My question stems from me wanting to start trading and holding trades through the overnight hours,
but I am a bit hesitant ... giving the stories I haave heard, of some traders not sleeping well and having restless nights, due to placing and holding trades through these overnight hours.
So even if you place a stop loss on a trade, that stop loss can become irrelevant and have the market blow straight threw it , and you incur a far greater loss ?
Is there a way to prevent this from happening /
And what causes these wild swings / gaps in the over night hours ...... news that comes out of Asia and Europe I am guessing ?
There's really no way of preventing it from happening, unless you use a stop limit, but then your stop would be unlikely to be triggered at all.
One can avoid the situation, however, which is a backdoor means of "preventing it from happening", by trading a larger bar interval, thus making the scenario you've presented irrelevant. If, for example, you trade an hourly bar and enter correctly, whatever Europe does at 3 or 4 in the morning is unimportant. The fact that we're currently ranging means more hovering on your part for now, but when we're trending, trading the hourly bar makes for much more relaxing trading. You lose the video-game excitement of daytrading, but perhaps that's begun to wear off.
The following user says Thank You to DbPhoenix for this post:
This is just something that I want to know as much as I can about, before I start looking to enter trades after 5:00 p.m. cst. ( so overnight trading and or to avoid the overnight Margins )
I look at a Daily, 2 , 3 ,4 day chart, as well as a weekly and monthly chart ( when is relevant to ..... the close of every Friday I look at the weekly charts and the last trading day of every month I look at the Monthly charts )
So sometimes, I can get an Entry based off of a weekly chart , which definitely calls for wider and costly stops ( if placed based on the structure of the charts, I.E. stop goes below a major support / above a major resistance level )
And with these triggers for Entry ..... something major would have to happen , something in the realm of a mood outside a Futures ADR of 2 - 3 x it
Just don't want to be I a trade ( on the wrong side of it ) when I'm asleep, and a Black Swan even occurs , like it did on the Swiss Franc, back when the Swiss Bank crisis hit months ago
Asking questions may not yield as much useful information as characterizing whatever instruments you want to hold overnight. I have no problem holding the NQ, and I imagine that ES traders have no problem holding the ES. However, some instruments are frantic, even overnight, and the upside may not balance off the potential downside.
Entering off a weekly chart does not necessarily mean entering off a weekly bar. The point of entering off a weekly or daily chart is to enter off the extreme. Once that extreme has been established, one can enter off whatever bar interval one chooses with an accompanying tighter stop. If and when the entry works, one can then back away and manage it on a larger interval, perhaps hourly.
Currently, the extreme in the NQ is the daily high (4555+/-). I'm not tempted to hold anything overnight that isn't entered one side or the other of that high.
The following 2 users say Thank You to DbPhoenix for this post: