The overnight position is a trading position that stays open until the next trading day. Trading positions are not closed by the trader at the end of the trading day, which is common in futures markets and foreign exchange markets.
To maintain overnight position, usually, forex traders generally take risk, leverage changes, strategy and cost of capital into account. Such trading position involves many risk factors such as any adverse movements happening overnight can lead to a significant loss. This risk factor can be mitigated by attaching stop loss and limit orders to open positions.
The main goal of keeping an overnight position is a try to maximize profit on the trade by holding it overnight or an attempt to recovering loss of day time trade. Although it is infrequent that overnight position can convert a daytime loss into profit. Stock traders believe that maintaining an overnight position is a beneficial strategy.