When taking a swing trade in $EURUSD with a target of 100+ pips, how do you guys adjust your position sizing for the overnight hold risk, especially when you're uncertain about how Asian session liquidity might impact early movement? Is it simply a percentage reduction, or do you factor in specific news events during that off-peak period?
Good question. For EURUSD specifically, I tend to reduce my size by about 25-30% if I'm holding through the Asian session, especially if there are any major data releases expected from that region. It's not just about liquidity, but also about the potential for unexpected news to cause gaps.
For overnight swings, particularly in majors like EURUSD, the Asian session can indeed be a bit of a wildcard due to thinner liquidity. I generally just reduce my usual risk percentage rather than trying to perfectly model every potential overnight news event. It's more about capital preservation for the unknown.