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Risk & Money Management

What Is Weekend and Gap Risk

Weekend and gap risk is a price that moves while the market is closed and reopens on the other side of a stop, so the stop fills at the first price after the jump instead of its own level. This paper shows you one real weekend on the euro against the dollar, Friday 31 January to Monday 3 February 2025, a 121-pip gap that filled a 25-pip stop for 485.60 dollars at 0.40 lot instead of 100; the idea as a drawbridge raised for the weekend over a river that keeps moving; the gap on the hourly chart with the stop line no bar ever touched; the same risk on gold over 25 and 26 October 2025; and the closed market on your platform, a greyed-out button until Monday.

Difficulty
Intermediate
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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One weekend, one stop, one fill

Gap risk is a price that jumps over the stop while nothing is traded, so the stop fills at the first price after the jump. Take one real weekend. The euro against the dollar closed at 1.03580 at 23:00 on Friday 31 January 2025, and the first price on Monday 3 February was 1.02366, a gap of 121.4 pips. A buy of 0.40 lot — a lot is 100,000 euros — with a stop 25 pips under Friday's close, at 1.03330, was set to lose 100 dollars. A stop is an order to close at the first price available once its level is reached, and the first price available was Monday's open. It filled there, for 485.60 dollars. The stop did its job. The market skipped the price it was set at.

A drawbridge raised for the weekend

Picture a drawbridge raised for the weekend. The roadway is the market, where prices are traded; from Friday night to Monday it is up, and nothing crosses. The river underneath is everything that moves the price, and it does not stop for the bridge. On Monday the roadway comes down where the river now is, which may be nowhere near where it was on Friday. A stop is a place on the roadway. While the bridge is up there is no roadway for it to be on, and when the roadway returns, the stop is filled at the first price on it, wherever that turns out to be.

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