Investors Are Switching to 24-Hour Trading—Should You? | Global News Avenue

Due to the rise of 24-hour stock trading, more and more investors are exploring how to profit from the prospect of off-trading hours markets.

While 24/7 access guarantees greater flexibility, it’s not as simple as clicking “buy” at 3 a.m. New rules, risks and opportunities are reshaping how to enter the market, but there are reasons for some to stay on the sidelines. Here’s what you need to know.

What’s behind the 24-hour shifts?

People who follow Investopedia in October 2024 Profit coverage It is understood that Tesla (Tesla) beat expectations, sending the stock up more than 8% in after-hours trading – with a market value of about $50 billion. For those with traditional brokerage accounts, there’s not much to do except wait for the 9:30 a.m. opening bell in New York, which is still a few hours away.

Therefore, it’s easy to understand why the traditional trading day has been expanding on digital networks that never stop. Major brokers such as Charles Schwab now offer trading hours from 4 a.m. to 8 p.m. Eastern Time, while other platforms even extend trading hours into overnight hours. This shift isn’t just about convenience, it’s about staying competitive in a global marketplace where breaking news doesn’t wait for the opening bell. The Forex and cryptocurrency markets already trade 24 hours a day.

The trend toward 24-hour trading is accelerating with the U.S. Securities and Exchange Commission approving the 24X National Exchange, scheduled to launch in 2025. Trading hours are initially offered from 4:00 am to 7:00 pm Eastern Time, exchange Plans eventually expanded to include almost 24/7 trading on weekdays (23 hours a day). This marks a significant shift from the extended trading hours currently offered by brokers – it will be the first fully regulated exchange to operate during the overnight session.

New rules for night trading

If you are considering after-hours trading, three key differences are important:

• You can only use limit order (Market orders are almost banned)
• Share prices may fluctuate significantly due to thin trading volume
• Not all stocks are active in after-hours trading

How to Trade After Hours: Steps

1. Before news release

• Set price alerts and news notifications.
• Place orders in advance (check your brokerage firm to find out the earliest time you can place an order).
• View recent transactions volume See how many people are interested in the stock after the bell.
• Start smaller than normal.

2. when the news comes out

• Don’t just read the headline (there may be an important warning in the second or third paragraph that will turn your strategy around)
• Look for specific numbers (earnings, guidance, etc.)

3. take action

• always use limit order (You probably have no choice anyway)
• Start with 25% of your expected position size
• Place an order slightly above the ask price (buy) or below the ask price (sell)
• If the spread is wider, be prepared to adjust your limit price

hint: Most successful after-hours traders view their first trade as a test. If they can get good pricing quickly, they’ll have a better understanding of interest and can make adjustments.

The dark side of 24-hour trading

Extended trading hours are not suitable for everyone. Lower trading volume means you might not get the price you want, or worse, get stuck in a position from which you can’t easily exit. Additionally, a larger spread between the buy and sell price may erode the higher profits you seek by not waiting for the market to open.

Most successful after-hours traders are very picky about when they participate.

bottom line

Round-the-clock trading isn’t just a Wall Street trend, it’s a fundamental shift in how markets work. But being able to trade around the clock doesn’t mean you should use it. More successful investors view extended working hours as a specialized tool rather than an everyday necessity. If you trade after hours, start small, stick to limit orders, and only take action when the potential reward clearly outweighs the higher risk.

The best strategy is to be selective: When big news or global events require immediate action, work longer hours, but don’t let FOMO Driving you into thin, volatile markets.