# Overnight Trading: Definition, How It Works, and Example

![A person at a desk with two screens trading stocks overnight.](https://www.investopedia.com/thmb/pi_SMnDVK6aBdfMDTg6dNyZutSw=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1397316774-543141073d5b45cba3de1a3cae43edd4.jpg)

*— martin-dm/Getty Images*

> **Definition**
>
> Overnight trading is done between the market close and the open on the following day.

Overnight trading refers to trades executed between an exchange's official closing time and its next opening bell. Each exchange has different rules on the exact hours such trading can be done.

An extension of after-hours trading, overnight trading provides investors with the ability to react to news and global market shifts outside regular trading hours. While not available across all markets, overnight trading has become increasingly accessible through electronic communication networks (ECNs) and mainstream broker platforms.

Below, we take you through what you need to know, as well as the strategies savvier investors use during this period.

### Key Takeaways

*   Overnight trading operates outside normal exchange hours, extending beyond premarket and after-hours sessions .
*   For U.S. stocks, brokers like Interactive Brokers, Charles Schwab, and Webull now offer expanded overnight trading, typically from 8:00 p.m. to around 4:00 a.m. ET.
*   Extended trading hours for U.S. stocks include premarket (4 a.m. to 9:30 a.m. ET) and after-hours (4 p.m. to 8 p.m. ET), while bonds generally trade from 4 a.m. to 8 p.m. ET.
*   The forex market is open throughout the weekdays with trading transitioning across global time zones through the four major sessions (New York, London, Tokyo, and Sydney).
*   Overnight trading typically has far less liquidity, wider spreads, and higher volatility than during standard market hours.

## What Is Overnight Trading?

Overnight trading comprises a wide range of transactions done outside the regular market hours. The most established markets for overnight trading include stocks, bonds, foreign exchange ([forex](https://www.investopedia.com/terms/f/foreign-exchange.asp)), and cryptocurrencies. Each market segment has developed different rules governing off-hours transactions. For example, the crypto markets never close, while the forex markets are closed only on weekends.

For stocks, [ECNs](https://www.investopedia.com/terms/e/ecn.asp) have enabled the move to after-hours trading by matching buy and sell orders without using a formal venue like the New York Stock Exchange. Over time, trading windows have been extending more and more outside conventional hours.

However, the market conditions can be very different for overnight trading. Far fewer investors are participating, which means prices can move quite quickly and [bid-ask spreads](https://www.investopedia.com/terms/b/bid-askspread.asp) are wider.  

## The Growing Appeal of 24-Hour Markets

In March 2025, many of those trading Stellantis NV ([STLA](https://www.investopedia.com/markets/quote?tvwidgetsymbol=STLA)) in the overnight hours were rewarded when the automaker's stock surged over 8% in after-hours trading following a White House announcement of a tariff exemption for certain auto manufacturers. This big move—worth billions in [market capitalization](https://www.investopedia.com/terms/m/marketcapitalization.asp)—occurred well outside regular trading hours, leaving many investors with traditional brokerage accounts unable to capitalize on the news until the next trading day's opening bell. 

Such situations, and competition from assets such as crypto that trade around the clock, have pushed brokers to expand the trading windows for stocks. Below are the overnight hours for several popular brokers:  

## Overnight Trading By Asset Class

**U.S. Stocks**

*   Regular trading hours run from 9:30 a.m. to 4:00 p.m. ET on major exchanges.
*   Extended-hours trading occurs from 4:00 a.m. to 9:30 a.m. (premarket) and 4:00 p.m. to 8:00 p.m. ET (after-hours).
*   Overnight trading (8:00 p.m. to 4:00 a.m. ET) is done through ECNs rather than formal exchanges.
*   Fewer securities trade than during regular hours, though major brokers are expanding their overnight offerings.
*   Trading is characterized by lower [liquidity](https://www.investopedia.com/terms/l/liquidity.asp) (less ability to trade quickly in the volume you want), wider spreads, and potentially higher volatility.

