Overnight Trading

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DEFINITION of 'Overnight Trading'

The buying or selling of currencies between 9pm and 8am local time. This type of transaction occurs when an investor takes a position at the end of the trading day in a foreign market that will be open while the local market is closed. The trade will be executed sometime that evening or early morning.

BREAKING DOWN 'Overnight Trading'

For example, the forex market trades 24 hours a day in exchanges around the world. The overlap of trading hours between North American, Australia, Asia and European currency exchanges makes this possible. However, investors must be aware of the significant level of risk involved with trading overnight, which includes foreign-exchange risk and overnight delivery risk.

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RELATED FAQS
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  2. How does the foreign-exchange market trade 24 hours a day?

    The forex market is the largest financial market in the world, trading around $1.5 trillion each day. Trading in the forex ... Read Full Answer >>
  3. What are the goals of covered interest arbitrage?

    The goals of covered interest arbitrage include enabling investors to trade volatile currency pairs without risk as well ... Read Full Answer >>
  4. How do I Implement a Forex Strategy when spotting a Sanku (Three Gaps) Pattern?

    A forex trading strategy can easily be implemented to profit from a market reversal signal that comes from the sanku, or ... Read Full Answer >>
  5. What's a good forex strategy to use when spotting a Wedge-shaped Pattern?

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  6. How do I use Time Segmented Volume (TSV) for creating a forex trading strategy?

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