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Overnight (position)

By Jarosław Wasiński • Published: • Updated:
Holding a position across a relevant day-end or financing cut-off. A provider may apply a financing debit or credit according to the instrument, direction, account and calendar. Overnight exposure also includes price and gap risk; the financing amount and the number of days charged are not universally the same.
Example. Illustrative cash-denominated financing: the specification charges $4 per lot per financing day. Holding 0.25 lot across a cut-off assigned three days costs 0.25 × $4 × 3 = $3. This does not mean every Wednesday or every instrument uses that schedule.

Use the quoted unit and calendar

Rates may be expressed in points, cash per lot, percentages or another basis. The number of financing days can reflect settlement, weekends and holidays. Read the long and short rates separately; both sides can be charges.

Financing and execution risk are separate

A positive financing credit does not offset every possible price move. Ordinary stop orders do not guarantee a price through gaps. Compare the contract’s cut-off and financing calculation with the strategy’s holding assumptions, including the cost of closing and reopening.

Overnight versus a daily candle

A candle boundary, a civil midnight and a financing cutoff need not coincide. Record the named time zone and date for the actual contract. A strategy tested on daily bars still needs a cash-financing model if its positions cross the relevant cutoffs.

FAQ

Does overnight always mean holding until the next calendar day?

Not necessarily. Crossing the instrument’s financing cutoff can matter even within one local date.

Is every Wednesday charged triple?

No. The instrument, settlement calendars and provider’s tariff determine the schedule.

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Jarosław Wasiński

Editor-in-chief, ForexMechanics.com • Macro & FX analyst

Independent analyst and practitioner with over 20 years of experience in financial markets. Actively involved in Forex since 2007, with a focus on fundamental analysis, OTC market structure, and disciplined capital risk management.

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