What is “Overnight Position” Trading Risk?

An overnight position represents a situation in which you remain exposed to market fluctuations even after the market closes. Consequently, the trading risk is carried into the next trading session. As per general market understanding, primary overnight position trading risks include:

• Price gaps caused by news or events after market hours
• Higher volatility at the next market opening
• Corporate announcements or global market movements
• Changes in currency, commodity, or international market conditions
• Potential slippage when the position is exited

In India, “what happens to a position after market close” depends on the security and product type. A position permitted for overnight holding remains open according to the broker and exchange rules, while intraday positions may be subject to compulsory “square-off” before the applicable market or broker cut-off time.

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