What is extended hours trading?

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When viewing US shares on the trading platform, you'll notice that many of the biggest stocks are labelled ‘extended hours’. This indicates that this market is available for trading from 8:10am-12am (UK time) Monday-Thursday and from 8:10am until market close (9pm) Friday.

The reason this is important to note is that in the US there's a main market trading session from 1:30pm-8pm (UK time). This session is characterised by high liquidity due to the presence of numerous market participants. For smaller US stocks, the main session represents the only tradeable time where liquidity is sufficient for us to offer a tradeable market. Remember, generally speaking, the more liquid a market is, the tighter the spread is.

However, in the US there is actually a pre-market session and a post-market trading session where shares continue to trade. Therefore, stocks of sufficient size and liquidity are made available for Capital.com clients to trade across all three sessions.

Advantages of extended hours trading

Extended hours trading has several advantages. Investors can use it to respond promptly to news stories that break outside standard trading hours, without having to wait for exchanges to re-open. Lots of important business developments – earnings releases, for example – are published when markets are closed. Economic data is also often released outside normal trading hours, and of course political events that impact the markets can take place at any time.

Risks of after-hours trading

After-hours trading does have some drawbacks, including lower liquidity, higher volatility, and increased competition from institutional investors with more resources and information. Please also note, stops, take-profits and pending orders can be open at any time while the market is open. Therefore for extended hours markets, that is from 8:10am-12am UK time.

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