In some currency trading circles the rule for shorter term traders is never hold a position over a weekend. We have had many examples of this rule needed to be used over the several months.
Example; The EUR/USD gaped up 150 PIPS due to positive weekend news about the Greek debt situation. What does this gap represent to currency traders? Well, let us take it from the top. If you were short the EUR/USD on Friday and had a 40 PIP stop loss the 150 PIP gap up over the weekend rolled over your stop loss. In other words, your broker had no way of unloading your EUR/USD stop loss order because the stop loss price was never available. Which means you are still short the EUR/USD and would need to absorb the 150 PIPS that went against you over the weekend.
Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.