Overnight Trading in Futures Markets

May 1, 2024 Advanced
Futures and foreign exchange markets have overnight trading sessions. Learn more about how to find opportunities in overnight futures trading.

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.

Overnight market trading

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.

Potential opportunities in overnight trading

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.

Sample chart plots prices in 5-minute intervals, from the time markets close in the United States until they open the next day. The blue lines show the trading hours of overseas markets.

Source: thinkorswim platform

For illustrative purposes only. Past performance does not guarantee future results.

Futures, and Futures options trading involves substantial risk and is not suitable for all investors. Please read the Risk Disclosure Statement for Futures and Options to trading futures products.

Forex trading involves leverage, carries a substantial level of risk and is not suitable for all investors. Please read the NFA Booklet Trading Forex: What Investors Need to Know prior to trading forex products.

Futures and forex accounts are not protected by the Securities Investor Protection Corporation (SIPC). Forex accounts do not receive a preference in any bankruptcy proceeding pursuant to Part 190 of the CFTC's regulations.

Additional CFTC and NFA futures and forex public disclosures for Charles Schwab Futures and Forex LLC can be found here.

Futures, futures options, and forex trading services provided by Charles Schwab Futures and Forex LLC. Trading privileges subject to review and approval. Not all clients will qualify. Forex accounts are not available to residents of Ohio or Arizona.

Charles Schwab Futures and Forex LLC is a CFTC-registered Futures Commission Merchant and NFA Forex Dealer Member.

Charles Schwab Futures and Forex LLC (NFA Member) and Charles Schwab & Co., Inc. (Member FINRA/SIPC) are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.

Charles Schwab Futures and Forex is the counterparty to all forex customer trades, and exclusively uses straight-through processing such that it automatically (without human intervention and without exception) enters into the identical but opposite transaction with another liquidity provider (creating an offsetting position in its own name).

The S&P 500® is a product of S&P Dow Jones Indices LLC or its affiliates ("SPDJI") and has been licensed for use by Charles Schwab & Co., Inc. Standard & Poor's® and S&P® are registered trademarks of Standard & Poor's Financial Services LLC ("S&P"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"). Charles Schwab & Co., Inc is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500.

The information here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The type of securities and investment strategies mentioned may not be suitable for everyone. Each investor needs to review a security transaction for his or her own particular situation.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.