How much weight do you put on overnight price action?

[wrbtrader]

I've heard overnight prices can show where the important levels are and I've heard that overnight volume is nowhere near day session and shouldn't be considered. Right now, my understanding is for swing trading, overnight volume is not important for stocks (provided no significant overnight catalyst) and futures. However they can provide clues for intraday traders or swing traders looking for good entry or references for managing trades. Curious to get other views on this.

One thing for sure is low volume means easy to manipulate. Very often, I've noticed a certain pre market trend only to see it reverse completely after open. Like the gap and crap, or shake out the longs.

Depends upon what markets you're talking about and the results of your trade signals.

Simply, your test results should tell you if overnight price is something you should only be trading, trading with RTH or not trading at all.

Thus, its really not an opinion...just follow your test results to determine the merits of the overnight trading session.

Another issue...some traders can only trade the overnight trading session or only trade the regular trading session due to limitations from their job. Thus, for these particular traders, it has nothing to do with test results.

For example, if you work regular work hours during the day...the night or overnight trading session is the only time you can trade even though their backtest results reveal to the trader that the trade method is more profitable during the regular trading session.

wrbtrader

 

[murray t turtle]

I've heard overnight prices can show where the important levels are ..........Curious to get other views on this.

One thing for sure is low volume means easy to manipulate. Very often, I've noticed a certain pre market trend only to see it reverse completely after open. Like the gap and crap, or shake out the longs.

%%
Some may find it useful;
for example, night owl types.
I find a certain amount of night time sleep+ rest helpful/so irregular late hours has little interest for me. I may glance sometimes @ price premarket + post market + may not...........

 

[antares66]

Another issue...some traders can only trade the overnight trading session or only trade the regular trading session due to limitations from their job. Thus, for these particular traders, it has nothing to do with test results.

Your are right. I would like to trade 24 hours but sadly have to sleep ;-) Here in Europe the ETH times conflict with my sleeping time. 9PM East time is 3 AM CET. 6 PM East would be the latest i could trade. Could restart at 1AM East which is 7 AM CET. Or i must drink more coffee

 

[KCalhoun]

This may prove that what the OP wrote won’t work. If a stock goes up overnight then how would you use this info to trade during the day?

Minor gap up continuations are often best, see BIDU NIO now for example

 

[Builder17]

I've heard overnight prices can show where the important levels are and I've heard that overnight volume is nowhere near day session and shouldn't be considered. Right now, my understanding is for swing trading, overnight volume is not important for stocks (provided no significant overnight catalyst) and futures. However they can provide clues for intraday traders or swing traders looking for good entry or references for managing trades. Curious to get other views on this.

One thing for sure is low volume means easy to manipulate. Very often, I've noticed a certain pre market trend only to see it reverse completely after open. Like the gap and crap, or shake out the longs.

i used to think RTH (or the SPY) has more importance, but IMO very often “important”prices you want to hit during the RTH day get touched at night. having a bigger account, and holding or entering overnight, has the potential to take advantage of those price moves that are not always traded the next day. Not sure if this applies to regular individual equities as much.

 

[tomorton]

In my field, forex, overnight prices (i.e. from the Asian/Australasian business hours) are usually unimportant in themselves and print with a reduced total range and range per hour. But this is helpful in a strategy based on a sudden increase on price volatility, like a London opening range break-out or Big Ben. In effect, the Asian market's range is treated as if it was an Inside Bar and a buy order and a sell order are set above and below the overnight range to catch the break-out.

Forex daily highs and lows are rarely set in Asia.

 

[Mercor]

I don't know if you have ever seen this chart. However, there is a huge difference in outcomes




View attachment 246655

Interesting
Is it easier to move a thin market after hours?

 

[They]

I've heard overnight prices can show where the important levels are and I've heard that overnight volume is nowhere near day session and shouldn't be considered. Right now, my understanding is for swing trading, overnight volume is not important for stocks (provided no significant overnight catalyst) and futures. However they can provide clues for intraday traders or swing traders looking for good entry or references for managing trades. Curious to get other views on this.

One thing for sure is low volume means easy to manipulate. Very often, I've noticed a certain pre market trend only to see it reverse completely after open. Like the gap and crap, or shake out the longs.

If you are trading US index futures, index based ETFs or leveraged index ETFs you should be aware of the ETH highs, lows, vwap of the index futures markets. They will be the first levels tested when the RTH begin.