The Weekend Gap Really Fills. Your Broker Opens Too Late to Catch It.

What is a weekend gap?

The forex market closes on Friday night and opens again on Sunday night. Sometimes the price on Sunday is very different from the price on Friday. This jump is called a gap.

Many traders believe the price usually goes back to Friday's price. This is called "filling the gap". And there are numbers for it: people say the gap on EURUSD fills 70 to 86% of the time.

Why would this happen? On Sunday night very few people are trading. If big news came out on the weekend, a few orders can push the price too far. When more traders come back, the price often moves back.

So the plan is simple: when there is a gap, trade in the other direction and wait for the price to go back to Friday's close. We tested this on four currency pairs.

The first test made zero trades

We ran the test for six months. It made zero trades.

The strategy was working. It found all 11 gaps. It knew where to buy or sell, where to put the stop loss and where to take profit. It sent every order. But every order came back with the same message: "Market closed."

Here is why:

• Our price data starts on Sunday at about 21:00 UTC.
• But the broker only lets you trade from Monday at 00:00 UTC. Almost every normal MT5 broker works like this.
• So every week there are 3 hours where you can see the price, but you cannot trade.

We changed the test so it trades at the first price on Monday. Then we checked what happened in those 3 hours. In the first half of 2021, 8 of the 11 gaps were already almost closed before we could trade.

This is the main lesson. The numbers about gaps are true. But they are counted from Sunday night prices. A normal trader can only trade from Monday. And most of the gap closes before Monday.

What is left on Monday

Best portfolio result for each gap size: what is left to trade on Monday

On Monday morning, there is no good choice:

• Small gaps (5 pips or more) happen often. We found 189 of them in five years on the four pairs. But the best settings still lost $1,308, because the spread (the cost to trade) near Sunday is 1.8 to 8.9 pips. That is about the same size as the gap. The cost eats all the profit.
• Bigger gaps lose less money. At 20 pips or more, the best settings finally made a profit: $150. But that was only 43 trades in five years. That is too few trades to trust. It could easily be luck.

All 48 portfolio settings, 2017-2022

We tested 48 different settings. Only 10 made money. None of them made money on all four pairs. No setting was clearly better than the others.

So we rejected the strategy. We did not test it on new data, because there was nothing worth testing.

The rule we learned

In our Bitcoin overnight study we learned one rule: if the trading cost is bigger than the profit, the edge does not exist for you.

This test adds a second rule: check the trading hours. If the price move happens when your broker shows prices but does not let you trade, then the edge does not exist for you either. It does not matter what the numbers say.

Now we check both rules before we write any code.

The old idea is still true: weekend gaps do fill. But the people who profit are the ones who can trade on Sunday night. A normal MT5 account cannot.

You can see all the strategies we tested, winners and losers, on the results page.

Past performance does not mean future results. These are backtests with real trading costs. They are not live trading results.