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Extended hours trading risks

Extended hours trading offers more flexibility but comes with increased risks compared to regular trading hours, as outlined below.

Liquidity and Volatility Risk

Trading activities during extended market hours involve a smaller group of market participants, which may result in a lower amount of available market orders compared to regular market hours. This could lead to difficulties in buying or selling financial instruments at your preferred price.

The changes in price that financial instruments undergo during trading are known as volatility. Volatility during extended market hours is generally higher, which could result in partially executed orders and exposure to unfavourable prices to an increased extent.

Wider Spreads Risk and Price Gapping Risk

Higher volatility coupled with lower liquidity could cause an increase in the difference between the sell and buy price (the "spread"), which could affect the profitability of your trades and lead to larger losses, as total transaction costs increase.

The price of a financial instrument may experience sudden changes without trades taking place in between ( i.e.price gapping). This could occur due to unexpected news, events, or unusual trading activities, and could result in losses if you buy or sell financial instruments at unfavourable prices.

News Release Risk

Issuers often publish important news outside regular trading hours to limit the news impact on the price of their financial instruments. Such announcements may occur during extended market hours and cause rapid price movements, which may lead to losses for you.

Unlinked Markets Risk

The extended hours trading systems are not interconnected, meaning that the price of a financial instrument displayed on one system may differ from the price of the same stock on another system operating at the same time.

This difference in prices may cause you to buy or sell a stock at a worse price than you intended during extended hours trading.

Uncertain Prices Risk

The prices of some stocks traded during extended hours trading may not reflect the prices of those stocks during regular hours, either at the end of the regular trading session or upon the opening of regular trading the next business day.

Extended hours trading might not be suitable for everyone. For more details, review our Risk Disclosure.