Thoughts on managing overnight risk in Asian markets given time zone differences?
I'm relatively new to trading Asian equities, specifically looking at some names on the Hang Seng and Nikkei. My challenge is the time difference. When I'm actively trading during my daytime, it's already evening or night in Asia. This means any positions I hold through my local night are effectively overnight positions for me, even if it's intraday for them. I'm struggling with how to appropriately size these positions or set stops, especially for volatile names. For example, if $9988 HK (Alibaba) moves significantly overnight, by the time my market opens, I could be well past my intended stop. Are folks using wider stops for these positions, or smaller position sizes? Or is there a more sophisticated way to manage this that I'm missing, beyond just checking my phone every few hours?
That's a very valid concern, and one many traders face when expanding into different time zones. Have you considered using options to hedge some of that overnight exposure, or are you primarily looking for strategies within the equities themselves?