Traders wish to hold positions overnight, usually to increase profits or in the hope that losing trades can be reduced or turned into profits the next day. However, holding a position overnight still carries the following additional risks to which investors should be alert:
1 Holding a position overnight will result in an increase in your trading costs.
Forex trading by its very nature operates on the basis of changes in the exchange rate between two currencies, each of which has its own interest rate, so when you buy and sell currency pairs at PGM, you are dealing with two different interest rates at the same time.
*Holding a position overnight on Wednesday incurs triple SWAP.
2 Breaking news, heavy data triggers additional losses.
The foreign exchange market 24 * 5 uninterrupted operation, such as your time zone has entered the midnight, and there are some transactions of the order is still open, the market changes may add new variables for your order, and these variables are you in the order did not take into account. Such as the Federal Reserve interest rate resolution more than 2:00 a.m. Beijing time announced, beyond the market expected results may lead to insufficient liquidity and triggered by the instantaneous spread broadening and lead to the burst position.
#PGM Warm Tips
- PGM platform time and SWAP collection time, the actual to MT4 contract specifications in the display shall prevail.
- If you are new to the Forex market, it is advisable not to hold positions overnight. Intraday trading is safer and more controlled, and holding a position overnight may result in the additional risks mentioned above, or in worrying about the quality of your sleep and the state of your trading the next day.
- If you are an experienced trader with a proven trading system and have good reason to believe that waiting is a more cost-effective profit opportunity, holding a position overnight is likely to allow you to capitalize on a big wave when the market is good.
- If you decide to hold a position overnight, you can evaluate whether your order meets the following three conditions:
- Positions are profitable.
Are you satisfied with the current profit, the market trend to support you to continue to profit is not completely sure?
- You have a general grasp of the current market.
Whether the market is biased in favor of the long side or the short side you have a good basis, it is best not to go against the trend of the order, expect to flip.
- A stop loss price has been set.
Always place a protective stop loss on a position to limit losses beyond what you can afford or accept.