Schwab Expands 24/5 Trading: A New Opportunity for Clients

Charles Schwab, a leading investment and trading firm, has announced the broad availability of expanded 24/5 trading for all clients. This move follows a successful pilot program and allows clients to trade an expanded list of securities, including S&P 500 and Nasdaq-100 stocks, as well as hundreds of additional exchange-traded funds (ETFs), 24 hours a day, five days a week. This new opportunity comes with both advantages and challenges, which clients should consider before engaging in extended-hours trading.



Advantages of Expanded 24/5 Trading

1. Access to US markets during business hours in Asia and Europe: Schwab clients in Asia and Europe can now invest in US companies and trade US markets during their business hours, allowing them to react to news events and market movements in real-time.
2. Trading around news events and earnings announcements: With 24/5 trading, clients can respond to breaking news and earnings announcements as they happen, even if they occur outside of regular US market hours. This allows for more timely decision-making and potentially better trading opportunities.
3. Putting education into practice: Schwab has observed that people tend to read trader education content in the evening. With 24/5 trading, clients can now put what they've learned into practice in their accounts immediately, rather than waiting for the next trading day.

Challenges and Risks of Extended-Hours Trading

1. Lower liquidity: During extended hours, there is less activity and fewer participants, which can lead to lower liquidity. This can make it more difficult to buy or sell securities at desired prices.
2. Higher volatility: With fewer participants and less liquidity, prices can be more volatile, making it riskier to trade.
3. Price changes between sessions: Prices can change significantly between the regular market hours and extended hours, which can impact the value of trades.
4. Unlinked markets: Extended-hours trading can involve unlinked markets, which means that prices in one market may not reflect prices in another. This can lead to discrepancies and potential losses.
5. News announcements: News events that happen outside of regular market hours can impact trading, but there may be less information available to make informed decisions.



Managing Risks and Trading Responsibly

To mitigate these risks, investors can:

1. Have a Trading Plan: Having a well-defined trading plan can help investors stick to their strategy and avoid overtrading or making impulsive decisions.
2. Stay Informed: Keep up-to-date with news and events that could impact the markets, even if they happen outside of regular market hours.
3. Be Cautious: Be aware of the unique dynamics and potential risks of extended-hours trading and adjust your strategy accordingly.
4. Consider Using Stop Orders: Stop orders can help limit potential losses by automatically selling a security if it reaches a certain price.
5. Be Patient: Don't rush into trades just because you can. Take the time to analyze the situation and make informed decisions.

In conclusion, the availability of 24/5 trading on Schwab's thinkorswim platform has opened up new opportunities for clients in different time zones, allowing them to access US markets during their business hours, trade around news events, and put their education into practice. However, it is essential for clients to be aware of the potential risks and manage their trading plans accordingly to avoid overtrading or taking on unnecessary risk. By doing so, clients can take full advantage of this new opportunity while maintaining a responsible and disciplined approach to investing.