Ever felt that rush of a breaking news story before the market even opens, and wished you could act on it right then and there? Or perhaps you missed an earnings announcement after the closing bell and wanted to adjust your portfolio without waiting until the next morning? If you're an ETRADE user, you're in luck! ETRADE offers extensive opportunities for trading outside of regular market hours, often referred to as "extended hours trading." This comprehensive guide will walk you through everything you need to know about how early you can trade on E*TRADE, the benefits, the risks, and the step-by-step process to get started.
The Early Bird Gets the... Opportunity: Understanding Extended Hours Trading on E*TRADE
Regular market hours for the major U.S. stock exchanges (NYSE and NASDAQ) are generally from 9:30 AM to 4:00 PM Eastern Time (ET), Monday through Friday, excluding market holidays. However, the world of finance doesn't sleep when the closing bell rings. News breaks, earnings are announced, and global markets continue to churn. This is where extended hours trading comes in, allowing you to react to these events when the traditional market is closed.
E*TRADE provides robust access to these extended sessions, empowering you to be more agile in your trading strategy. Let's dive into the specifics.
Step 1: Are You Ready to Be an Early/Late Trader? Understanding Extended Hours Trading Sessions
Before we get into the "how-to," let's clarify what "early" and "late" mean in the context of ETRADE's trading hours. ETRADE offers several extended hours trading sessions:
Pre-Market Session: This is the early bird trading window. On E*TRADE, the pre-market session runs from 7:00 a.m. ET to 9:30 a.m. ET, Monday through Friday. This is your chance to react to overnight news, economic data, or pre-market earnings announcements.
After-Market Session: This is your opportunity to trade after the regular market closes. E*TRADE's after-market session is from 4:00 p.m. ET to 8:00 p.m. ET, Monday through Friday. Many companies release earnings reports after the market closes, making this a crucial time for active traders.
Extended Hours Overnight Session: For certain ETFs, E*TRADE even offers an overnight session, running from 8:00 p.m. ET Sunday through Thursday until 7:00 a.m. ET the following morning. This provides incredibly broad access for specific instruments.
It's important to remember that these hours are Eastern Time (ET). If you're in a different time zone, you'll need to adjust accordingly. For example, if you're in Dhule, Maharashtra, India, which is currently 9.5 hours ahead of ET, 7:00 a.m. ET would be 4:30 p.m. IST on the previous day.
Step 2: Activating Your Extended Trading Privileges: Enabling the Feature
E*TRADE generally allows extended hours trading by default for most brokerage accounts. However, it's always a good idea to confirm and ensure you understand the terms. While you don't typically "enable" it as a separate feature you turn on for your account as a whole, you need to specify that your order is for extended hours trading when you place it.
Sub-heading: Checking Your Account Settings (Optional but Recommended)
While ETRADE largely integrates extended hours trading seamlessly, a quick check of your account settings can provide peace of mind. Look for sections related to trading permissions or agreements within your ETRADE account portal. You might find an "Extended Hours Trading Agreement" that you implicitly or explicitly agreed to when opening your account. Reviewing this document will outline the specific terms and conditions.
Sub-heading: The Key is in the Order Ticket
The real "activation" happens at the point of trade. When placing an order on the ETRADE platform (web, Power ETRADE, or mobile app), you'll typically find an option or toggle to designate your order for extended hours. This toggle is usually off by default for each order, meaning if you don't specifically select it, your order will be queued for the next regular trading session.
Step 3: Navigating the Extended Trading Landscape: Placing Your Order
Once you're ready to make a move during extended hours, here's the step-by-step process for placing your order on E*TRADE:
Sub-heading: Choose Your Platform
E*TRADE offers a variety of platforms, and the exact steps might vary slightly, but the core functionality remains the same:
E*TRADE Website: The standard web platform is user-friendly for most trades.
Power E*TRADE Web: This web-based platform offers more advanced tools and charting.
Power E*TRADE Desktop (Pro): A downloadable desktop platform for the most active and sophisticated traders, offering extensive customization.
Power E*TRADE App: The mobile application provides trading capabilities on the go.
For the purpose of this guide, we'll assume you're using the general ETRADE web platform or the Power ETRADE web platform, as they are widely used.
Sub-heading: The Order Entry Process
Log in to your E*TRADE account.
Navigate to the "Trade" section. This is usually a prominent button or tab on the platform.
Search for the security you wish to trade (e.g., a stock's ticker symbol).
