The realm of round-the-clock stock trading
Continuous trading is increasingly materializing as a tangible phenomenon. Individual investors assert that the moment has finally arrived. For an extended period, investors operated within the conventional confines of Wall Street trading hours, which span from 9:30 a.m. to 4 p.m. ET on weekdays, alongside “extended hours” that commence as early as 4 a.m. and conclude at 8 p.m. Brokerages are adapting to the increasing global demand for U.S. stocks by lengthening their operational timelines.
Following the introduction of overnight trading in single stocks by Robinhood Markets and Interactive Brokers last year, a competitive surge has prompted other platforms to broaden their service offerings. The New York Stock Exchange has announced its intention to expand trading hours on its fully electronic platform to a total of 22 hours each day. Charles Schwab intends to expand its after-hours trading offerings by incorporating individual stocks and a multitude of additional exchange-traded funds. Webull has recently broadened its 24-hour trading platform to accommodate U.S. users, while Firstrade is set to introduce overnight trading in the coming year.
In 2024, the demand from investors for equities has been insatiable. The S&P 500 has surged by 25%, propelled by the artificial intelligence boom and anticipations of interest-rate reductions. Investors have increasingly flocked to funds that track U.S. equities following Donald Trump’s election as president. Deutsche Bank reported that its gauge of equity positioning experienced its largest weekly increase on record after the election, according to data dating back to 2010. Advocates of round-the-clock trading argue that it enhances investors’ autonomy over their portfolios and enables swifter responses to developments occurring beyond conventional trading hours. This, they assert, enables investors to effectively manage their risk in real time.
“If a door detaches from a Boeing aircraft over the weekend, there is no need to await the morning opening of the stock exchange,” remarked Brian Hyndman, chief executive of Blue Ocean Technologies, the parent company of a platform facilitating overnight trading for U.S. brokerages. Engaging in late-night trading presents its own set of risks for traders. Low trading volumes can render markets susceptible to abrupt price fluctuations, while excessive volumes may cause disruptions in the operational infrastructure of trading platforms. Blue Ocean, which facilitates after-hours trading for platforms such as Schwab and Webull, experienced a prolonged outage amid the global market turmoil in August. Blue Ocean has announced an upgrade to a new technology platform.
The predominant excitement surrounding round-the-clock trading appears to stem from retail investors and participants in Asia, where trading hours do not coincide with those of the United States. Certain institutional investors have advocated for a reduction in the trading day, citing the concentration of activity around the opening and closing bells. Individual investors frequently engage in larger, more speculative investments compared to their institutional peers. Schwab and Webull represent a cohort of brokerages that restrict certain overnight trades to “limit orders,” allowing investors to establish specific maximum and minimum prices for buying or selling. This approach is frequently advocated by financial advisers to help investors mitigate their exposure in the event of an unforeseen market collapse.
For certain traders, engaging in substantial late-night wagers has proven lucrative. Long Hoang, a 30-year-old software engineer based in the San Francisco Bay Area, amassed over $1 million through a series of trades last month. On October 25, he acquired shares of Trump Media in anticipation of Trump’s interview with podcaster Joe Rogan, subsequently divesting them when the stock surged in an overnight session a few days later. On Wednesday, he acquired shares of bitcoin holding company MicroStrategy at 10:15 p.m. PT, anticipating a market rally in the wake of Nvidia’s robust earnings report. He liquidated his entire stake just a minute after the market opened on Thursday, securing an approximate profit of $450,000.
Overnight trading “has been somewhat of a godsend,” remarked Hoang, who frequently remains awake late into the night to seize trading opportunities surrounding events like speeches from China’s President Xi Jinping. “It appears that we now wield significant influence.” Trading platforms assert that a significant portion of their after-hours transactions is driven by specific events. Blue Ocean enabled an unprecedented $3.3 billion in trades during the off-hours session subsequent to Election Day. According to Hyndman, the trading platform generally records approximately $1 billion in transactions during an overnight session.
Robinhood has experienced heightened activity during critical overnight sessions coinciding with Federal Reserve policy meetings, significant earnings announcements, and unfolding events in the Israel-Hamas conflict. The after-hours trading session subsequent to Nvidia’s earnings report last week marked Robinhood’s sixth-busiest on record. Steve Quirk, the chief brokerage officer at Robinhood, noted that individual investors seek the flexibility to trade according to their preferences and timing. While the trading surge of the pandemic has diminished, strong online communities and the expansion of remote work have enabled Americans to engage with the market as never before. Moreover, the advent of 24-hour trading in assets like cryptocurrencies has heightened investors’ anticipations regarding the trading hours of other assets, according to James Kostulias, head of trading services at Schwab.
