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. Currency

    A generally accepted form of money, including coins and paper ...
  4. Overnight Delivery Risk

    The risk that occurs as a result of conducting transactions between ...
  5. Foreign-Exchange Risk

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

    The action by which an underlying commodity, security, cash value, ...
RELATED FAQS
  1. 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 Full Answer >>
  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 >>
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