possible with some providers. Margin requirements can also behave differently at re‑open; brokers sometimes increase margin or change execution policies around volatile opens.
Because stops are not guaranteed to get the exact stop price during a gap, many traders account for that by sizing positions conservatively, using wider stops, or avoiding holding positions into the weekend if they want to eliminate gap exposure.
Risks and caveats
Trading around weekend gaps involves several distinct risks. Liquidity can be thin at the market open and stops may suffer slippage; limit and stop orders can be filled at prices materially different from the displayed level. Not every gap fills, and some reflect fundamental shifts that establish a new price regime rather than a temporary dislocation. Strategies that rely on gap fills therefore carry the risk of sustained adverse movement. Always remember trading carries risk and you can lose money; this article does not constitute personalised financial advice. If you consider trading around gaps, test any method on a demo account first and ensure position sizing, stop placement and risk limits are appropriate for your account.
Practical tips to manage weekend gap exposure
Before the weekend, review the economic calendar and known events that could create discontinuities. If you are uncomfortable with the possibility of large moves, consider reducing or closing positions before the market closes. When trading a gap at the open, wait for price confirmation rather than entering on the first tick, and make conservative assumptions about slippage when calculating risk. Use demo testing to understand how your broker executes orders at open and to refine your signals and money management.
Some concise suggestions to help manage risk:
- Keep position sizes smaller when exposure to weekend gaps exists.
- Avoid relying on precise stop execution; allow for slippage in calculations.
- Know your broker’s weekend and re‑open policies so you understand potential execution behaviour.
Key takeaways
- A weekend gap is the price difference between Friday’s close and the next open; it reflects information arriving while markets were closed.
- Gaps can be caused by news, geopolitical events, liquidity changes or broker pricing; they can be small or very large.
- Traders either avoid the open, trade with the gap, or fade it; each approach requires clear risk controls and testing.
- Trading carries risk; stops may be subject to slippage and strategies should be tested on demo accounts rather than relied on without verification.
References
- https://fundednext.com/blog/market-gaps-in-forex-causes-and-effects-for-prop-traders
- https://paxforex.org/forex-blog/forex-weekend-gap-trading
- https://fenefx.com/en/blog/what-is-a-gap-in-forex-and-its-types/
- https://www.forex.com/en-us/trading-academy/courses/managing-risk/market-gaps-and-slippage/
- https://www.tastyfx.com/news/what-is-gapping–230727/
- https://mondfx.com/what-is-a-gap-in-forex/
- https://www.oanda.com/us-en/trade-tap-blog/trading-knowledge/understanding-and-trading-price-gaps-in-forex/
- https://www.whselfinvest.com/en-be/trading-platform/free-trading-strategies/tradingsystem/54-gap-close-forex-free