overnight holding refers to keeping a position open after the regular trading session ends and holding it into the next trading day. Some prop firms allow this, while others require traders to close all positions before the session closes to avoid risks such as overnight price gaps, low liquidity, or unexpected market events.
Why It Matters
- 1Most prop firms restrict or control overnight holding in futures trading as a form of risk management.
- 2Holding positions overnight exposes both the trader and the firm to sudden price gaps, low liquidity, or unexpected market events that can quickly trigger drawdowns.
- 3By limiting overnight exposure, firms protect themselves and ensure that trading risks remain manageable.If your strategy relies on holding positions for multiple days, you need to specifically choose a firm that allows it.
Example
- 1You enter a long NQ position at 15,000 during the regular trading session (9:30 AM - 4:00 PM ET). Your firm requires all positions closed by 4:00 PM. If you fail to close by the cutoff, the firm may auto-liquidate at whatever price is available, potentially at a loss.
- 2Some firms charge a penalty or issue a rule violation for overnight holds.
Common Mistakes
- ✖Not setting alerts or automatic close orders before the daily cutoff time
- ✖Assuming 'overnight' means the same thing at every firm — cutoff times vary
- ✖Ignoring overnight margin requirements which are typically higher than intraday margin