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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Exchange Rate

    The price of a nation’s currency in terms of another currency. ...
  2. Overnight Position

    Trading positions not closed by the end of the trading day and ...
  3. Position

    The amount of a security either owned (which constitutes a long ...
  4. Delivery

    The action by which an underlying commodity, security, cash value, ...
  5. Foreign-Exchange Risk

    1. The risk of an investment's value changing due to changes ...
  6. Overnight Delivery Risk

    The risk that occurs as a result of conducting transactions between ...
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