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Weekend gap risk is the risk that a position held into the weekend opens at a materially different price when trading resumes, because the underlying market was closed while news and events continued to happen in the wider world. Unlike a normal trading day, where price moves gradually and your stop-loss has a chance to trigger along the way, a weekend gap can jump straight past your stop with no opportunity to exit at the level you planned.
A useful way to picture this: a geopolitical shock, surprise policy announcement, or major economic development occurs over the weekend while forex, stock, and index markets are closed. When trading reopens Monday, the price can open dozens or even hundreds of pips away from where it closed Friday. A stop-loss set at what seemed like a safe distance offers no protection in this scenario, because the market simply never traded at that price — it jumped over it entirely.
Managing weekend gap risk generally means reducing exposure before markets close for the weekend, particularly around known event risk such as elections, referendums, or scheduled political decisions expected to land over a weekend. Some traders close all positions before the weekend as a rule; others simply reduce size on anything they choose to hold. It's also worth understanding the difference between a standard stop-loss and a guaranteed stop, where offered, since only the latter protects against this specific kind of gap.
This risk mainly applies to markets with defined trading hours, such as forex, stocks, and most indices. Markets that trade continuously, like many cryptocurrencies, don't experience the same weekend closure and therefore carry a different risk profile.
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