> **Tip**
>
> In overnight trading, ECNs often accumulate orders overnight until they have enough matches for the trades to go through. This means your trade execution is often delayed as the system waits for a counterparty to show interest at the price you requested.

**Bonds**

*   Most U.S. bond trading occurs from 8:00 a.m. to 5:00 p.m. ET.
*   Some platforms offer extended trading from as early as 4:00 a.m. and as late as 8:00 p.m. ET.
*   Overnight bond trading is more limited than stocks, with a narrower selection of securities.
*   U.S. Treasurys trade in a broader time window than corporate bonds, with trading available from 8:00 p.m. to 5:00 p.m. ET the following day (22 hours), Sunday to Friday.
*   [Municipal bonds](https://www.investopedia.com/terms/m/municipalbond.asp) have the most restricted trading windows, typically limited to standard market hours.

**Forex (Foreign Exchange)**

*   This market, the largest worldwide, runs continuously, 24 hours a day, five days a week (Sunday evening to Friday evening ET).
*   There is no formal "overnight" trading as markets transition among the global financial centers (London, New York, Sydney, and Tokyo).
*   Most trading occurs during session overlaps, particularly when the London and New York markets are both active.
*   [Retail traders](https://www.investopedia.com/articles/active-trading/030515/what-difference-between-institutional-traders-and-retail-traders.asp) have consistent access regardless of their time zone.

![Forex Market Hours](https://www.investopedia.com/thmb/G24UPTDLLnsvlYda-jtn9ZbE9vI=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/dotdash_final_Forex_Market_Hours_Dec_2020-01-85c0a7fa11a347f8937001cc596a13cc.jpg)

*— Investopedia / Sabrina Jiang*

**Mutual Funds**

*   Shares in mutual funds can't be traded during overnight hours.
*   Portfolio values are calculated once per day at the market close.
*   All orders placed after the market closes receive the next day's closing [net asset value](https://www.investopedia.com/terms/n/nav.asp) price.
*   There is no intraday pricing or trading like stocks or exchange-traded funds (ETFs).  
    

**ETFs**

*   The most popular of these funds have similar overnight trading rules as individual stocks.
*   Major index [ETFs](https://www.investopedia.com/terms/e/etf.asp) (tracking S&P 500, Nasdaq-100, etc.) typically offer the best overnight liquidity.
*   There are likely to be more discrepancies between the value of the assets the fund holds and share pricing during overnight sessions, given the wild swings and which assets are tradable overnight and held by ETFs.
*   Sector-specific and niche ETFs generally have less accessibility for overnight trading than broad market funds.

**Cryptocurrencies**

*   Trade continuously 24/7 across decentralized and centralized exchanges worldwide.
*   No distinction is made between "regular" and "overnight" trading.

## Overnight Trading Example

Below is a chart showing a sample overnight trading session for Apple Inc.'s ([AAPL](https://www.investopedia.com/markets/quote?tvwidgetsymbol=AAPL)) stock. AAPL trades on the Nasdaq, which closes at 4 p.m., at which point [after-hours trading](https://www.investopedia.com/terms/a/afterhourstrading.asp) begins. The volume of trades immediately drops off, though there is a spike at 5:01 p.m.

![Overnight trading example](https://www.investopedia.com/thmb/NH7OsOMa2Q5rMi5THGr9i0nZd3E=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/dotdash_INV_final_Overnight_Trading_Jan_2021-01-cf182eed457f406285088a693587629d.jpg)

*— Investopedia / Sabrina Jiang*

The next morning, the trade at 4 a.m. is higher than the previous night. Volume stays light in the [premarket](https://www.investopedia.com/terms/p/premarket.asp) hours, picking up again as the Nasdaq opens at 9:30 a.m.

