Overnight trading refers to trades that are placed after an exchange’s close and before its open. The trading hours vary based on the type of exchange through which an investor conducts trades.
Overnight trading is an extension of after-hours trading. Not all markets offer overnight trading opportunities.
Key Highlights
- What is Overnight Trading? Overnight trading takes place outside of the primary exchange’s normal trading hours as well as outside pre-market and after-hours trading windows.
- U.S. Markets: Brokers catering to U.S. stocks may extend after-hours trading from 8 p.m. ET until pre-market trading opens or through the normal exchange opening.
- Forex Markets: Unlike other markets, the forex market remains almost continuously open on business days because trading is managed across the globe by various banks and businesses, eliminating the concept of overnight trading.
- Bonds and Extended Hours: Bond markets also offer extended trading hours, enabling trades between 4 a.m. and 9:30 a.m. ET (pre-market hours) and 4 p.m. and 8 p.m. ET (post-market hours).
Comprehensive Guide to Overnight Trading
Overnight trading allows you to place orders outside of standard market hours. Different financial markets—equities, bonds, forex, and cryptocurrencies—each have unique standards for overnight trading that investors must be familiar with when participating in off-hour trades.
During non-traditional trading hours, particularly in U.S. exchanges where the typical hours are from 9:30 a.m. to 4 p.m. ET, liquidity tends to be lower, resulting in fewer participants, larger bid-ask spreads, volatile price movements, and generally high volatility.
Comparing Overnight and Extended-Hours Trading
While extended-hours trading happens from 4 p.m. to 8 p.m. ET and again from 4 a.m. to 9:30 a.m. ET, overnight trading occurs from 8 p.m. to 4 a.m. ET.
Forex Market: The Unique Case of Shiftless Trading Hours
The forex market is the world’s largest financial market, notable for operating 24 hours a day five days a week. Thanks to the time zone overlaps of business operations between North America, Australia, Asia, and Europe, forex trades are possible around the clock. Consequently, the concept of overnight trading does not apply here as it does to other financial instruments such as stocks or bonds.
Overnight Opportunities in U.S. Stocks
U.S. stocks trade on primary exchanges from 9:30 a.m. to 4 p.m. ET. ECNs like those from brokers such as Charles Schwab, Robinhood, and InterActive Brokers facilitate trades out of these hours—from just after 8 p.m. until 4 a.m. ET the next business day.
Investigate Mutual Funds
Mutual funds are unique, adhering to intimal identical closing rules. Orders placed outside of market hours get processed once the NAV is available for the next day’s close giving incentive to accomplish trading within regular hours.
Resting at a unique pivot, an insightful strategy for overcoming irregularities spotlights the harmony of timely managed order structures.
Overnight Trading‘a impact on Bonds
Bond exchanges limit intraday and near-night trades to similar segments, bound within customary exchange circuits. Transactions seep across celestial differences dovetailed around primary huts sliced properly.
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What Time Overnight Trading typically starts
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References
- Financial Industry Regulatory Authority. “SEC Approves Amendments to Finra Trade Reporting Rules on OTC Equity Transactions Executed Outside Normal Market Hours”.
- New York Stock Exchange. “Holidays & Trading Hours”.
- Charles Schwab. “Extended Hours Trading”.
- Robinhood. “Robinhood 24-Hour Market”.
- Interactive Brokers, LLC. “Trade US Stocks and Options Around the Clock”.
- U.S. Securities and Exchange Commission. “Mutual Funds and ETFs”, Page 4.
- New York Stock Exchange. “Markets/NYSE Bonds: Market Information”.
- University of Georgia Terry College of Business. “Why Do Some Stocks Seem To Make Money Overnight?”