Click "Trade" or "Buy/Sell" next to the security. This will open the order entry ticket.
Specify your order details:
Action: Buy or Sell
Quantity: The number of shares you want to trade.
Order Type: This is crucial for extended hours trading! E*TRADE primarily accepts limit orders for extended hours trading. While some recent updates might allow market orders with "collaring" (conversion to limit orders with a price buffer), it is strongly recommended to use limit orders to protect yourself from potentially volatile price swings during less liquid periods.
Why Limit Orders? During extended hours, liquidity can be lower, and bid-ask spreads wider. A market order could be executed at a price significantly different from what you expect. A limit order allows you to set the maximum price you're willing to pay (for a buy) or the minimum price you're willing to accept (for a sell).
Limit Price: If you chose a limit order, enter the specific price at which you want your order to be executed or better.
Locate the "Time in Force" or "Extended Hours" option. This is where you designate your order for extended trading.
You'll typically see options like "Day" (default, for regular hours only), "Good-Till-Canceled (GTC)," and an option for "Extended Hours" (or similar wording). Select the extended hours option.
Important Note: For extended hours, E*TRADE generally accepts "Day" orders only. This means if your extended hours order isn't filled by the end of that specific extended session (e.g., by 8:00 p.m. ET for after-market), it will be canceled. Good-Till-Canceled (GTC) orders typically do not apply to extended hours.
Review your order carefully. Double-check all the details, especially the limit price and the extended hours designation.
Preview and submit your order.
Step 4: Understanding the Nuances and Risks of Extended Hours Trading
While trading early or late can offer significant advantages, it's crucial to be aware of the inherent risks:
Sub-heading: Lower Liquidity
What it means: Fewer buyers and sellers are participating in the market during extended hours compared to regular trading hours.
Impact: This can make it more difficult to execute your trades at your desired price. Your order might be partially filled, or not filled at all.
Your Takeaway: Be prepared for potentially slower order execution and wider price fluctuations.
Sub-heading: Increased Price Volatility and Wider Spreads
What it means: Due to lower liquidity, even small orders can have a larger impact on a stock's price. The difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask) – the spread – can be much wider.
Impact: You might buy at a higher price or sell at a lower price than you would during regular hours. Significant news can cause rapid and dramatic price swings.
Your Takeaway: Use limit orders judiciously to control your execution price.
Sub-heading: Unlinked Markets
What it means: During regular hours, the Securities and Exchange Commission (SEC) generally requires brokerages to execute orders at the "National Best Bid and Offer" (NBBO) across all exchanges. This rule does not apply during extended hours.
Impact: The price you receive on E*TRADE might be different from what's available on another extended-hours trading venue.
Your Takeaway: Be aware that price discovery can be less efficient.
Sub-heading: News Announcements
What it means: Many companies release important news, like earnings reports or press releases, outside of regular market hours.
Impact: This can lead to immediate and substantial price reactions in extended hours. While this offers opportunity, it also presents risk if the news is negative.
Your Takeaway: Stay informed and have a clear strategy for reacting to news.
Sub-heading: Professional Competition
What it means: Extended hours trading often sees participation from institutional investors and professional traders who have access to advanced tools and information.
Impact: You might be competing against highly sophisticated players.
Your Takeaway: Do your research, have a well-defined trading plan, and understand the risks before entering positions.
Step 5: Leveraging E*TRADE's Tools for Extended Hours Trading
E*TRADE provides a suite of tools that can be particularly useful for navigating extended hours trading:
Sub-heading: Real-Time Quotes and Charts
Benefit: Essential for monitoring price movements and assessing market sentiment during less liquid periods.
How to use: Utilize ETRADE's streaming quotes and advanced charting features on Power ETRADE to visualize price action and identify trends.
Sub-heading: News Feeds
Benefit: Quick access to breaking news and earnings announcements is paramount for extended hours trading.
How to use: Keep an eye on the news feeds within your E*TRADE platform or a reliable financial news source to react swiftly to market-moving information.
Sub-heading: Watchlists
Benefit: Track the performance of specific stocks you're interested in, especially those you anticipate making news.
How to use: Create focused watchlists to monitor the few stocks you're actively considering for extended hours trades.
Sub-heading: Order Entry and Management
Benefit: The platform's intuitive order entry ensures you can place limit orders quickly and efficiently.
