Friday afternoon - why to avoid trading

Friday afternoon, exhausted after a whole week, you decide to open a few positions. You think you might still 'gain' something before the weekend. Unfortunately, this often ends badly. The slippage in order execution is greater, which means that your buy order may be executed at a price higher than you expected. Let's assume you invest 10,000 PLN and the slippage is 1%. That's already a 100 PLN loss at the start. The spread, which is the difference between the buying and selling price, also increases, which means it becomes harder for you to exit the position with a profit. And what if your stop loss is not filled? You could see your loss exceeding 200 PLN in the blink of an eye.

On Friday afternoon, there is a decrease in liquidity in the markets. This means fewer participants, resulting in lower trading volume. In practice, this means greater price fluctuations, wider spreads, and increased slippage risk. In such conditions, the market becomes less predictable, and your orders have a lower chance of being executed as expected. Additionally, there is the weekend gap - the difference in the opening price on Monday compared to the closing price on Friday, which can surprise even experienced traders.

Assuming your capital is 15,000 PLN and you decide to open a position for 10,000 PLN. Due to slippage and increased spread, you lose 1.5% of the position value - that's 150 PLN. If there is also a weekend gap, which can be as much as 2%, the loss can reach 300 PLN. In total, that's 450 PLN, which constitutes 3% of your capital. With repeated mistakes, this can significantly deplete your financial resources.

1. Avoid opening new positions on Friday afternoons.
2. Consider closing existing positions before the weekend to avoid weekend gaps.
3. Reduce leverage on Fridays to limit potential losses.
4. Monitor spreads and slippage before making a trading decision.
5. Plan your trades in advance and stick to established risk management rules.

Make a habit of closing positions before the weekend

• Avoid holding positions over the weekend to minimize risk.
• Plan your trades to ensure you close them by Friday.
• Set reminders for yourself to check your positions on Fridays.
• Review your trading strategy to incorporate this habit.
• Consider the impact of weekend news on your positions.