Can you buy and sell stocks on the weekend? Yes, you can. It wasn’t possible in the past. Traders couldn’t trade whenever they wanted. However, the computer and internet revolution in the modern era has also revolutionized how we trade. Electronic trading has made it seamless for traders to trade from wherever they want and whenever they want.
So, how can you buy and sell stocks on the weekend? This is a very important question. Knowing the answer to this question is imperative if you want to trade outside regular trading hours. In this article, we are going to explain how can you buy and sell stocks on the weekend as well as its advantages and disadvantages. Therefore, read carefully and understand all you need to know to trade outside regular trading hours.
Can you buy and sell stocks on the weekend?
Can you buy and sell stocks on the weekend is a very pertinent question. Many traders don’t know the answer to the question, especially beginners. The shortest answer to this question is yes. In fact, trading stocks on the weekend helps you avail good trading opportunities. However, it is important to know how can you buy and sell stocks on the weekend.
Electronic Communication Networks (ECNs)
Buying and selling stocks on the weekend is made possible by Electronic Communication Networks (ECNs). As you know, almost all stock exchanges remain open according to a 9 am to 5 pm five days a week format or similar to this format. For example, the New York Stock Exchange (NYSE) opens at 9:30 am and closes at 4 pm. So can you buy and sell stocks on the weekend or outside operating hours on NYSE? Yes, you can. ECNs have made it possible for you to trade during the pre-market or post-market sessions.
Moreover, if we go into detail, we can conclude that there are three possible ways to trade on the weekend. Firstly, you can capitalize on pre-market and post-market sessions to trade on the weekend. Secondly, you can use Middle Eastern stock exchanges to trade on the weekend. This is because Middle Eastern stock exchanges operate between Saturday and Wednesday. Finally, you can also use time zone differences for your trading. You can trade during regular trading hours in stocks from other countries.
How to buy and sell stocks on the weekend?
1. Pre-market and post-market sessions
How can you use pre-market and post-market sessions for trading outside trading hours? There are two key factors here that you need to understand. Firstly, all exchanges worldwide have set hours for pre-market and post-market sessions. For example, NYSE allows pre-market trading between 7 am to 9:30 am. Whereas, it allows post-market trading between 4 pm and 8 pm. Secondly, you can use the services of brokers offering after-hours services to their clients. Thus, you can use pre and post-market sessions to trade outside regular trading hours.
However, it is important to note that there are some risks associated with trading outside regular trading hours. For instance, you can only place buy or sell orders on ECNs. Therefore, you cannot place custom orders. In other words, your orders will be without stop-losses and that carries a huge risk.
2. Middle Eastern stock exchanges
The second option to trade on the weekends is to use Middle Eastern markets. As you know, the majority of stock exchanges worldwide operate from 9 am to 4 pm and five days a week between Monday and Friday. However, Middle Eastern countries follow the Islamic calendar. Therefore, their stock markets operate between Friday and Wednesday because Friday is the first working day of the week. For instance, Dubai Financial Market (DFM) operates five days a week between Friday and Wednesday. Thus, Middle Eastern stock exchanges are a viable option to trade on weekends. However, you need a trusted broker who has access to international stock markets.
3. Using time zone differences
Using time zone differences is also a viable option to trade during weekends. For example, US traders can trade after 5 pm on various stock exchanges worldwide. They can use time zone differences to trade stocks on stock exchanges that remain open after 5 pm in the US. In fact, time zone differences make 24 hours trading possible for traders and investors.
What are the risks associated with trading on weekends?
You know by now the answer to the question: can you buy and sell stocks on the weekend. However, you still don’t know about the risks associated with trading on weekends. The following are the major risks of buying and selling stocks on the weekend.
- As you know, trading volume always remains very low in pre-market and post-market sessions. Therefore, it is obvious that trading volume also remains low on weekends. That said, it is easy to conclude that there is order execution risk. In simple words, your orders may not be fulfilled because of low volume.
- High volatility is another huge risk associated with low volume on weekends. Therefore, any news event can cause stock prices to fluctuate real quick in any direction. Furthermore, a lower number of buyers and sellers may also lead to the greater influence of big market players like institutional investors.
- Another huge risk associated with trading on weekends and during pre-market and post-market sessions is you cannot place custom orders. You can only place buy or sell orders without stop-losses. Therefore, it is a huge risk to enter a trade without stop-loss orders.
Can you buy and sell stocks on the weekend? The answer is yes. You can use pre-market and post-market sessions, use different time zones, and even trade on Middle Eastern stock exchanges. However, trading during weekends carries a lot of major risks. For instance, you cannot place stop-loss orders to protect your trades from going wrong. Furthermore, lower trading volume on weekends leads to order execution risk as well as high volatility. Therefore, it is important to trade on weekends with a lot of care and after fully understanding what you are doing.