Question: What happens if Forex prices of Friday closing and Monday opening are different?
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On AAAFx’ trading platforms, the market opens on Sunday 22:00 UTC and closes on Friday 22:00 UTC.
Even though Market opens on Sunday 22.00 UTC (when Eastern Time is in daylight saving, market opens Sunday 21:00 UTC) you can notice slight fluctuation of rates prior to opening.
The Trading Desk initiates relevant services and starts updating the rates in order to have them prepared and available when the trading resumes.
However, the rates displayed prior to the official market open cannot be applied to new market orders and trading cannot be performed.
How will my open position be affected, if the prices change from Friday’s close to Sunday’s open?
Under normal market conditions when the market opens you can see that the opening price of a currency pair is very close to the price registered on Friday before the market closed.
However, there are times when the rates can move significantly up or down, and this can have a positive or a negative effect in your trading activity.
If there is a major news announcement or important economic events that will have an impact on the value of the currency, there is a greater likelihood of gaps in the market.
Please bear in mind that as the price can move against your current position, you can find that your position is losing even though it was in profit when the market closed.
For this reason traders holding positions or orders over the weekend should be aware of such adverse eventual gaps and be ready for potential losses.
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The price upon market open exceeded my predetermined Stop/Limit of a trade. What will happen to the trade?
If the predetermined Stop value is exceeded when the market opens, the trade will be closed by the prevailing rate at that time.
The rate will depend on the liquidity available at that moment.
The execution of Stop order at any exceeded rate implies bigger losses than expected.
However, when the market opens at a rate that exceeds your set a Limit value, the trade will be closed with a higher profit than expected.
Let’s see this with an example.
You have a BUY EUR/USD position opened at price 1.1150 with Limit set to 1.1350.
On Friday when the market closed the price of the pair reached 1.1250, and on Sunday when the market opened with the price at 1.1450.
As you can see the price exceeded the Limit of 1.1350 so the trade would be closed by this new current price bringing you profit of 300 pips instead of the set 200 pips.
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Why did I get a Margin Call notification when the market was closed?
The market opening process is not instantaneous – it is a gradual process that starts before 22:00 UTC.
As a result, AAAFx also start receiving rates before the 22:00 point, so they generate a Margin Call or Stop Out notifications before that – however trades are not closed before official market opening at 22:00.
If after the market opening, the available rates still put your account below the Stop Out level, then the Stop Out mechanism is triggered, and closure of the trades is initiated.
How can I protect my trades held over the weekend?
If you believe that over the weekend the market may be volatile and the rates will move against your open positions, you should anticipate risk.
If this trading strategy does not suit you, it is recommended that you get out of a trade by realizing your current profit or loss before the market closes.
How to calculate profit/loss on AAAFx trading platforms?
When the value of a currency that you have bought rises, then profit is created; you can secure the profit of this transaction by selling the currency back and thus closing the position.
Let’s see that with an example where we buy U.S. dollars and sell Swiss francs.
- The rate you are quoted is 1.2755 / 1.2760. Because you are buying U.S. dollars you will be working on the “ask” price of 1.2760, or the rate at which traders are prepared to sell.
- Let’s assume you buy 1 standard lot (100,000 units) at 1.2760.
- A few hours later, the price moves to 1.2780 and you decide to close your trade.
- The new quote for USD/CHF is 1.2780 / 1.2785. Since you’re closing your trade and you initially bought to enter the trade, you now sell in order to close the trade so you must take the “bid” price of 1.2780, or the rate at which traders are prepared to buy.
- The difference between 1.2760 and 1.2780 is .0020 or 20 pips.
- Using the pip calculation formula, we now have (.0001/1.2780) x 100,000 = $7.82 per pip x 20 pips = $156.49
Keep in mind that when you enter or exit a trade you are subject to the spread of the bid/offer quote.
When you buy a currency, you will use the offer or ask price and when you sell, you will use the bid price.
AAAFx offers MT4 and ZTP trading platforms
AAAFx offers you both the MT4 Platform for your manual trading plus free access to the ZuluTrade web-based Autotrading Platform for receiving trades from Signal Providers as well as manual trading.
In addition, you may also access your AAAFx MT4 account from your mobile device by downloading the relevant application here for iPhone and iPad and here for Android devices.
In order to connect to the AAAFx server, please search by the keyword ‘Tripleafx’.
You can also access your ZuluTrade account from iPhone, iPad and Android devices by downloading the relevant ZuluTrade applications from here.
