In this article, we will talk about whether you can leave your forex trade overnight. We will also discuss in detail whether it is a good idea to hold your positions overnight.
Yes, depending on your trading style you can keep your forex trade overnight. If you are a swing trader or a position trader then you definitely will have to hold your trade overnight. But if you are a day trader or a scalper you will exit your trades before you go to sleep.
Now, let’s talk about whether it is a good idea to hold your trading positions overnight.
Is it a good idea to hold positions overnight?
There are several things you need to consider when deciding to trade in this style of holding positions overnight. Holding your position overnight can be quite risky. It is important that you first decide whether you are willing to take this risk. There is always a probability of losing money, even if you do not hold positions overnight.
Sometimes, you might not be able to get a good night’s sleep because your mind will keep thinking about this position. If you cannot get a good night’s sleep because of this you might want to avoid this style of trading (Swing Trading).
There might be other reasons you want to hold your position overnight. Let’s say you are long-term trading like a position trader. A position trader holds positions for months or years. With this type of trading, you will be holding the position over many nights.
I personally do not recommend position trading in the forex market. Position trading is more suitable for the stock market or the cryptocurrency markets.
Also, if you don’t have much time to trade in the week because of your job or any other reason, and if you are able to only take maybe 1 trade then you might want to hold your position overnight as well to maximize your profits (Swing Trading).
Managing Your Overnight Position
The first and most important thing to do when you have an overnight position is to have a stop loss. Remember, always remember to place a stop loss when holding your position overnight.
This is extremely critical because things can go wrong even if you do good technical analysis. If things go wrong, the stop loss will be able to minimize your losses and keep your account in good condition.
Also, depending on how confident you are in your analysis it can be a good idea to have a trailing stop loss without a take profit if you want to maximize your profits.
My favourite trailing stop loss is an exponential moving average with a period of 8. To use this trailing stop loss, keep moving your stop loss just under or over the exponential moving average depending on the market direction.
It can also be quite useful to have a set time every day to trade so that when you have a position overnight you will know exactly when to check your position. Otherwise, you will be constantly checking your position or will be thinking about your position which can affect you emotionally.
If you like this type of trading (Swing trading), we recommend you practice with a small trading account initially holding positions overnight to see how it affects you emotionally. Because controlling emotions are a very important part of trading.
As discussed in this article, if you are a swing trader or a position trader it is totally reasonable for you to hold your trading positions overnight.