Market Access Uncertainty and Investor Behavior: The Impact of Irregular Trading Hours on Short-Term Strategies and Volatility

The global financial landscape is undergoing a seismic shift as stock exchanges increasingly adopt irregular and extended trading hours. From 2024 to 2025, major U.S. exchanges like the NYSE and Nasdaq have accelerated plans to transition toward near-24/7 trading,
driven by demand from global investors and the rise of digital assets. This evolution is reshaping short-term trading strategies, amplifying portfolio volatility, and forcing market participants to adapt to a new paradigm of liquidity, risk management, and behavioral dynamics.

The Rise of Extended Trading Hours and Its Strategic Implications

Official announcements from exchanges underscore a clear trend toward extended market access. The NYSE's NYSE Arca platform, for instance,
received accelerated SEC approval to operate 22 hours daily, with a target launch in late 2026. Meanwhile,
the SEC's approval of the 24X National Exchange in November 2024-a 23-hour trading venue-highlights the sector's push to align with global markets and the 24/7 news cycle. These changes are not merely logistical; they are fundamentally altering how traders approach execution, liquidity, and timing.

Short-term traders are already adapting. Firms are updating execution frameworks to handle increased liquidity during off-hours sessions, while
algorithmic strategies such as mean reversion and momentum trading are being refined to account for the unique dynamics of pre-market and post-market activity. For example,
NYSE research reveals that pre-market trading volumes surged to 3.74 billion shares on a single day in June 2025, up from 3.0% of daily volume in 2023 to 7.1% in Q2 2025. This surge is particularly pronounced in non-S&P 500 stocks, where
nearly 80% of pre-market trades are retail-driven. Retail investors, who account for 20-35% of U.S. daily trading volume, are leveraging extended hours to capitalize on real-time news and earnings reports.

Portfolio Volatility and the New Normal of Market Uncertainty

Extended trading hours have also amplified portfolio volatility, driven by both structural and macroeconomic factors.
In Q4 2025, the VIX-the market's "fear gauge"-peaked at 26.4 in late November due to a mixed jobs report and concerns over prolonged interest rates. By early October, the VIX had climbed above 27,
reflecting heightened anxiety over credit concerns and geopolitical tensions, such as U.S.-China trade disputes over rare earth materials. These volatility spikes are not isolated events but part of a broader pattern where 24/7 trading enables immediate reactions to corporate actions and global shocks.

Investors are responding with defensive strategies.
Sector rotation into low-volatility stocks-such as utilities, consumer staples, and healthcare-has gained traction as these sectors are perceived as more resilient during economic uncertainty. Additionally,
the use of options and hedging tools has surged, with market participants seeking to mitigate downside risks in an environment where volatility can erupt at any hour. For instance,
the rise of 24/7 trading has led to increased demand for overnight hedging strategies, as traditional market close protections no longer apply.

Challenges and the Path Forward

Despite the benefits of extended trading-such as improved price efficiency and access to global capital-challenges persist. Liquidity fragmentation remains a critical concern, as trading across multiple time zones and platforms can create price discrepancies. Operational hurdles, including staffing exchanges for round-the-clock surveillance and ensuring robust infrastructure, also pose risks. Furthermore,
the rise of algorithmic trading in extended hours has raised questions about market fairness, particularly for retail investors who may lack the tools to compete with high-frequency traders.

Regulators are grappling with these complexities.
The SEC's review of near-continuous operations from 8:00 p.m. ET Sunday to 8:00 p.m. ET Friday underscores the need for updated oversight frameworks. Meanwhile,
infrastructure providers like DTCC are modernizing systems to support 24×5 trade processing, with a production launch expected in June 2026. These efforts highlight the sector's recognition that extended trading requires not just technological upgrades but also a reimagining of market governance.

Conclusion

The shift to irregular and extended trading hours is redefining the investment landscape. While it offers unprecedented flexibility and access, it also introduces new layers of complexity for short-term traders and portfolio managers. As volatility becomes a more persistent feature of 24/7 markets, investors must balance agility with caution, leveraging defensive strategies and advanced tools to navigate uncertainty. For exchanges and regulators, the challenge lies in ensuring that these innovations enhance market integrity without compromising stability. In this evolving environment, adaptability-and a keen understanding of the interplay between market access and investor behavior-will be key to long-term success.