24 Hour Trading Stocks: Trading Around the Clock

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Posted Jan 14, 2025

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Smartphone Displaying Stock Trading App Screen
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24 hour trading stocks offer a unique opportunity for investors to trade around the clock, with many markets staying open from Sunday evening to Friday evening.

This extended trading window can be a game-changer for those who want to stay on top of their investments or take advantage of global market fluctuations.

The New York Stock Exchange (NYSE) is one of the most well-known exchanges that operates 24/5, closing only on Christmas Day and New Year's Day.

The NYSE's extended hours allow investors to react quickly to news and events that occur outside of traditional trading hours.

Broaden your view: Sentinelone Stock Symbol

What is Extended Hours Trading

Extended hours trading is a type of trading that allows investors to buy and sell stocks or ETFs outside of the standard market hours. This can include pre-market trading, which occurs between 4am ET and 9:30am ET, and post-market trading, which begins at 4pm ET and runs until 8pm ET.

The rules for extended-hours trading differ from those during normal trading hours. For example, with a Fidelity brokerage account, you can only place certain types of orders during extended-hours trading, including buy, buy to cover, sell, or short-sale orders.

Credit: youtube.com, Extended Hours Trading - Is 24 Hour Stock Trading Right For You?

During extended hours, the increased volatility and lower liquidity can magnify the potential risks associated with using margin. Margin requirements for extended-hours trading on many platforms remain the same as during regular trading hours.

Extended hours trading provides a feature from a convenience standpoint, particularly for market participants outside the US. The ability to trade pre- and post-market allows one to trade at a time of day more convenient to local time zones.

Here's a breakdown of the extended trading sessions:

  • Pre-market: Occurs between 4am ET and 9:30am ET.
  • Cash Market: The standard trading session, running from 9:30am ET to 4pm ET.
  • Post-market (After-hours): Begins at the end of the cash session at 4pm ET, running until 8pm ET.
  • Overnight: Offered by some brokers, this extends trading for select equities 24 hours a day, 5 days a week.

Extended hours trading also allows investors to capture opportunities presented by unexpected news events, such as M&A headlines or geopolitical developments, which can break at any time of day.

Benefits and Risks

Extended-hours trading offers several benefits, including the ability to trade market moves that occur after corporate reports, which is incredibly rare during market hours, with around 95% of US firms reporting earnings before or after market hours.

Earnings reports can lead to significant price swings and impact market sentiment in the minutes following news events, as seen with Nvidia rallying over 10% in post-market trade and Alphabet falling as much as 8% after-hours.

Credit: youtube.com, Robinhood's 24-Hour Stock Trading Announcement: Game Changer or Investor Trap?

Extended hours trading also provides a feature from a convenience standpoint, particularly for market participants outside the US, allowing them to trade at a time of day more convenient to their local time zones.

However, extended-hours trading is not for everyone, and it's essential to learn more about it and discuss the risks and potential advantages with an investment professional before trying it out.

The heightened risks involved in extended-hours trading may not be suitable for those focused on building a diversified portfolio of high-quality stocks, bonds, and other investments.

Benefits of Extended Hours

Extended hours trading offers numerous benefits, making it a valuable tool for investors. Around 95% of publicly-listed US firms choose to report earnings either before the market opens or after it closes, resulting in significant price swings and impacting market sentiment.

These price swings can be particularly volatile, with examples including Nvidia rallying over 10% in post-market trade after Q4 23 figures were released, and Alphabet falling as much as 8% after-hours, also after the release of Q4 23 earnings.

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Extended hours trading allows traders to capture opportunities presented by unexpected news events, such as M&A headlines or geopolitical developments, which can break at any time of day.

The ability to trade pre- and post-market allows one to trade at a time of day more convenient to local time zones, rather than being constrained to trading only during the traditional cash session.

Overnight trading hours for US stocks and ETFs are from 8:00 pm ET to 3:50 am ET, with the first session beginning on Sunday at 8:00 pm ET and the last session ending on Friday at 3:50 am ET.

Here's a breakdown of the extended trading sessions:

  • Pre-market: Occurs between 4am ET and 9:30am ET.
  • Cash Market: The standard trading session, running from 9:30am ET to 4pm ET.
  • Post-market (After-hours): Begins at the end of the cash session at 4pm ET, running until 8pm ET.
  • Overnight: Offered by Pepperstone, this extends trading for select equities 24 hours a day, 5 days a week.

These extended trading sessions can be particularly beneficial for traders based in Asia, allowing them to take advantage of overnight breaking news and mitigate risk.

What Are the Risks?

The risks of extended-hours trading are real, and it's essential to understand them before diving in. You might not get the price you want due to lower trading volume and wider bid-ask spreads. This can lead to a bigger difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept.

Credit: youtube.com, Benefits of Risk Management

During extended hours, the lack of liquidity can result in more significant price movement, which can be a double-edged sword. While some traders might see this as a positive, others might be caught off guard by the increased volatility. The bid-ask spread is often wider during extended hours, particularly at the extreme ends of the trading session.

One of the biggest risks associated with extended-hours trading is the potential lack of liquidity. The vast majority of trading occurs during normal business hours, which means there's more demand for stock you're selling and more supply of stock you want to buy. This can be costly, especially if you're trying to sell your shares quickly.

To illustrate this point, consider an example where you want to sell 100 shares of a stock for $55. During normal market hours, there might be hundreds or thousands of traders willing to buy your shares at $55. However, during extended hours, there might only be a handful of traders interested in your shares, and the highest bid might only be $53.50.

Other risks include price volatility, which tends to be much higher in extended-hours trading than during normal market hours. You'll also face stronger competition from professional traders who are more skilled at seeking the best price execution for themselves.

A stock trader analyzes financial data on multiple computer screens in an office setting.
Credit: pexels.com, A stock trader analyzes financial data on multiple computer screens in an office setting.

Here are some of the key risks to consider:

  • Lack of liquidity
  • Higher price volatility
  • Wider bid-ask spreads
  • Stronger competition
  • Trading limitations imposed by your broker

These risks can be mitigated by being highly selective about when you participate in extended-hours trading and by starting small. It's also essential to use limit orders and to be prepared to adjust your limit price if spreads are wide.

A different take: Limit Orders

Krystal Bogisich

Krystal Bogisich

Lead Writer

Krystal Bogisich is a seasoned writer with a passion for crafting informative and engaging content. With a keen eye for detail and a knack for storytelling, she has established herself as a versatile writer capable of tackling a wide range of topics. Her expertise spans multiple industries, including finance, where she has developed a particular interest in actuarial careers.

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