Professional and part-time traders alike can benefit from weekend stock trading by brushing up on their abilities while optimizing their profits.
Yes, stock traders may trade on weekends. While most stock markets are open Monday through Friday from 9 a.m. to 5 p.m., dealing on weekends is possible due to so-called Electronic Communication Networks (ECNs). These allow investors to trade before and after trading hours.
There are three strategies to trade stocks on weekends, in my opinion. The first alternative is to buy as well as sell stock outside of normal trading session during pre-market and after-market trading sessions. The second option is to exploit the worldwide difference in time to operate in other nations’ stocks during regular hours. The final option is to trade equities on Middle Eastern stock exchanges, which are open from Saturday through Wednesday.
Trading Outside of Regular Trading Hours by Using Pre-Market and After-Market Trading
Every stock market has set hours of operation, which are usually between 9 a.m. and 5 p.m. The New York Stock Exchange (NYSE), for example, is open from 9:30 a.m. until 4:00 p.m. Traders who want to deal with shares first before the market opens or just after closes must do so through the Electronic Communication Networks during the pre-market or post-market sessions (ECNs).
Traders can use ECNs to trade equities outside of market hours. Initially, ECN trading was exclusively accessible to institutional investors. With the digital revolution, however, an increasing number of investors nowadays can afford to purchase and sell stocks via ECNs. After-market trading is now offered by popular providers such as Charles Schwab.
What Should I Do If I Can’t Trade During Regular Trading Session?
- Most brokers nowadays provide after-hours services to customers. Some brokers only provide restricted access, while others only provide trading via slower computer networks, leading to delayed execution rates. Before dealing outside of usual business hours, make sure you read this carefully.
- Pre-market and after-market share trading hours are set by each exchange. The hours of operation for post-market operations are usually from 4 and 8 p.m. Pre-market trading can also take place between the hours of 4 a.m. and 9 a.m.
- The NASDAQ and the New York Stock Exchange (NYSE) both are biggest in world stock exchanges. The following table depicts their market operation times. All times are in Eastern Standard Time.
| NYSE | NASDAQ | |
| After hours trading | 4pm to 8pm | 4pm to 8pm |
| Pre-market trading | 7am to 9:30am | 4am to 9:30am |
Most ECNs only accept buy and sell orders from customers. This could be a concern for investors who prefer to utilize custom orders to invest in the stock market, such as stop-loss options. Moreover, ECNs generally have a lesser volume of shares than the actual transaction, which may result in some orders not being fulfilled. This is because, for a transaction to occur, a seller’s offer to sell shares must be met by a buyer’s offer to buy equities. In low-volume ECN marketplaces, this isn’t always the case.
Why I should do Trading Outside of Regular Trading Hours?
Trading outside of regular market hours has two key advantages.
- Freedom: The primary advantage of off-hour dealing is the flexibility it gives non-professional traders while buying and selling stocks. Due to their office commitments, part-time investors are unable to devote appropriate time to respective investments. This could be due to the enormous volume of work or even because their boss forbids them from engaging in non-office activities during working hours. In this case, after-hour trading helps people to juggle office jobs with their financial ambitions in a very convenient way.
- Fresh Information: Off-hour stock trading provides investors with the opportunity to act upon fresh news that comes to their attention, in addition to convenience. This data is based on two factors. One is external market knowledge gleaned from one’s social media network or the press. The next piece of data comes from individual research, which may prompt a trader to sell or acquire shares right away.
What challenges I can face while Trading Outside of Standard Trading Hours?
Trading outside of typical market hours has four primary drawbacks.
- Execution Risk: For off-hour trading, the key disadvantage is “execution risk.” The term “execution risk” refers to the possibility of an order being not executed that day. Pre-market and after-market traders which trade on ECN exchanges face this risk. Due to the obvious lack of volume inside the ECN market, buy/sell orders might not have been completed.
- High volatility: Low volume leads to excessive volatility, which is in addition to the execution risk. This is because a smaller number of traders gives institutional investors and other significant players more clout. As a result, share prices can fluctuate dramatically.
- Extra trading fees: Many CDCs impose a fee for trades made between pre-market and after-market share trading. These additional fees might sometimes cancel out the benefits of low-margin deals. Even if investors trade high-margin stocks, the added charges will reduce their returns on investing.
- Limited trading options: in addition to charging customers extra fees, CDCs offer a limited set of stock options trading. Stop-loss orders, for example, are not available in pre-market or after-market orders. This might be a significant disadvantage if the individual’s trading plan includes a stop-loss as a key component.
Conclusion
Trading outside of regular business hours is becoming increasingly prevalent on stock exchanges across the world. Three tactics can be used by investors to trade stocks on weekends. Investors can use ECNs to trade shares during pre-market and after-market sessions in addition to trading shares during market hours. Shares purchased during pre-market and after-market hours offer the benefit of introducing new information and providing somewhat flexibility to part-time investors. Off-hour stock trading, on the other hand, has its own set of issues, such as execution risk and excessive volatility.