It's a dynamic world out there, and the financial markets are no exception! Gone are the days when you were strictly confined to the 9:30 AM to 4:00 PM ET window for trading U.S. stocks. With Charles Schwab, you have avenues to trade beyond traditional hours, often referred to as "overnight trading" or "extended hours trading." This can be a game-changer for those who want to react to news, manage positions, or simply find opportunities when the main bells are silent.
But hold on a minute! Before you dive headfirst into the exciting world of overnight trading, it's crucial to understand that it comes with its own unique set of risks and considerations. This isn't just a simple extension of regular market hours; it's a different beast entirely. So, are you ready to unlock the potential of extended-hours trading on Charles Schwab? Let's get started!
How to Trade Overnight on Charles Schwab: A Step-by-Step Guide
Trading outside of regular market hours, including what many refer to as "overnight trading," is facilitated by Charles Schwab primarily through its thinkorswim® platform for 24/5 access to a wide range of securities, and also through Schwab.com and Schwab Mobile for more limited extended-hours sessions.
Step 1: Understand the Different Extended Trading Sessions at Schwab
Before you even think about placing an order, you need to grasp the different "overnight" trading sessions available on Charles Schwab. It's not just one continuous block of time.
1.1. Pre-Market Session
- Time: Generally from 7:00 AM to 9:25 AM ET.
- Order Placement: Orders can typically be placed as early as 8:05 PM ET on the previous trading day and remain eligible for execution during this session.
- Availability: Accessible on Schwab.com, Schwab Mobile, and thinkorswim® platforms.
1.2. After-Hours Session
- Time: Generally from 4:05 PM to 8:00 PM ET.
- Order Placement: Orders are eligible for execution during this time and can be placed between 4:05 PM and 8:00 PM ET.
- Availability: Accessible on Schwab.com, Schwab Mobile, and thinkorswim® platforms.
1.3. Extended + Overnight (24/5) Sessions (Exclusive to thinkorswim)
- Time: This is the closest you'll get to true "overnight" trading. It's continuous, 24 hours a day, 5 days a week, from Sunday 8:00 PM ET until Friday 8:00 PM ET (excluding market holidays). There are typically 5-minute closures before and after regular exchange hours.
- Order Placement: Orders can be placed at any time and are eligible for continuous execution.
- Availability: Exclusively available on Charles Schwab's thinkorswim® platforms. This is where you'll find the most extensive "overnight" trading opportunities.
- Eligible Securities: Over 800 popular stocks and ETFs, including all stocks in the S&P 500, Nasdaq 100, and Dow 30, plus over 200 ETFs.
Step 2: Choose Your Platform
Your choice of platform will significantly impact your "overnight" trading capabilities.
2.1. Schwab.com or Schwab Mobile
These platforms offer access to the standard pre-market and after-hours sessions. They are generally more user-friendly for casual traders.
2.2. thinkorswim® Platforms (Desktop, Web, Mobile)
For serious "overnight" traders, thinkorswim is the go-to. It provides the full 24/5 extended + overnight sessions and a broader range of eligible securities. If you're looking to react to global news or trade during non-traditional U.S. hours, this is your platform.
Step 3: Understand Order Types and Time in Force
This is critical for extended-hours trading, as not all order types are supported, and "Day" orders behave differently.
3.1. Only Limit Orders (Generally)
For all extended-hours sessions on Schwab.com and Schwab Mobile, and generally for thinkorswim as well, only limit orders are accepted. This is a crucial safety measure to protect investors from unexpected price fluctuations in less liquid markets. A limit order specifies the maximum price you're willing to pay (for a buy order) or the minimum price you're willing to
Why limit orders? Because extended-hours trading can have lower liquidity and wider bid-ask spreads. A market order placed in such conditions could be executed at a price significantly different than the last quoted price, leading to an unfavorable trade.
3.2. Time in Force (TIF) Options
The "Time in Force" instruction tells your broker how long your order should remain active. For extended-hours trading on Schwab, specific TIF options are available:
- ***Extended Hours a.m.***: For pre-market Day orders on Schwab.com and Schwab Mobile.
- ***Extended Hours p.m.***: For after-hours Day orders on Schwab.com and Schwab Mobile.
- ***EXT 13h (thinkorswim)***: A 13-hour continuous Day order, active from 7:00 AM to 8:00 PM ET. Day orders typically expire at 8:00 PM ET each day.
- ***EXTO 24h (thinkorswim)***: This is for the full 24/5 continuous trading. You can select either a Day order (expires at 8:00 PM ET each day) or a Good-Till-Canceled (GTC) order. GTC orders are active for up to 180 calendar days at Schwab, making them ideal for long-term extended-hours strategies.
- ***Day + Extended Hours (
Schwab.com/Mobile - ***GTC + Extended Hours (
Schwab.com/Mobile
Step 4: Placing Your Overnight Trade (Step-by-Step)
Let's walk through placing an order on thinkorswim, as it offers the most comprehensive "overnight" capabilities. The process on
4.1. Log in to Your Schwab Account
Access your chosen trading platform (thinkorswim desktop, web, or mobile app).
4.2. Navigate to the Trading Interface
- On thinkorswim, you'll typically find the "Trade" tab or a direct order entry panel.
- On Schwab.com, you can usually click on a stock symbol and then "Trade" or "Buy/Sell."
4.3. Enter the Stock or ETF Symbol
Type in the ticker symbol of the security you wish to trade (e.g., AAPL for Apple Inc., SPY for the S&P 500 ETF).
4.4. Select "Buy" or "Sell"
Indicate whether you want to buy or sell shares.
4.5. Enter Quantity
Specify the number of shares you wish to trade.
