Overnight Trading: Strategies for Making Money and Insights

You do overnight trading by buying the close and either selling at the next day’s open or close. We have previously covered how you can buy at the close and sell at the next day’s open in the S&P 500. This post looks at how you can expand the time frame and hold for a few hours more.

The overnight trading edge in the stock market is a well-known edge and has been covered on our website multiple times. The edge is mainly from the close until the next open.

We backtest the following trading rules:

We buy the close and sell the next day’s open. We exit (or sell) on the open because the average gain from the open to the close has been zero during the last 30 years.

Below is the chart showing the equity curve if you bought the open and sold on the close (ie, day trading)

You can find more info about this trading strategy here:
https://www.quantifiedstrategies.com/how-to-make-money-overnight-trading/