Overnight Trading


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.

  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. Currency

    A generally accepted form of money, including coins and paper ...
  4. Position

    The amount of a security either owned (which constitutes a long ...
  5. Forex - FX

    The market in which currencies are traded. The forex market is ...
  6. Delivery

    The action by which an underlying commodity, security, cash value, ...
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    The goals of covered interest arbitrage include enabling investors to trade volatile currency pairs without risk as well ... Read Full Answer >>
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  5. What's a good forex strategy to use when spotting a Wedge-shaped Pattern?

    Use wedge-shaped patterns to identify bullish or bearish price action when trading currencies in the foreign exchange (forex) ... Read Full Answer >>
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