Upbeat music plays throughout.
Narrator: Most traders know the stock market opens at 9:30 a.m. Eastern and closes at 4 p.m. with the closing bell. But what does a trader do if something big happens after the close?
There's more to trading than what happens between the sounding of the bells. Schwab allows trading 24/5—24 hours a day, five days a week. Clients who use the thinkorswim® desktop, mobile, or web platforms can trade hundreds of stocks and many ETFs overnight. In short, thinkorswim users have the convenience of trading the news as it happens.
But it's not quite the five days you may think of. Trading runs from 8 p.m. ET on Sunday night through 8 p.m. ET Friday night. And any orders executed after 8 p.m. are considered trades for the following trade date. Due to T+1 settlement, this means that an order executed after 8 p.m. on Sunday will settle on Tuesday, and an order executed after 8 p.m. on Monday will settle on Wednesday. That's different from the typical experience, where an order executed on Monday settles on Tuesday. This may affect your day-trading status or available funds for trading and withdrawal.
Also, keep in mind, these irregular trading hours may have higher volatility than normal trading hours, and you could face wider bid/ask spreads due to lower liquidity. This could make it harder to get orders filled.
One important caveat: This video is just an overview of the 24/5 trading available on the thinkorswim platform. There is more nuance to the general idea of after-hours trading you should consider.
Let's log in to the thinkorswim application to see exactly how to place an overnight trade. Securities include all companies in the S&P 500®, the Nasdaq-100®, and hundreds of ETFs. Keep in mind, mutual funds, bonds, and most options do not trade in extended hours.
In the thinkorswim platform, you'll see a "24" icon next to securities that are tradeable in the overnight sessions. For this example, I'll open up the chart for… let's say Microsoft. You can see the 24 icon here. Let's say I want to buy a few shares. I'll select the ask price, the same way I normally would.
In fact, you'll enter most of your trade details the same way you would during the regular trading session. Notice I said *most.*
When you're placing trades after hours, there are two things you'll need to do differently. First, you'll need to use a limit order; market orders won't work. You'll also need to select the time in force. In the dropdown, you'll notice several choices. You'll want to choose EXTO, or GTC+EXTO. Let me break down how those work:
EXTO orders can be active for up to 24 hours, but always expire at 8 p.m. So, an order placed at 9 p.m. on Tuesday will expire at 8 p.m. on Wednesday, but an order placed at 7 p.m. Wednesday will also expire at 8 p.m. on Wednesday.
GTC + EXTO orders are active for up to six months after the order is placed, or until the order is executed or canceled.
The rest of the order works mostly the same way. Adjust the quantity and limit price, select Confirm and Send, and then select Send. That's all it takes to place an overnight trade.
On-screen text: [Schwab logo] Own your tomorrow®
