DEFINITION of 'Overnight Position'

Trading positions not closed by the end of the trading day and held overnight. For securities trading, overnight positions expose the investor to risk because a number of events can negatively impact a position while the trading floor is closed.

BREAKING DOWN 'Overnight Position'

In forex trades, 5pm EST is considered the end of the trading day. Positions opened at 4:59pm EST and closed at 5:01pm EST are considered overnight positions because a new "day" begins after 5pm. Rollover interest is paid out or received on overnight positions based on the closing interest rate.

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RELATED FAQS
  1. What is an overnight position in the forex market?

    Overnight positions represent all open long and short positions that a forex trader possesses as of 5:00pm EST, which is ... Read Answer >>
  2. In the forex market, how is the closing price of a currency pair determined?

    The foreign exchange market, or forex, is the market in which the currencies of the world are traded by governments, banks, ... Read Answer >>
  3. What does rollover mean in the context of the forex market?

    In the forex (FX) market, rollover is the process of extending the settlement date of an open position. In most currency ... Read Answer >>
  4. How is rollover interest calculated?

    In the forex market, all trades must be settled in two business days. Traders who want to extend their positions without ... Read Answer >>
  5. What is the difference between investing and trading?

    Investing and trading are two very different methods of attempting to profit in the financial markets. The goal of investing ... Read Answer >>
  6. How do I close a long position in forex?

    Learn the different ways that traders close out existing long positions in the forex market, depending on whether their brokers ... Read Answer >>
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