Table of Contents
Key Takeaways
- Robinhood allows trading during extended hours from 7 AM to 8 PM ET, in addition to regular market hours of 9:30 AM to 4 PM ET.
- You can place limit orders but not market orders during extended hours on Robinhood.
- Trading outside regular hours carries additional risks like lower liquidity and higher volatility.
As an experienced trader and investing writer, I understand the importance of being able to react quickly to market events and news. Traditional stock trading hours of 9:30 AM to 4 PM ET may not always align with your schedule or allow you to act on time-sensitive information. That’s where extended-hours trading comes in, and Robinhood has made it accessible to its users.
What is Extended-Hours Trading?
Extended-hours trading, also known as pre-market and after-hours trading, refers to the ability to buy and sell stocks outside of the regular trading session hours. On Robinhood, you can trade during the following extended hours:
- Pre-Market Hours: 7 AM to 9:30 AM ET
- After-Hours: 4 PM to 8 PM ET
This means you have an additional 6.5 hours of trading time every regular trading day (Monday to Friday, excluding holidays).
How to Trade During Extended Hours on Robinhood
Trading during extended hours on Robinhood is relatively straightforward. Here are the steps:
- Open the Robinhood App: Launch the Robinhood app on your mobile device or access the web platform.
- Search for the Stock: Use the search bar to find the stock you want to trade.
- Select the Order Type: Robinhood only allows limit orders during extended hours. Tap on the “Trade” button and then select “Limit Order.”
- Set the Limit Price: Enter the maximum price you’re willing to pay per share (for a buy order) or the minimum price you’ll accept (for a sell order).
- Choose Extended-Hours Session: Under “Session,” select either “Extended-Hours” for pre-market or after-hours trading, or “24 Hour Market” for overnight trading.
- Set Order Duration: Specify whether you want the order to be “Good for Day” (GFD) or “Good ’til Canceled” (GTC).
- Review and Submit: Double-check your order details and submit the order by swiping up.
It’s important to note that Robinhood does not support market orders during extended hours. All orders must be limit orders, which means you set the price you’re willing to accept for the trade.
Risks of Extended-Hours Trading
While extended-hours trading offers convenience and potential opportunities, it also comes with additional risks that you should be aware of:
- Lower Liquidity: Trading volume is typically lower during pre-market and after-hours sessions compared to regular market hours. Lower liquidity can lead to wider bid-ask spreads and potentially less favorable execution prices.
- Higher Volatility: With fewer market participants, prices can be more volatile and subject to larger swings during extended hours.
- Unlinked Markets: During extended hours, not all markets are open simultaneously, which can lead to pricing discrepancies and potential arbitrage opportunities.
- News Announcements: Significant news or events can occur outside of regular trading hours, causing sudden price movements that may be difficult to react to.
- Wider Spreads: Due to lower liquidity, the difference between the bid and ask prices (the spread) may be wider, resulting in less favorable trade execution.
It’s crucial to understand and carefully consider these risks before engaging in extended-hours trading. Robinhood provides an Extended-Hours Trading Disclosure that outlines these risks in detail.
Tips for Successful Extended-Hours Trading
To maximize your chances of success when trading during extended hours on Robinhood, consider the following tips:
- Use Limit Orders: As mentioned earlier, Robinhood only allows limit orders during extended hours. Set your limit prices carefully based on your trading strategy and risk tolerance.
- Monitor News and Events: Stay up-to-date with relevant news, earnings reports, and other events that could impact the stocks you’re trading, as these can cause significant price movements during extended hours.
- Manage Your Risk: Extended-hours trading can be riskier due to lower liquidity and higher volatility. Consider using smaller position sizes or implementing stop-loss orders to manage your risk effectively.
- Be Patient: Don’t chase trades or panic if your orders don’t execute immediately. Extended-hours trading can be less liquid, so be patient and wait for favorable opportunities.
- Understand Order Types: Familiarize yourself with the different order types available on Robinhood, such as limit orders, stop-loss orders, and their variations, to better control your trades during extended hours.
- Practice with Paper Trading: If you’re new to extended-hours trading, consider practicing with a paper trading account first to get a feel for the dynamics and potential risks involved.
By following these tips and exercising caution, you can potentially benefit from the additional trading opportunities offered by extended-hours trading on Robinhood while managing the associated risks.
Remember, extended-hours trading is not suitable for everyone, and it’s essential to thoroughly understand the risks involved before engaging in it. Always do your due diligence, develop a solid trading strategy, and never risk more than you can afford to lose.
[Content warning: The following text contains profanity and explicit language.]
