Holding Stocks Overnight in Day Trading?


Well-known member

Wonder whether people will hold stocks overnight in day trading.

It seems to me that by definition, day traders close all their positions at the end of each day in order to avoid the over-night risk. However, there have been some interesting examples which seem to defy such a practice. Two of such examples are FNM and MTH on 21/12/2003 and 22/12/2003.

In each case, the stock did well today, 22/12/2003, on top of its performance yesterday. To me, they seemed worth of keeping overnight.

So I wonder whether day traders keep stocks overnight occasionally? If so, what kind of methods do they normally use to decide what stocks are worth the overnight risk?

Thanks a lot indeed. :D


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MTH on 21 to 22 December 2003.


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I think people who day-trade actually take on more risk than people who hold overnight. Big gaps against your position (hence going for the safety of going home flat) is pure propaganda to make people do more business and pay more commissions.

The shorter term you trade the harder it is to make money over time because the cost of doing business is THE dominant factor. You'll end up trading and working for your broker instead of the other way around, especially if you trade cfds.
All well and good at the moment when the market wants nothing but up.... It's a risk few are willing or prepared to take. The outcome is NOT under their control.
If you're long in an uptrend and closing at the hi of the day there's a good chance it'll open higher next day.

forgot to mention, good volume is important.
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Hi oatman,

Thank you really for the information; it is exactly what I was looking for.

Can you please further explain two points of your suggestion for me? Sorry I am a slow learner. :p

Firstly, when you says 'long in an uptrend', do you mean an uptrend for the stock, or an uptrend for the corresponding market, i.e. the NYSE index in this case, or both?

Secondly, is the opporsite of the statement true? That is, if I am short in a downtrend and closing at the low of the day, is there a good chance it will open lower next day, with confirmation from the volume?

BTW, is it possible for me to learn more about this aspect, preferably from the Internet or some books?

Thanks a lot indeed. :D
To me long or short is neither here nor there, it's just a position. If you're looking at stocks, there could be a downtrend in the market, ie Index, which your stock is going against. Quite often you will see what's known as "follow through" buying or selling which is spilling over from the previous day's enthusiasm.
So the answers would be 1) Both and 2) Yes.
Don't forget volume.
Hi oatman,

Thanks really for the information.

But I am afraid I still do not understand the first point. With 'both', I take it as that I should look at both the trend of the index and that of the stock itself in order to decide whether a stock is worth keeping overnight.

However, as you have pointed out, if the overall index is down, but the stock's trend is up, would you consider it as a good long candidate for keeping overnight?

Really sorry for my ignorance. Thanks a lot indeed. :D
If your stock trend is strong you could hold but if the index is also in an uptrend it would be better. These are generalisations remember, there's nothing cut and dried here.
With respect, overnight risk is very controllable if your trading indices/FX.

I use SBets and trade E/$ in the main now, FX is traded 5days a week for 24 hrs a day, prices for US indicies (as far as im aware) are available 24/7, so wheres the overnight risk? Back in the day when there were no overnight quotes there was a risk of gapping (especially on individual issues) but if your trading any instrument that has overnight prices available then i can't really see the problem.

Ive never been good at daytrading and to be honest find it a poor option next to swing or position trading for stress/screen time (and as far as im concerned, profit) considerations. One positive may be the 'vogue' element. ;)

Of course all IMHO

regards and a happy new year to all :D
"Sorry I am a slow learner"!!!!!!!!!!!
Oh no you're not!!!!!!!!!!!!!
Check your email box
Happy holidays,
Hi darktone, thanks for your suggestion.

Hi R, thank you really for the email. It is really helpful. :D

With you both a great New Year!!!!!!
L., -
My pleasure.
Look in your email again and you will find a simple and accurate way of making up your own mind with some straightforward research.
People's opinions are one thing - and you have no way of valuing their opinions as some people on these boards sound authoritative but are talking out of the tops of their heads and ignorantly misleading new traders.
Instead may I suggest you continue to do your own research to discover the facts for yourself.
My latest email will help you a great deal on this subject ;-))
Best wishes,
Hi Richard,

I have got the second email. Thanks a lot indeed; it and the first one are so helpful. :D