What You Should Know about Forex Trading on Friday

Hello ladies and gentlemen, Forex traders!

Friday. A relaxed day, when the mad weekend is ahead, after which the working Monday will come. How does this affect the market? How do big players behave on this day? Who leaves positions for the weekend, taking risks?

Today we will figure out what to remember when trading on Forex on Friday, why this day candle is important, what clues can be learned from the direction of the price on this day and consider some more important nuances that you hardly thought about.

What time does the Forex close on Friday?

 

The first thing that should be mentioned is the time when the forex market closes on Friday. In the market review window, MT4 has a watch, and most brokers close when the time on them comes to 23:59. The more precise information you can find on the website of your broker. For example, in Roboforex, the schedule is in the section “For Clients” -> “Info” -> “Market Trading Hours”.

Everything is planned in details, but note that a non-standard time zone can be used and you may need to “google” how it relates to your local time.

Friday news and NonFarm

Also, newcomers should remember that on Friday at 15:30-16:30 (depending on whether it‘s summer or winter) in America, the US dollar often comes out with significant news, for example, Nonfarms, which can be very shocking to the market.

Therefore, on Friday, do not forget to check the economic calendar, which is also on our website here.

Note whether there is any high impact news in the calendar marked with red.

The trend direction in the afternoon is the key to the impulse on Monday

Next, what I would like to draw attention to is the movement in the second half of Friday, i.e. after 13:00-14:00 GMT and until the close of the market.

If during this period the price increases steadily - on Monday we should expect the continuation of this movement. Accordingly, if the price steadily decreases - at least in the first half of Monday, you can expect the continuation of this momentum. And we are interested in a clearly expressed and directed movement:

This is especially evident in the USDRUB pair, which is shown in the screenshot above. If the same stable growth continues until the market closes, then on Monday it is worth waiting for the continuation of this momentum.

Why this happens, I think, it is understandable: big players start buying, not being afraid that something will happen over the weekend. That is, they are sure that there is no news, they confidently buy or sell - and this means that on Monday we can wait for the continuation of the momentum.

Weekly candle formation

In general, the market does not like to change the shape of a weekly candle on Friday. Therefore, considering the chart on the W1 timeframe, namely the almost formed weekly candle, we can assume what kind of movement will be before the end of the day.

For example, this Friday, at noon on the EURUSD chart, a week-long candle has a rather long tail, which indicates that the bulls have already been kicked out. Plus quite a targeted move of prices down. Even if we take into account Nonfarm - often they only endure stop-loss, and then the price goes back in a couple of hours. So, most likely, the end of the day will continue to move downward, or the price will remain approximately at the same level. But it is not worth to expect some noticeable growth.

A weekly candle by 12:00-14:00 on Friday will either be a full-bodied bull, or a solid (large body, small shadows) bearish – don‘t expect a significant price movement in the opposite direction until the end of the day.

Accordingly, in this case, if you are trading within a day, looking for sale deals, if the weekly candle is clearly bullish, there is not much sense in it.

Of course, if the weekly candle is indistinct, for example, something like a Doji, then the price can go in any direction, and it is difficult to predict something for such a candle.

But a solid week candle allows you to predict the movement of the market in the afternoon of Friday with sufficient accuracy: bearish - down, bullish - up. Well, or almost will not change – which happens more often than we would like to…

Why is Friday so important?

A huge amount of trading volume in the forex market is intraday trading. High-frequency and intraday traders account for up to 80% of transactions on the market. And they all leave the market until Monday.

So who are they - those people who open positions on Friday and leave them for the weekend? After all, anything can happen during the weekend. These are big traders, various serious institutions that own more information than we or the media. At the same time, they agree on the risk of transferring transactions through the weekend, paying swaps. That is, they are very significant traders and, at least, we need to look narrowly at the direction of their positions. Therefore, what happens on Friday, often has a significant impact on the further price movement, and can give an impulse on both Monday and the whole next week.

In addition, according to statistics, Friday is often the minimum or maximum point of a weekly candle. For the same reason, we should expect the continuation of the directed price movement, if it is present in the weekly candle.

And if you take a separate Friday D1 candle, - if it has any of the signals on your trading system, or in general by Price Action - it should be looked at.

When to open positions at a signal on D1 - on Friday or on Monday?

Many ask the question: when is it better to open positions when there is a signal on D1 - at the close of the market on Friday evening, or at the opening of the market on Monday?

The answer is simple: opening positions at the opening of the market on Monday. If there is a gap, we trade it, and if there is no gap, we trade our setup. Since if you open positions on Friday night, a huge gap can simply endure your stops on Monday and you will get a loss (plus your order can slip). Therefore, if you see a signal on Friday evening, it’s better to open positions on Monday.

Conclusion

In addition to the above, do not forget that on Fridays, many traders close the transaction and fix the profit, not wanting to postpone the positions through the weekend. This can be associated with both a possible gap and a desire to get out of the position and calmly go on a weekend. Therefore, at the very end of the day, if there was a clear bullish trend - the price moves back a little (bulls fix profit), if there was clearly a bearish trend - the price moves slightly higher (bears close positions).

Regards, Michael

ForexTraderPortal.com