How to trade Stocks at the Weekend?

 

Ways to Trade Stocks at the Weekend

For part-time traders or professionals interested in the stock market, the way to further their earnings is to be able to trade stocks over the weekend.

 

Normally, many exchanges operate on weekdays between 9.00 and 17.00. But on the weekends, you can buy and sell stocks using Electronic Communications Networks (ECNs). In this way, you can trade outside of standard market hours.

 

There are three different ways to trade stocks on the weekends. The first one is to use pre market and post market trading sessions. The second option is to trade stocks on the stock markets of different countries using the global time difference. The last option is to trade in the Middle East markets, which can be traded between Saturday and Wednesday.

 

We will examine these three options in detail in our article.

 

Pre-Market and Post-Market Trading Sessions

Stock markets around the world have standard opening and closing hours, usually 9 am and 5 pm. Us Stocks are open to transactions between 9:30 and 16:00. When investors want to trade before or after the stock market opens, they can use Electronic Communication Networks (ECNs) during pre- or post-market sessions.

 

When they first emerged, ECNs, which only allowed institutional investors to trade stocks outside of market hours, have become available to more investors with the developing technology. For example, Charles Schwab, one of the mainstream service providers, offers post-market trading services.

 

How to Trade Outside of Trading Hours?

Today, many brokers offer their clients trading outside of standard market hours. But what you need to be aware of when choosing a broker is that while some offer limited access services, some brokers offer trades over slower computer networks resulting in slower execution speeds.

 

Exchanges have hours set according to pre-market and post-market stock trading. Pre-market hours are usually between 04:00 and 09:00, while post-market hours can be between 16:00 and 20:00.

 

In addition to the advantages of trading outside market hours, ECNs have some differences compared to normal stock market hours. For example, many ECNs only contain buy and sell orders. For this reason, it cannot meet the requests of investors who use special orders such as stop-loss orders to minimize the loss.

 

In addition, ECNs have lower share volume than the real-time stock exchanges. Some buying or selling transactions may not be carried out, as there must be a purchase request for each share sold for the transaction to take place.

 

Advantages of Trading Outside of Normal Trading Hours

Trading outside market hours has two benefits;

Flexible Working Hours: Being able to trade stocks outside of normal hours is a great advantage for part-time investors. People who work in different jobs to earn their living during the day may not have enough time to trade in the stock market. The fact that people can trade stocks outside of normal hours due to the lack of a suitable environment to follow stock exchange transactions or to be very busy during working hours enables them to gain maximum profit by balancing their daily work with their investments.

 

New information: People have the opportunity to test their knowledge by trading stocks outside of their normal hours. They can obtain this information by using US Stock API to obtain historical data on stocks and use the data in their individual analysis. Or they can access real-time data and news about stocks in the market using the Live Market Data API. Finally, they have the opportunity to test the algorithmic trading strategies they set up using the Algo Trading API, outside of market hours.

 

Disadvantages of Trading Stocks Outside of Regular Hours

There are four major disadvantages to trading outside of market hours;

Execution Risk: This risk refers to the fact that the order cannot be processed on the same day and is the biggest disadvantage that traders who make transactions outside of working hours should face. As we mentioned before, buy or sell orders may not be executed in ECN markets due to low stock volume.

 

High volatility: One of the disadvantages of low stock volume is high fluctuations in stock prices. Since there are few buyers and sellers in the market, the effects of institutional investments or investors trading large amounts on stock prices are also great.

 

Extra trading fees: Many brokerage houses charge higher fees for pre-market and post-market transactions than normal time. If low margin trading is done, these extra transaction fees can eliminate the profit return. In high margin transactions, the return on investment decreases as the fee increases with the transaction.

 

Limited trading options: In addition to the extra trading fees, there is a limit on stock diversity during pre-market and post-market stock trading. Also, you cannot place special orders such as 'stop loss'. If you are an investor who uses this order frequently, it may turn into a very disadvantageous situation for you.

 

Middle East Stock Exchanges for Weekend Stock Trading

Although the stock market hours are 9-5 in many countries, not all countries accept Saturdays and Sundays as weekends. For example, countries that work according to the Islamic calendar accept Friday as the start of the week and work until Wednesday.

 

Dubai Financial Market (DFM) is one of the good examples of these exchanges. In this way, investors can trade on Saturdays and Sundays, which are accepted as weekends in their own countries. In order to be able to trade these different countries' stock exchanges, you need to use brokers with worldwide access to stocks. We explained the ways to trade in stock exchanges in different countries in our previous article.

 

Trading Stocks Over the Week Using Time Zone Differences

Stock exchanges in America close after 17:00 as in the whole world. After this time, you can take advantage of the time zone difference and trade stocks in different countries that have not yet reached the end of the day. What you need for this is a broker with access to different country exchanges and stock portfolios from different exchanges. This allows you to trade stocks 24/7 on stock exchanges around the world

 

To sum up

To summarize all we have told, trading stocks outside of normal hours has become more common day by day. In addition to being able to trade on the weekend using the three different methods we have described, you can trade at pre-market and post-market hours using ECNs.

 

The opportunity to trade outside of office hours provides the flexibility they need for part-time investors, while also providing the opportunity to test your new knowledge. But there are also disadvantages to be aware of. These are execution risk and high volatility in stock prices.