Because the Forex market is running continuously for 24 hours during the week,
there is very little gapping, which can be a common problem with stock trading. For
example you may have bought XYZ stock at $24.20 on Tuesday just before the
market close with a stop loss set at $23.50 to protect you against any major losses.
During the night, when the market is closed, there is a major announcement that
affects the company trading as XYZ, and the market opens on Wednesday morning,
with XYZ trading at $22.10. Not only has it gapped down $3.10 overnight, it has also
opened $1.40 below your stop loss giving you a much bigger loss than you ever
anticipated.
This rarely happens in Forex trading, but having said that it can happen, especially
over the weekend as this is the only time the Forex market is closed. But it is rare! I
can give you one example where I was caught out on a weekend. Late 2003 I was in
open positions over the weekend where I was basically going against the US dollar,
and then US troops captured Saddam Hussein. This was very positive for the US
dollar, which then opened much higher on the Monday inflicting some financial
pain my way. I have learnt my lesson and I am rarely in open positions over the
weekend
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