Weekend Gap Management

In This Lesson

Handling weekend gaps and overnight risk.

Duration: 20 min

Overview

Handling weekend gaps and overnight risk. This lesson will provide you with practical knowledge and actionable insights you can apply to your trading immediately.

By the end of this lesson, you'll have a clear understanding of the concepts and be able to apply them in real trading scenarios. Let's dive into the details.

Key Concepts

Gap Statistics

Most gaps fill partially (50%+) within days. Full gaps fill 70% of time within weeks.

Weekend Hedging

Use options or inverse ETFs to protect against adverse weekend gaps without selling position.

Gap Trading Setups

Weekend gaps create opportunities: fade exhaustion gaps, buy continuation gaps on pullback.

Position Sizing Adjustment

Reduce size into weekends based on event risk: earnings, Fed meetings, geopolitical events.

Practical Application

Now let's put this knowledge into practice. Follow these steps to apply what you've learned:

1. Review economic calendar every Friday for weekend event risk
2. Decide Friday whether to hold, reduce, or exit positions
3. Set Monday morning game plan: levels to buy/sell based on gap scenarios
4. Use Friday's last hour to adjust positions, not Monday's open
5. Track gap statistics for your holdings: how often and how much
6. Consider weekend time decay when holding options over weekend

Common Mistakes to Avoid

Ignoring Weekend Risk

Holding full positions over weekends when news can create massive gaps leads to unexpected losses.

Panic Selling Monday Gaps

Immediately selling into Monday morning gaps often means selling at the worst price.

Weekend FOMO Trading

Obsessing over positions during market closure leads to poor Monday morning decisions.

Key Takeaways

Weekend gaps are manageable with proper planning and position sizing
Most gaps provide second-chance entries during the week
Reducing position size eliminates emotional weekend stress
Gap trading can be profitable strategy when done systematically
Professional traders plan for gaps, amateurs react to them

Your Next Steps

Ready to continue your learning journey? Here's what to do next:

• Review this lesson's key concepts
• Complete the practical exercises
• Take notes on what you've learned
• Practice with a demo account
• Move on to the next lesson when ready