Overnight Holding

Trading Rules & Restrictions

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According to Vigil's prop trading glossary, Overnight Holding is keeping trading positions open past the daily market close. Some prop firms require all positions to be flat (closed) before the end of the trading session, while others allow positions to be held overnight. In prop trading, understanding overnight holding is critical because it directly affects your drawdown limits, position sizing, and whether you pass or fail an evaluation.

This term is part of the full prop firm glossary.

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How does overnight holding work?

Overnight holding rules primarily affect futures traders. Futures markets have a daily close and re-open, and prices can gap significantly between sessions. Firms that prohibit overnight holding want to avoid the risk of traders getting caught in an overnight gap.

TopStep and Apex require all positions to be flattened before the daily close. This means swing trading is effectively impossible -- you must be a day trader. FTMO, FundedNext, and The5%ers allow overnight holding, making them suitable for swing traders.

The practical impact is significant for trading style. If you trade forex (which operates nearly 24 hours), overnight holding restrictions are less relevant. For futures traders, being forced to close by 4:00 PM EST means missing overnight moves that could be profitable. Traders who prefer holding positions for days or weeks should choose firms that allow overnight and weekend holding.

What does overnight holding look like in practice?

TopStep $100K futures account: markets close at 4:00 PM CT. You have a winning NQ position at 3:55 PM. You must close it before 4:00 PM or face a rule violation. If NQ gaps up $200 overnight, you miss $4,000 in potential profit (2 contracts). On FTMO forex, you could hold EUR/USD overnight and capture the Asian session move.

Why does overnight holding matter for prop firm traders?

Overnight Holding rules vary between firms. What is allowed at one firm can be a violation at another. Always verify before your first trade on a new account.

Practical example across firms: FTMO: 2-step, static drawdown, 5% daily loss, from €155. TopStep: 1-step, trailing drawdown, 2% daily loss, from $49.

Common mistake: The most common mistake with overnight holding: carrying habits from one firm to another without rechecking. Overnight Holding rules can differ between firms and even between evaluation phases at the same firm.

How do different firms handle overnight holding?

Understanding overnight holding is essential when choosing and trading with a prop firm. Compare how different firms handle this:

What terms are related to overnight holding?

Weekend Holding

Keeping trading positions open from Friday market close through Monday market open. Weekend holding carries gap risk because markets can move significantly over the weekend due to geopolitical events.

News Trading Restriction

A rule prohibiting or limiting trading during major economic announcements like FOMC, NFP, and CPI releases. Firms restrict news trading because extreme volatility can cause rapid drawdown breaches.

Position Sizing

The process of determining how many contracts, lots, or shares to trade per position based on your account size, risk tolerance, and the distance to your stop-loss. Proper position sizing is the foundation of risk management.

Daily Loss Limit

The maximum amount you can lose in a single trading day before your account is flagged or terminated. This resets each day and is separate from your overall maximum drawdown.

See overnight holding in action
Where can I learn more?

How to Pass FTMO $200,000

Step-by-step guide

How to Pass TopStep $150,000

Step-by-step guide

How to Pass Apex Trader Funding $300,000

Step-by-step guide

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