Overnight Trading in Futures Markets

Most people know the stock market closes at 4 p.m. ET, and some are aware that they can trade in the after-hours session until 8 p.m. However, there are also nearly round-the-clock markets for futures, futures options, and currency products available to qualified account owners.

The E-mini S&P 500 futures (traded under the symbol /ES on the thinkorswim® trading platform) trades on Globex, CME Group's all-electronic trading platform, and is one of the products with the highest after-hours volume.

Because CME Group is based in Chicago, E-mini S&P 500 futures trade on a schedule quoted in U.S. Central time (CT). For /ES, the week begins on Sunday at 5 p.m. CT and ends at 4 p.m. CT on Monday. The daily schedule repeats throughout the rest of the week until Friday at 4 p.m. CT, at which time, trading is closed until the Sunday open.

Other products may have slight variations in their trading hours. These futures products cover a wide variety of areas including, but not limited to, agriculture (corn, soybeans, and wheat), energy (oil, gasoline, and natural gas), metals (gold, silver, and platinum), currency futures and options on futures. Charles Schwab Futures and Forex closes daily at 4 p.m. CT and reopens at 5 p.m. CT. Trading closes for the weekend at 4 p.m. CT on Fridays. Off exchange trading could face additional hours where trading may be unavailable.

One drawback when trading stocks and equity options is that you can only do so for about one-third of the day, and if news breaks or events happen during the other two-thirds, there's no way to act on it. But with futures, you can—and many traders do trade during overnight sessions.

Overnight trading in the futures markets can provide potential opportunities to take advantage of news events that happen while the U.S. equity markets are closed, but it can also bring risk of lower liquidity with lower trading volume and  wider bid-ask spreads.

Additionally, some traders use futures as a proxy, in an attempt to help manage risk in their equity portfolios.

When potentially market-moving news breaks outside normal trading hours, it often influences futures, with some traders seeing futures as an "early warning signal." For example, if a trader is holding a basket of stocks that tracks the S&P 500^® index (SPX), and news begins to unfold overnight, they could trade/ES as a way to potentially hedge their portfolio against a down open.

Similarly, a trader holding energy companies might trade Crude Oil futures (/CL) or other futures contracts that correlate with their holdings. Some traders see this type of overnight trading as a tool to help them manage "overnight risk."

When watching for potential overnight trading opportunities, consider following news and announcements from the European Central Bank (ECB) and the Bank of Japan (BoJ), as well as China's economic reports, most of which are scheduled ahead of time just like in the United States.

Some traders also look for market-moving news out of Asia when the Tokyo Stock Exchange opens at 7 p.m. CT and in Europe when the London Stock Exchange opens at 2 a.m. CT.