what is overnight trading 
overnight trading refers to trades that are placed after an exchange s close and before its open overnight trading hours can vary based on the type of exchange on which an investor seeks to conduct trades overnight trading is an extension of after hours trading also known as extended hours trading not all markets have overnight trading understanding overnight tradingovernight trading encompasses a broad range of orders that are placed outside of standard market hours across the financial markets there are various avenues for trading through a variety of exchanges the mainstream markets include stocks and bonds alternative markets include foreign exchange and cryptocurrencies each market has standards for overnight trading that must be considered by investors when placing trades during off market hours for example some over the counter otc products cannot be traded outside of business hours 1 the foreign exchange forex market on the other hand does not close during the week so there is no true overnight trading because it is open at all hours except on weekends outside of normal market hours which for the u s stock exchanges is usually 9 30 a m to 4 p m et liquidity is typically lower 2 this means fewer participants larger bid ask spreads and potentially erratic price moves and high volatility extended hours trading takes place from just after 4 p m through 8 p m et and again from 4 a m through 9 30 a m et overnight trading takes place from 8 p m through 4 a m et forex and overnight tradingthe forex market is the largest market in the financial industry it s where global currencies are traded forex trading can be conducted 24 hours a day five days a week therefore the forex market doesn t technically have overnight trading since it is open all the time during the week many day traders choose to trade currencies for this reason the overlap of business hours between north america australia asia and european markets makes it possible for a trader to execute a forex trade through a broker dealer at any time investopedia sabrina jiangu s stocks and overnight tradingstocks in the u s trade on primary listing exchanges between 9 30 a m and 4 p m et this is when the exchange along with other networks called electronic communication networks ecns facilitate trading trades can also be conducted on ecns for several hours before the primary exchanges open and after they close in pre market and after hours trading in addition certain brokers e g charles schwab robinhood and interactive brokers offer overnight trading when u s stock exchanges are closed and outside of extended hours trading periods from just after 8 p m through approximately 4 a m et when pre market trading begins overnight trades get placed through and filled by ecns 345ecn trading begins at 4 a m and ends at 8 p m et these sessions include extended hours or extended trading outside of normal exchange hours from 4 a m to 9 30 a m and from 4 p m to 8 p m ecns also facilitate overnight trading outside of extended hours from 8 p m to 4 a m et mutual funds and overnight tradingmutual funds are governed by a forward net asset value nav pricing rule that requires all orders placed after the market s close to receive the next day s closing nav price this rule helps to ensure a smooth nav accounting close for mutual funds at the end of each day 6since navs are only calculated once per day a mutual fund investor may see a substantial difference in the closing price from one day to the next for such investors this can provide a greater incentive to place a trade before the current day s market close orders can be placed outside of normal market hours but the transactions aren t processed until a nav is available bond market overnight tradingbonds also trade on exchanges throughout the day however they are only issued on certain exchanges which limits their availability for trading bonds trade through market makers and are listed on a variety of exchanges including bond exchanges at the new york stock exchange nyse and nasdaq on the nyse bonds can be traded from 4 a m to 8 p m et 7example of overnight trading in a stockthe following chart shows an overnight trading session in apple inc stock the nasdaq stock exchange on which aapl is listed closes at 4 p m on high volume after hours trading commences volume for aapl drops off except for a large spike at 5 01 p m the price of the stock trails a bit lower from the closing price with the last transaction occurring at 7 59 p m investopedia sabrina jiangthe following day the first trade occurs at 4 a m at a higher price than the previous night s action volume is relatively light in the pre market and then escalates at the opening of the nasdaq exchange at 9 30 a m apple has relatively active overnight trading compared to many stocks 