Holding positions overnight

[rubbles88]

With the risk of holding positions overnight, GNSS and SEPR immediately come to mind, I know many still conitnue to hold positions overnight. I know daytraders don't have to worry about this. With the rest, what strategies do you have for taking stocks overnight.

I think this is going to be important with earnings preannouncements starting next week. Without much thought, I'm thinking of holding only stocks of companies that have recently preannounced or reported earnings.

 

[BruceF]

Originally posted by rubbles88
...
I know daytraders don't have to worry about this.
...

This is a risk that any good, successful trader will concern himself with, regardless of the timeframe.

Trading on a stock can be halted during the day for a variety of reasons. Can you imagine being short when a takeover is announced in the middle of the day that doubles the stock price? How about being long when a company suffers some sort of disaster such as a plant fire, earthquake, key officer or employee dies, etc. and the stock plunges?

This is a risk that should be in the back of the mind of any trader, IMO. And should be incorportated into their psition sizing and money management as they see fit.

 

[ddefina]

I hold 8-10 stocks overnight all the time, and ironically my worst loss was intraday on ESST just last week. Lost 8 points (6 up 2 down) on a 600 share short position after the stock was halted for 15 minutes and resumed to a flurry of buy orders. My overall record of holding overnight and experiencing gaps is slightly positive I believe, because it works both ways.

 

[NihabaAshi]

Originally posted by rubbles88
...what strategies do you have for taking stocks overnight...

rubbles88...my only strategy that I use to hold stocks or eminis overnight (I don't hold overnighters that often) is via key Japanese Candlestick signals in the Nasdaq Composite or S&P 500 Index.

Simply, overnighters are due to Exhaustion or Reversal candlestick patterns...Long or Short.

I do not hold overnighters via Continuation candlestick patterns.

Also, I only hold overnighters if I'm already at a profit in that particular position and I'll unload some of the position (usually 1/2) to lock in those profits.

This strategy has worked well for me for many years.

Nihaba Ashi

 

[dgabriel]

SEPR is a prime example why not to hold stocks overnight in companies that are overly dependent on regulatory bodies for product approval. Specifically smaller drug companies which develop compounds. Major drug cos. can get whacked by the FDA and suffer only a 3-4 point blip because they have a diverse portfolio of products. But SEPR and IMCL are johnny-one-notes and they get dumped like armageddon has arrived.

SEPR chart telegraphed the bad news. THere was a sellof long before the FDA aanouncement.

I trade NVDA intraday, but wiith the cloud hanging over its head now, I would never take it home. Long or short, one day an announcement will occur regarding its SEC investigation.

There are plenty of companies with a low likelihood of a negative announcement knocking them down.

 

[Bono]

As a Technician, it is my personal opinion that once the analysis is done on a stock, it is recommended to check the fundamentals (at least briefly) and annoucements, etc ... and avoid those issues which are awaiting any announcements. Well, unless you have some insider info

If on the other hand, surprise news comes out in your favor after having already opened a trade, well good and well for you. But if it comes against you, well, unfortunately, you'll have to take your loss on the spot, and get out of it.

 

[dufferdon]

I hold ovenight frequently as I swingtrade. I try very hard to avoid holding when earnings are to be announced, unless it is a very low P/E stock. Check more than one source of earnings calanders. They are not all complete. I have been hit by pre-announcements, some good and some bad, and don't see any way of avoiding that risk unless you only trade very conservatively.

I also avoid putting more than 20% of my account into any one position, no matter what position size is suggested based on my stop and normal risk criterion. A big hit in one stock will hurt but not be fatal.

If I have substantial open positions on one side of the market and I still like the trades, but the general behaviour of the market is making me nervous near the close I will sometimes hedge my positions overnight using QQQ or SPY.

 

[SHORTY]

I mostly swingtrade and was burned Friday because I was holding FLEX short. Daytrading eliminates most of this risk. I agree with previous posts that position size needs managed, but also feel somewhat better holding a short position overnight. You can find examples of some stocks gapping up tremendously but I think downside moves are more prevalent and severe. The real danger of shorts come on low cost stocks where the loss could exceed %100.

Good Luck and Big Profits