More Trading Hours for tastytrade Customers
More Trading Hours for tastytrade Customers
By:James Melton
The update gives users an extra 30 minutes before the markets open and three hours of extra trading time after markets close
If opportunity—in the form of a stock-trading idea–knocks before the market opens or after it closes, tastytrade customers have a new way to answer the door.
The brokerage will make pre-market trading available from 7 a.m. until 8:30 a.m. CDT on weekdays. After-hours trading will be available from 3 p.m. until 7 p.m. CDT weekday evenings. Compared to tastytrade’s previous extended hours, this update gives users an extra 30 minutes before the markets open and three hours of extra trading time after markets close.
Extended hours trading is available only for trading in shares such as stocks, exchange-traded funds and American depositary receipts. An American depositary receipt is a certificate issued by a U.S. bank that represents shares in foreign stock and priced in U.S. dollars. Extended hours trading does not apply to equity options trading.
Pros and cons of extended hours
Why is this important? Pre-market and after-hours trading give investors more time to react to events, such as earnings announcements and major world news. Extended trading hours also can be convenient for traders who may live in a non-U.S. time zone.
Traders who are new to buying and selling stocks outside normal market hours may want to keep several risks in mind before diving in. Smaller trading volume during extended-hours trading can lead to low liquidity and higher-than-normal price volatility. More about that is below.
Customers asked for more hours
The increase in hours for stock trading resulted from customer requests, says JJ Kinahan, CEO of IG North America, which includes tastytrade.
"You have asked for it, so we of course deliver it,” Kinahan said. “Customers should keep an eye out for more features they have been asking for coming shortly.”
The SEC and extended trading hours
In a bulletin issued in June 2022, the Securities and Exchange Commission notes that “extended-hours trading may present investment opportunities” but cautions investors to consider the following risks:
- Lack of liquidity because of “less trading interest and therefore less price competition for most stocks.”
- Price volatility for stocks with limited trading activity.
- Uncertain prices that may not reflect the prices of those stocks during regular hours.
- Trading systems that are not linked, resulting in price differences across systems.
- The effect of news announcements made outside regular trading hours.
- Wider spreads between the bid and ask prices.
- The possibility that order-handling rules will differ from those during regular trading hours.
- Some brokerages may accept only limited orders during extended-hours trading.
- Some brokerages may set a time limit on orders.
- Competition from “professional traders who, by nature of their profession, generally have access to more information than individual investors.”
For additional investor educational information, see the SEC’s website for individual investors, Investor.gov.
James Melton is managing editor of Luckbox magazine.
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