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Understanding Intraday and Overnight Positions
Intraday and overnight positions are important concepts of forex trading which you must understand in order to gain profits. Forex market is always fluctuating and the price of the currencies keeps changing. In such a scenario it becomes impertinent that time also plays an important factor. You buy and sell the currencies, and the period for which you hold a particular currency may make or break you. This is where it becomes useful to understand the concept of intraday and overnight positions.
Intraday positions are quite different from overnight positions. In the case of intraday positions, you take position during the period of 24 hours once the brokers/ the market makers normal business hours start. But you do not go on holding the currency once the market closes.
On the other hand overnight positions are those positions that continue even after the normal trading period of the trader or the brokers are over. The broker or the market maker rolls over the holdings, or you may also say the positions, at the rates which are very competitive. These competitive rates are based entirely on the interest rate differences of the currencies as per the next day’s expected price.
The intraday positions are those positions which open and close down within the cut off period of 5 PN EST. It is the rollover cut off period, or the conclusion of the international forex trading day. Overnight positions are those positions which are held through the roll over cutoff period, i.e. 5 PM EST. They are still on, beyond the cutoff/ closing time of the trade to the coming day’s price.
It has been reported that generally speaking 40% holdings last for less than two days and on the other hand 80% of the holdings last for seven days or may be even lower.
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