Does MT4 trade on weekends?

A popular question amongst traders is when the MetaTrader 4 (MT4) platform operates. What are the hours? Can it be used to trade with on weekends? The answer is pretty straightforward. MT4 doesn’t set trading hours, the global markets do. Whilst the forex market is open 24/5, it is essentially divided into different geographic trading sessions. These sessions open and close based on their timezone, with overlaps occurring. Therefore, the session you choose to trade in will determine the hours that you’ll be using the MetaTrader 4 platform.

Forex trading sessions, what are they?

As we’ve already mentioned, the forex market is open 24 hours a day, Monday to Friday. It closes over the weekend, so you’re unlikely to be using MT4 during that time. There are 3 key sessions that are comprised of several primary markets.

Asian session (Tokyo and Sydney)

Popular currencies traded during this session are the Japanese Yen, and the Australian and New Zealand dollars.

• Tokyo is the first Asian trading centre to open and and is known for handling a significant portion of the region’s trading activities, just ahead of Hong Kong and Singapore. The USD/JPY, GBP/JPY, and GBP/USD see a considerable amount of activity during this session, with the USD/JPY an especially important pair to watch as the Bank of Japan has a strong influence on its movements. Tokyo is open from 12:00 am to 9:00 am UTC

• The Sydney session marks the official start of the trading day. It is the smallest of the four key markets but sees significant activity as trading resumes after an extended break since Friday afternoon. Sydney is open from 9:00 pm to 6:00 am UTC.

The North American session (New York)

• The USD is involved in the highest percentile of all forex trades, making it one of the most traded currencies in the world. It is heavily influenced by movements on the NYSE (New York Stock Exchange), creating price fluctuations in just seconds. New York is open from 1:00 pm to 10:00 pm UTC. There is participation in the market by Mexico, Canada, and some countries in South America.

The European session (London)

• Open from 7:00 am to 4:00 pm UTC, the London market is said to account for over 40% of global trading. The presence of German and French markets do impact trading hours, but the European session typically begins as the Asian trading hours come to a close.

Why are the financial markets generally closed on weekends?

For one, major banks and financial institutes which provide liquidity for the forex market, are typically closed over the weekend. Without liquidity, it is impossible for traders to buy or sell forex pairs. However, currency prices can still fluctuate due to unanticipated market-moving events which is why you may see a change in prices when the market re-opens.

Trading the gap

For those looking to leverage the weekend gap and potentially earn gains if successful, the “trading the gap” strategy presents an opportunity. This approach hinges on the anticipation or speculation that Sunday’s opening price will align with Friday’s closing price. The gap refers to the difference between the forex market’s closing price on Friday evening and its opening price on Sunday.

To exploit these gaps, high trading volumes are usually required, which is challenging as most large traders and financial institutions are inactive during the weekend.

Consequently, weekend forex traders often focus on closing gaps. This can be achieved when a small group of traders move the market in the same direction. For e.g., the market may rise and many traders may choose to trade against the trend, aiming to profit from the situation.

How do gaps occur?

1. Significant economic or political news or other global events over the weekend can result in the market reopening at a drastically different price. Examples include the break-out of war (Russia/Ukraine war), a natural disaster, or even a pandemic (Covid-19).
2. The release of news or specific events occurring over a weekend may impact investor (trader) sentiment, leading to a shift in market sentiment by the time the market reopens once the weekend concludes.

Types of weekend gaps

Three types of gaps exist: breakaway gaps, exhaustion gaps, and continuation gaps.

• Breakaway gaps occur when the price moves out of a consolidation phase, breaking above or below key support or resistance levels.
• Exchaustion gaps happen at the end of a price pattern, typically following a sharp increase in volume that quickly reverses, signaling the end of a trend.
• Continuation gaps arise within an ongoing price pattern, reflecting increased buying or seling pressure.

Effective risk management

Managing forex trading risks, including those incurred by weekend gaps, requires the integration of several key strategies.

1. As far as avoiding weekend gaps is concerned, closing all positions on Friday before the trading day concludes will mitigate exposure to any unanticipated market-moving events over the weekend.
2. Using stop-loss or take-profit orders is another crucial tactic to mitigage forex trading risk. A stop-loss order seeks to limit losses, while take-profit orders aim to lock in profits. Both can be implemented by way of automation, and triggered when predefined price or profit levels are reached.
3. Monitoring economic releases is also a vital strategy to take advantage of potential trading opportunities or avoid unnecessary risk. Using an Economic Calendar such as the IronFX Economic Calendar is one way to achieve this. The calendar will keep you informed of financial events and economic indicators in real time so that you remain updated and are able to make informed trading decisions quicky and easily. This includes Gross Domestic Product (GDP), interest rates, unemployment rate, central bank minutes and Consumer Price Indices (PMIs) (measure for inflation). This is particularly useful also if a major event is scheduled for over a weekend, giving you the option of deciding whether you want to hold an open position over that weekend or not.
4. Diversifying your portfolio may also be a way to manage trading risk. By spreading your capital across different currency pairs, you may reduce the adverse impact of unexpected movements in any single market.

Managing trading psychology

One of the strongest drivers of forex trading decisions is one’s trading psychology. This refers to the extent that one allows their feelings to drive their decision making process. These feelings include fear, anxiety and panic. However, they may also include arrogance, greed, and over-confidence. All of these emotions have the ability to impair sound reasoning and judgement, resulting in poor trading, and thus financial, outcomes.

This is why getting a good handle on your trading psychology should be a core component of your risk management plan. How you achieve this is entirely dependent on your character, your specific personality. For some people, practicing mindfulness is a way to calm their nerves. For others, it’s getting in regular sessions at the gym or focusing on eating healthily for good cognitive and thus mental health. Whatever works best for you is ultimately the way to go.

Trading with IronFX

Becoming an IronFX trader means gaining access to a high-quality, flexible trading experience, multiple asset classes, an extensive range of account types, and fast trade execution. Through this international broker with clients across the globe, you’ll also be able to enjoy seamless withdrawals and deposits, and market access via the MetaTrader 4 (MT4) trading platform, arguably one of the world’s most popular trading systems amongst global traders. The IronFX Academy also offers an abundant source of educational resources to boost one’s skills and acquire fundamental trading insights.

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This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked in this communication.