newbie overnight position risk question

D

dudeness

correct me if i am wrong about this basic issue -

i want to take a long term position on the ES but to avoid any overnight surprises (huge gaps against me and so on).

if i take the position and put a stop market order that can trigger outside RTH hours, i have efficiently capped my risk to the level of my stop and there should not be any surprises.

the only possible surprises could be when globex closes, for 45 minutes each market day and throughout the weekend.

so basically if i want to avoid the weekend risk i can close the position at the end of trading on friday and re-establish it once trading opens on sunday afternoon.

this way, with the stop in place 24h, there should not be any surprises, except possibly on those 45 minutes a day when globex is closed.

did i miss something or is this correct?

thanks.
 
1) if liquidity isn't that great in Globex your stop loss may be executed at a price far away from your stop loss level. There's no way to say if there will be a bid for you when your stop loss is triggered.

2) if you close your position on Friday evening and re-open it on Monday morning, obviously you don't have the week-end risk but I hope you realize that if the market gaps up on Monday morning... the proffit won't be for you.


I find it a little paradoxical that you want to take a long term exposure on an instrument but you don't seem willing to take overnight/weekend risk. Markets do gap.
 
while hardly a perfect method, and you may end up not gaining on trades which you should have gained on, the method seems to keep the risk capped. i can't see any 'holes' in it, risk wise. slippage could happen but unlikely on the ES if you take a small position, which i assume you do.
 
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