With lots of market uncertainty and volatility surrounding the global Covid-19 (Coronavirus) pandemic, brokers are increasingly advising traders to monitor their trading positions going into the weekend following the close of trading on Friday, March 13th.
Among others, IG Group has posted a blog entry reminding traders that holding positions or orders going into a weekend following some of the worst market performance in the last 3 decades is very risky. Historically, price gaps have happened following a weekend lull and traders can expect that markets may move quickly and unpredictably at market open on Sunday.
IG’s customers are urged to do the following:
- Monitor your positions closely at all times
- Ensure you are comfortable with the size of your positions, and the effect that any market gap may have on them
- Ensure you have sufficient funds on your account to cover your positions in the event of a significant market move
As with all margin trading, investors should be aware of the different types of trading orders available to them to limit upside and downside risks, including setting “stop-loss” or “limit/take profit” orders before market close to ensure that risks are minimized. Ultimately, staying out of the market during market open on Sunday may be the best decision a trader can make during such volatile times.
IG has also reminded traders that markets can be halted due to high volatility: “at times of high volatility, regulated central exchanges may suspend trading on one side of the underlying market (an event known as a circuit-breaker). This happened to the Dow Jones Industrial Average this week, for example. IG follows suit whenever a circuit-breaker occurs. Circuit-breakers aim to restrict trading in order to avert market crashes or spikes. The restrictions are called ‘up limits’ or ‘down limits’, depending on the direction that the market has moved. As trading is suspended in the underlying market, it will impact how you trade with us.”