Risks of extended hours trading

Liquidity is the ability to buy and sell stocks quickly at a good price. Generally, the more orders that are available in market, the greater the liquidity. Fewer people trade outside regular hours, so your orders may take longer to fill or may not fill at all. It is usually easier to buy or sell stocks during the regular trading hours.

 

Volatility is the frequency and size of price changes in stocks. The higher the volatility of a security, the greater its price changes. There is usually greater volatility outside regular hours. When trading 24/5, you may receive a worse price compared to when trading during regular hours.

Spread is the difference between a stock's buy and sell price. Lower liquidity and higher price volatility outside regular hours may lead to wider spreads. Spreads are usually lower in the regular hours.

Companies often release important information outside the regular trading hours, such as earnings releases, mergers and acquisitions, dividend announcements, and other market-moving news. These announcements may cause significant price changes. When combined with lower liquidity and higher volatility, this worsens the trading conditions compared to regular trading hours.

Different brokers may use different 24/5 trading systems. Prices on one platform may be different from others. You could receive a worse price in one 24/5 system compared to another.

The prices of stocks in extended hours and overnight trading may not reflect the prices either at the end of regular trading hours, or the regular session opening the next day. This means you might not get the best price if you buy or sell outside the regular trading hours.