Continuous trading risk
When a market never closes, how does that change the way price risk builds up for anyone holding a position?
In plain words
Continuous trading means a market trades around the clock, every day, with no closing bell and no scheduled overnight break. A position can be repriced at any hour, including weekends and holidays, so exposure is live whenever the holder is asleep or away.
Why it matters
In markets with a daily close, gaps can form between sessions, but losses are also contained within set hours. In a never-closing market, a position can move through several time zones' worth of headlines and trading before the owner can act, so risk management has to assume there is no pause.
In a real week: BTC, week of 4 May 2020
In the week of 2020-05-04, BTC traded in a 24.02% range, with its high at 10067.0 on 2020-05-07 23:00 UTC (Thu) and its low at 8117.0 on 2020-05-10 00:00 UTC (Sun). The largest single hourly move, -8.76%, also struck at 2020-05-10 00:00 UTC (Sun), and the worst day, -8.56%, was 2020-05-10. The sharpest repricing landed on a weekend, outside any traditional session.
A common mistake
Assuming a quiet period on one calendar day means risk has paused. Trading continues across all hours, so the largest move can arrive when least attention is paid.