## Basic Strategies for Overnight Trading

For overnight trading, a strategic approach is essential if you don't want to be saddled with losses from quick shifts in off-hours pricing:

1.  **Focus on news-driven prospects**: Target trades triggered by specific triggers like earnings releases, major economic data, or geopolitical developments outside regular hours.
2.  **Use limit orders only**: Though required by many brokers anyway, it's best to use orders with specified entry and exit prices since market orders are particularly perilous during the thin trading of overnight sessions.
3.  **Start with highly liquid securities**: Start with highly liquid stocks and ETFs with reasonable trading volume overnight, like APPL or ETFs tracking the [S&P 500 index](https://www.investopedia.com/terms/s/sp500.asp).
4.  **Use smaller position sizes**: Cut your standard position size by about half during overnight sessions to manage the greater volatility and wider spreads.
5.  **Monitor global markets**: Keep abreast of moves in the international market so you can better predict the potential reactions in the U.S. markets.
6.  **Be patient**: Accept that fills may come in partial blocks as matching liquidity becomes available, particularly for less-traded securities.

## Bottom Line

The ability to trade around the clock represents a fundamental shift in market accessibility, but it calls for investors to use a disciplined approach. While you can respond 24 hours a day to breaking news and global events, the thinner liquidity in overnight trading carries heightened risks that can quickly erode potential gains.

The most successful overnight traders strictly manage their risk, using [limit orders](https://www.investopedia.com/ask/answers/05/buystoplimit.asp) and selectively engaging only when specific events warrant action rather than treating extended hours as simply an extension of regular trading.

> **Article Sources**
>
> 1.  Federal Reserve Bank of New York. "[The Overnight Drift](https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr917.pdf)."
> 2.  _Globe & Mail_. "[General Motors (NYSE:GM) and Dodge-Owner Stellantis Rally on Tariff ‘Flexibility’ Hopes](https://www.theglobeandmail.com/investing/markets/stocks/GM/pressreleases/31544511/general-motors-nysegm-and-dodge-owner-stellantis-rally-on-tariff-flexibility-hopes/)."
>     
> 3.  New York Stock Exchange. "[Holidays & Trading Hours](https://www.nyse.com/markets/hours-calendars)."
>     
> 4.  Charles Schwab. "[Extended Hours Trading](https://www.schwab.com/stocks/extended-hours-trading#:~:text=Overnight%20trading%20session&text=Overnight%20trading%20sessions%20are%20available,trading%20sessions%20available%20on%20thinkorswim.)."
>     
> 5.  Robinhood. "[Robinhood 24-Hour Market](https://robinhood.com/us/en/support/articles/24hour-market/)."
>     
> 6.  Interactive Brokers, LLC. "[Trade US Stocks and Options Around the Clock](https://www.interactivebrokers.com/en/trading/us-overnight-trading.php)."
>     
> 7.  Lachance, M.-E. "[Night Trading: Lower Risk But Higher Returns?](https://doi.org/10.1002/rfe.1180)" _Review of Financial Economics_, vol. 41 (2023), pp. 347–363. 
>     
> 8.  New York Stock Exchange. "[Bonds Market Information](https://www.nyse.com/markets/bonds/market-info)."
> 9.  TreasuryDirect. "[FAQs About Treasury Marketable Securities](https://treasurydirect.gov/help-center/marketable-faqs/)."
> 10.  U.S. Government Accountability Office. "[Overview of Market Structure, Pricing, and Regulation](https://www.gao.gov/assets/gao-12-265.pdf)."
> 11.  Oanda. "[Forex Trading Sessions & Best Times to Trade](https://www.oanda.com/us-en/trade-tap-blog/trading-knowledge/when-is-the-best-time-for-forex-trading/)."
> 12.  U.S. Securities and Exchange Commission. "[Net Asset Value](https://www.investor.gov/introduction-investing/investing-basics/glossary/net-asset-value#:~:text=%22Net%20asset%20value%2C%22%20or,assets%20minus%20its%20total%20liabilities.)."
>      
> 13.  U.S. Securities and Exchange Commission. "[Mutual Funds and ETFs](https://www.sec.gov/investor/pubs/sec-guide-to-mutual-funds.pdf)," Page 4.