Thoughts on trading holding positions overnight?

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Viewing 12 posts - 1 through 12 (of 12 total)
  • 09/19/2017 at 8:40 AM #46564
    jebus89

    So as im studying and reading on this forum, one thing has struck me. Alot of the strategies here are on the hourly timeframe (1/2/4) and even daily. Im having a hard time getting over the fact that you could be 150% screwed if things gap down during the night, is this not a fear that everyone holds? I trade via IG and CFD’s and im terrified of holding positions (esp. forex) overnight because of this. I’ve read enough “nightmare situations” online to understand that a 1000 pip gap down has happened and it would absolutely ruin me financially.

    To all you guys running systems that hold overnight, are you not afraid of this? Does it happen so rarely that its a 1 in a million chance? I realise that the amounts of pips from a gap can vary, but if youre leveraged enough and running a very tight stop-loss but then it jumps over and gaps down 200 pips that might be x10 your stop loss. That -500$ you where risking is now -5000$..

    Thoughts? personally im only looking for ideas to create my own system that only (day)-trades during opening hours and one that will not hold overnight. (Also the fees for holding overnight is brutal imho)

    09/19/2017 at 9:46 AM #46575
    robertogozzi

    Everyone should abide to their own inclination. I trade Forex and Dax. While I have no problems leaving trades open overnight as for Forex pairs, I seldom do this with Dax due to its many gaps. I do not trade stocks.

    But risks of high slippage and stops well beyond one’s settings are not peculiar to nighttime.

    The huge slide with the SWISSIE, on Jan. 15th 2015, happend at about 9:15 in the morning!

    09/19/2017 at 10:18 AM #46578
    Despair

    You will notice that creating a profitable strategy that exits a trade every night is very hard to create.

    So for me it depends a lot on the sort of strategy. My usual forex strategies hold over night but exit before the weekend, dax I usually do intraday only but on little longer term commodity-strategies i hold over both nights and weekends. The later named I run on futures so there is no overnight cost.

    09/19/2017 at 8:27 PM #46623
    jebus89

    Thanks for some input!

    How many times have you guys experienced gaps beyond your stops?
    I generally thought it happened during nightime (someones always awake though i guess..) I’ve also have had the impression that there’s more gaps in forex than the indicies? CFD futures that is.

     

    Also i experienced a weird trade, my system said i got stopped at xx40, but in PRT the recent high was xx34. I checked in IG and the high was indeed xx40 in that chart. This kind of freaked me out. Anyone else experienced this? The loss was somewhere in the $20’s so i didnt really bother mailing anyone, probably should though? The market was DAX 1€ on IG.

    09/19/2017 at 8:51 PM #46625
    Eric

    overnight no problem if IG is open for trading

    its the weekends that can be a problem

    still waiting for a guaranteed stop function on a normal account

     

    jebus89

    its the bid and ask thats fills your order (not the midprice in prt) so check the spread at the time if thats the problem?

    09/19/2017 at 10:25 PM #46630
    Derek

    Yes, I am afraid of a big unexpected loss.

    Trading manually, the switch to guaranteed stops only has made it easier to trade on the dailys. Because now I cant cheat myself into opening a non-guaranteed position and leaving it open through the weekend.

    09/20/2017 at 8:24 AM #46650
    jebus89

    Thx for input guys. Derek, the guaranteed stoploss is absolutely a good thing. Still waiting for that in PRT.

    09/20/2017 at 10:44 AM #46685
    Despair

    Maybe it is because of the sort of strategies I run but neither gaps or slippage have ever caused a problem for me.

    Slippage is usually minimal (just a few cents) when price is moving fast.

    Gaps I never experienced because all my forex strategies close there positions friday night and during the week there are rarely gaps because the currencies trade 24h. So there is only a gap-risk for instruments that stop trading every night for some time like the dax. And well my dax-strats are all intraday.

    I think if you want to talk about gaps you have to specify which market you are going to trade because the risk from market to market varies greatly.

    09/20/2017 at 12:16 PM #46697
    Derek

    We should all follow the advice from Roberto: A sudden price gap will occur intraday, it’s simply the risk of being in the market.

    More examples from an FT headline: Sterling joins S&P futures, Swiss franc and US T-bills on the roster of market shocks

    It’s really easy to find examples for many markets. If we are trading leveraged products without guaranteed stops, the fill price can be at maximum adverse levels for little wallets.

     

    09/20/2017 at 4:33 PM #46719
    Wing

    I have run overnight systems before. Gaps can be in your favor or against you. The main point is just to avoid risk of ruin. In theory, if you held a buy position in DAX, and it proceeds to gap to zero, would you be intact? If you would lose a substantial amount of your money, or more than you even own, then you have too large position size. If we suppose that a worst-case-scenario gap for the DAX is 10%, you should be able to sustain such a loss and lose less than 10 % of your total capital/worth. This is if you want to be really safe.

    That’s just my thoughts. I think the REAL risk is if you SHORT STOCKS overnight. You short Company A on Tuesday. On Wednesday, Company A is bought by microsoft, or patents the cure to cancer etc. The gap could be 100%, 500% — there is no real limit. A company can only go down to zero, but it can increase its value infinitely, which makes it extra risky to be on the short side.

    09/20/2017 at 4:42 PM #46722
    Despair

    At the end it always boils down to – don’t risk money you can’t afford to lose.

    09/20/2017 at 8:07 PM #46736
    jebus89

    Good feedback, thanks.

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