How to use: Familiarize yourself with the order ticket, especially the "Time in Force" and "Extended Hours" options, to avoid errors. Use the order management tools to monitor the status of your trades.
Step 6: Developing Your Extended Hours Trading Strategy
Just like with regular hours trading, having a strategy is key. Here are some considerations for extended hours:
Sub-heading: News-Based Trading
Strategy: This is one of the most common reasons for extended hours trading. If a company announces positive earnings after hours, you might consider a pre-market buy to capitalize on anticipated upward movement when the market opens. Conversely, bad news could prompt a sell.
Consideration: Be extremely quick in your reactions, as prices can adjust rapidly.
Sub-heading: Gap Trading
Strategy: Identify stocks that have "gapped" up or down significantly in pre-market or after-hours due to news. Traders might look to fade the gap (trade against the initial move) or ride the momentum.
Consideration: This is a high-risk, high-reward strategy that requires deep understanding of market dynamics.
Sub-heading: Hedging Existing Positions
Strategy: If you hold a position that is suddenly impacted by after-hours news, you might use extended hours to hedge your risk or exit the position before the next regular session.
Consideration: This can help mitigate potential losses, but remember the risks of liquidity and price.
Conclusion
Trading on ETRADE early, during pre-market hours, or late, during after-market hours, offers a powerful advantage for those who are prepared for its unique characteristics. By understanding the specific trading windows, correctly placing your orders using limit orders, and being acutely aware of the associated risks like lower liquidity and higher volatility, you can effectively leverage ETRADE's extended hours capabilities. Always remember that extended hours trading is generally suited for experienced traders who can closely monitor market movements and react swiftly.
Trade smart, stay informed, and happy (extended hours) trading!
10 Related FAQ Questions
How to trade during E*TRADE's pre-market session?
To trade during E*TRADE's pre-market session (7:00 a.m. to 9:30 a.m. ET), simply place a limit order for your desired stock and select the "Extended Hours" option (or similar) in the "Time in Force" section of the order ticket.
How to trade during E*TRADE's after-hours session?
To trade during ETRADE's after-hours session (4:00 p.m. to 8:00 p.m. ET), place a limit order on the ETRADE platform and ensure you select the "Extended Hours" option when setting your order's "Time in Force."
How to know if a stock is eligible for extended hours trading on E*TRADE?
Most U.S.-listed stocks and ETFs are generally eligible for extended hours trading on E*TRADE. However, certain illiquid or very low-priced stocks might not be available. You'll typically see the option to select "Extended Hours" in the order ticket if the security is eligible.
How to protect myself from volatility during extended hours trading on E*TRADE?
To protect yourself from volatility, always use limit orders when trading during extended hours on E*TRADE. This ensures your trade is executed at or better than your specified price, preventing unexpected fills due to wider bid-ask spreads or sudden price swings.
How to find E*TRADE's full extended hours trading schedule?
You can find E*TRADE's official extended hours trading schedule on their website, typically in the "Pricing & Rates," "Platforms," or "Knowledge" sections, under a heading like "Extended Hours Trading" or "Trading Hours."
How to check the liquidity of a stock during E*TRADE's extended hours?
While E*TRADE doesn't have a specific "liquidity meter" for extended hours, you can gauge it by observing the bid-ask spread on the real-time quotes. A wider spread generally indicates lower liquidity. You can also look at the trading volume during the extended hours session.
How to cancel an extended hours order on E*TRADE?
You can cancel an unexecuted extended hours order on E*TRADE through your active orders section on the trading platform, just like you would with a regular market order. However, remember that extended hours orders are typically "Day" orders and will expire at the end of the session if not filled.
How to understand the risks of extended hours trading on E*TRADE?
E*TRADE provides a disclaimer or agreement for extended hours trading that outlines the specific risks, including lower liquidity, higher volatility, wider bid-ask spreads, and the unlinked nature of extended hour markets. It's crucial to read and understand these disclosures before trading.
How to monitor news relevant to extended hours trading on E*TRADE?
ETRADE's trading platforms (especially Power ETRADE) offer integrated news feeds. Additionally, keeping up with major financial news outlets that report on earnings and breaking news outside of regular market hours is essential.
How to ensure my extended hours trade is executed on E*TRADE?
There is no guarantee an extended hours trade will be executed, especially due to lower liquidity. To increase the chances, ensure you're using a limit order with a reasonable price relative to the current market, and be aware that partial fills are common.
