Introduction
Extended hour trading is a popular feature offered by many online brokerages, including Fidelity. This feature allows investors to trade outside of normal market hours, which can be especially useful for those with busy schedules or those who want to react to news that breaks after the market has closed. In this article, we will take a closer look at extended hour trading at Fidelity and everything you need to know about it.
What is Extended Hour Trading?
Extended hour trading refers to the ability to trade securities outside of the regular market hours. This includes pre-market hours, which are before the official market opening, and after-market hours, which are after the official market closing. At Fidelity, pre-market hours are from 7:00 am to 9:28 am ET, while after-market hours are from 4:00 pm to 8:00 pm ET.
Benefits of Extended Hour Trading
Extended hour trading has several benefits, including:
- The ability to react to news that breaks outside of regular market hours
- More flexibility for investors with busy schedules
- The potential for increased liquidity
Risks of Extended Hour Trading
While extended hour trading can be beneficial, it also comes with some risks, including:
- Increased volatility and higher risk of price fluctuations
- Lower liquidity, which can make it difficult to enter or exit a position
- Wider spreads, which can increase trading costs
How to Access Extended Hour Trading at Fidelity
To access extended hour trading at Fidelity, you must have a brokerage account with the company. Once you have an account, you can place trades during pre-market and after-market hours through the firm’s website or mobile app.
Types of Securities Available for Extended Hour Trading
Not all securities are available for extended hour trading at Fidelity. The types of securities that are available include:
- Most stocks
- Exchange-traded funds (ETFs)
- Options
- Some mutual funds
Order Types Available for Extended Hour Trading
Fidelity offers several order types for extended hour trading, including:
- Market orders
- Limit orders
- Stop orders
- Trailing stop orders
- Conditional orders
How Extended Hour Trading Works
During extended hour trading, the market operates differently than during regular market hours. There may be less liquidity, wider spreads, and higher volatility, which can make it more difficult to execute trades at a desired price. Additionally, not all market participants are active during extended hour trading, which can further impact liquidity and volatility.
Examples of Extended Hour Trading at Fidelity
Here are some examples of how extended hour trading might work at Fidelity:
- Before the official market opening, you hear news that a company has announced positive earnings. You log into your Fidelity account during pre-market hours and place a buy order for the stock.
- After the official market closing, you see that a company’s stock has dropped significantly due to negative news. You log into your Fidelity account during after-market hours and place a sell order for the stock.
Things to Consider Before Trading During Extended Hours
Before trading during extended hours, it is important to consider:
- The increased risks associated with extended hour trading
- Your own risk tolerance and investment goals
- The potential impact of after-hours trading on the stock’s price
- The potential impact of news that breaks outside of regular market hours
Final Thoughts
Extended hour trading can be a useful tool for investors, but it also comes with increased risks. Before participating in extended hour trading at Fidelity, it is important to fully understand how it works and the potential impact on your investments. By doing so, you can make informed decisions and potentially take advantage of opportunities that arise outside of regular market hours.
