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Overnight

Overnight refers to the period between the close of a trading day and the opening of the next. In financial markets, "overnight" is significant because it encompasses risks associated with price movements and liquidity changes that occur after regular market hours. Traders and investors holding positions overnight may face unexpected market news or developments that affect the value of their positions when the market reopens.

Example

A stock trader holds a long position overnight, risking potential price changes from global economic news released after the market closes.

Key points

• Refers to the time between the market’s close and the next day’s open.

• Overnight positions carry risks due to price movements or news affecting markets outside trading hours.

• Traders must consider overnight risks when holding positions.

Quick Answers to Curious Questions

Overnight positions are exposed to price changes caused by global economic news, earnings reports, or other events that occur when markets are closed.

Traders may use stop-loss orders or hedge positions to limit potential losses from overnight market movements.

Global economic news, earnings reports, and geopolitical events can affect market sentiment and prices before the market reopens.