Investors Are Switching to 24-Hour Trading—Should You?

A growing wave of investors is discovering how to profit from off-hours market prospects—thanks to the rise of 24-hour stock trading.

While around-the-clock access promises greater flexibility, it's not as simple as clicking "buy" at 3 a.m. New rules, risks, and opportunities are reshaping how to approach the market but there are also reasons some are staying on the sidelines. Here's what you need to know.

What's Behind the 24-Hour Shift?

In October 2024, those following Investopedia's earnings coverage learned that Tesla (TSLA) beat expectations, sending the stock up over 8% in after-hours trading—that's about $50 billion in market cap. For those with traditional brokerage accounts, there was little to do but wait for the 9:30 a.m. opening bell in New York, which is many hours away.

It's thus easy to see why the traditional trading day has been expanding over digital networks that never sleep. Major brokers like Charles Schwab now offer trading from 4 a.m. to 8 p.m. ET, while other platforms extend even further into overnight hours. This shift isn't just about convenience—it's about staying competitive in a global market where breaking news doesn't wait for the opening bell. 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's approval of 24X National Exchange, set to launch in 2025. Initially offering trading from 4:00 a.m. to 7:00 p.m. ET, the exchange plans to eventually expand to nearly round-the-clock trading (23 hours per day) on weekdays. This marks a significant shift from the current extended-hours trading offered by brokers—it will be the first fully regulated exchange operating during overnight hours.

The New Rules of Night Trading

If you're considering after-hours trading, three key differences matter:

• You can only use limit orders (market orders are all but forbidden)
• Stock prices can swing dramatically since there's thin volume
• Not all stocks trade actively after hours

How To Trade After Hours: The Steps

1. Before the News

• Set up price alerts and news notifications.
• Place your orders in advance (check your brokerage for the earliest you can set them).
• Check recent trading volume to see how much interest there is in the stock after hours.
• Start smaller than you would during regular hours.

2. When the News Breaks

• Don't just read the headline (an important caveat might be tucked in the second or third paragraph that would reverse your strategy)
• Look for specific numbers (earnings, guidance, etc.)
  

3. Make Your Move

• Always use limit orders (you'll likely have no choice anyway)
• Start with 25% of your intended position size
• Place orders slightly above the ask (to buy) or below the bid (to sell)
• Be ready to adjust your limit price if spreads are wide

Tip: Most successful after-hours traders treat their first trade as a test. If filled quickly with good pricing, they have a better idea of the interest and can adjust.

The Dark Side of 24-Hour Trading

Extended hours trading isn't for everyone. Lower trading volume means you might not get the price you want or, worse, get stuck in a position you can't easily exit. Plus, the broader spreads between buy and sell prices can eat into the higher profits you sought by not waiting for the opening bell.

Most successful after-hours traders are highly selective about when they participate.

Bottom Line

Twenty-four-hour trading isn't just a Wall Street trend—it's a fundamental shift in how markets work. But having access to round-the-clock trading doesn't mean you should use it. The more successful investors treat extended hours as a specialized tool, not an everyday necessity. If you trade after hours, start small, stick to limit orders, and only act when the potential reward clearly outweighs the higher risks.

The best strategy is to stay selective: use extended hours when major news or global events demand immediate action, but don't let FOMO drive you into thin, volatile markets.