what is overnight leverage rate?

Discussion in 'Prop Firms' started by ceo2008, Mar 20, 2007.

  1. ceo2008

    ceo2008 Guest

    some firms offer 20:1, 10:1 and 8:1 intraday leverage, but what is overnight leverage? You borrow money to trader Asian market at night?

  2. PolarisT


    Overnight leverage is the leverage given to you to hold shares overnight (from one day to the next). This leverage is much smaller than the ones you mentioned and many prop trading companies will not allow inexperienced traders to hold positions overnight (after the market daily close).

    Most prop firms in the US will not let you trade shares registered solely at foreign stock exchanges.
  3. The amount of capital usage overnight, with our Firm, is determined by amount of risk, based on longevity, capital, and type of positions being held. Many Merger guys and Pairs guys take home 30 or more times their equity of hedged positions. Naked long or shorts are generally limited to 20 times.

    A risk fee (haircut) charge may apply for these positions. For example if you take home 30 times your equity in (roughly based on $$ long vs. $$ short) hedged positions, the max you'll pay is 3.6% per annum. 0-6 times free, 6-12 times = 2%, 12-18 - 4% and 18-30 times = 6%.

    This is based on U.S. equities only (at this point anyway).