4.6. Choose "Limit" as the Order Type
As discussed, this is usually the only acceptable order type for extended hours. Enter your desired limit price.
4.7. Set the "Time in Force" (TIF)
This is the most crucial step for overnight trading.
- For 24/5 continuous trading on thinkorswim: Look for EXTO 24h. You can then choose "Day" or "GTC."
- For pre-market (7:00 AM - 9:25 AM ET) or after-hours (4:05 PM - 8:00 PM ET) on thinkorswim, Schwab.com, or Schwab Mobile: Select "EXT AM" (pre-market), "EXT PM" (after-hours), "Day + Extended Hours," or "GTC + Extended Hours" depending on your platform and desired duration.
4.8. Review Your Order
Carefully check all the details: symbol, buy/sell, quantity, limit price, and especially the Time in Force. Make sure it's set for extended or overnight trading!
4.9. Confirm and Place Order
Once you're satisfied, confirm and place your order. You'll usually receive a confirmation message.
Step 5: Monitor Your Order and Understand Execution
After placing your order, it's important to monitor its status.
5.1. Order Status
Check your "Order Status" or "Account Details" section on the platform. Your order will show as "Open," "Partially Filled," or "Filled." If it's not filled, it means there wasn't a counterparty willing to trade at your specified limit price during the active extended-hours session.
5.2. Unexecuted Orders
- Orders placed for specific extended-hours sessions (e.g., EXT AM, EXT PM) that are not executed will be automatically canceled at the end of that specific session. They do not carry over to the next standard market session or subsequent extended-hours sessions.
- EXTO 24h Day orders expire at 8:00 PM ET each day.
- EXTO 24h GTC orders will remain active for up to 180 days unless executed or canceled by you.
Step 6: Be Aware of the Risks of Overnight Trading
While convenient, overnight trading comes with significant risks that you must understand.
6.1. Lower Liquidity
- Impact: Fewer buyers and sellers in
the market can lead to wider bid-ask spreads (the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept). This means you might buy at a higher price or sell at a lower price than you'd prefer. It can also make it harder to get your order fully executed. - Mitigation: Always use limit orders!
6.2. Higher Volatility
- Impact: With lower liquidity and potentially fewer participants, a single large order or a piece of breaking news can cause disproportionately large and rapid price swings.
- Mitigation: Be prepared for sudden price movements. Consider smaller position sizes.
6.3. Price Uncertainty
- Impact: Quotes in extended hours may only reflect prices from one trading venue, not the consolidated best price across all venues (which is common during regular hours). This means the price you see might not be the absolute best available.
- Mitigation: Understand that the "last trade" price might not be reflective of true market depth or availability.
6.4. News Announcements
- Impact: Many companies release earnings reports or significant news outside of regular market hours. While this is an opportunity, it can also lead to dramatic price movements that are difficult to predict or react to quickly.
- Mitigation: Stay informed about potential news releases for the stocks you're trading.
6.5. Competition with Institutional Investors
- Impact: Extended-hours trading is often dominated by large institutional investors and professional traders who have advanced tools, resources, and algorithms. As an individual investor, you might be at a disadvantage.
- Mitigation: Have a clear strategy and avoid impulsive trades.
6.6. No Calculation of Underlying Index Value (for certain products)
- Impact: For some index-based products (like certain ETFs or derivatives), the underlying index value may not be calculated or publicly disseminated during extended hours. This can make it difficult to assess the fair value of these products.
- Mitigation: Be aware of this limitation if trading such securities.
Step 7: Consider Your Trading Strategy for Overnight Trading
Overnight trading isn't for everyone. If you decide to engage, here are some strategic considerations:
7.1. Reacting to News
This is one of the most common reasons. If a company you follow announces earnings after market close, overnight trading allows you to react before the next day's open.
7.2. Global Market Awareness
For international news or events that impact U.S. equities, 24/5 trading on thinkorswim can be advantageous.
7.3. Risk Management
Given the heightened risks, stringent risk management is crucial.
- Stop-Loss Orders: While stop orders aren't generally eligible for execution during extended hours, having a mental stop or being prepared to place a limit order to exit a position quickly if prices move against you is vital.
- Position Sizing: Consider reducing your typical position size during extended hours to mitigate potential losses from increased volatility.
- Liquidity Checks: Before placing a trade, check the current bid-ask spread and recent volume to gauge liquidity. If the spread is very wide, or volume is extremely low, it might be best to wait.
7.4. Practice with PaperMoney® (Simulated Trading)
If you're new to extended-hours trading, Charles Schwab's thinkorswim offers a paperMoney® application. This allows you to engage in simulated trading with hypothetical funds using live market data. It's an excellent way to practice and get a feel for the unique dynamics of extended hours without risking real capital.
Frequently Asked Questions (FAQs) about Overnight Trading on Charles Schwab
Here are 10 related FAQ questions, starting with "How to," along with quick answers:
How to Enable Extended Hours Trading on Charles Schwab?
Extended hours trading is generally enabled by default for eligible accounts. You don't usually need to "enable" it separately. The key is knowing which platforms and order types to use, as detailed above. For 24/5 trading, you'll need to use the thinkorswim platform and select the EXTO order type.
How to Place a Limit Order for Overnight Trading on Charles Schwab?
When placing an order, select "Limit" as the order type and then choose an appropriate "Time in Force" (TIF) option for extended hours (e.g., EXT AM, EXT PM, EXTO 24h, Day + Extended, GTC + Extended) on your chosen platform (Schwab.com, Schwab Mobile, or thinkorswim).
How to See Extended Hours Quotes on Schwab Platforms?
On thinkorswim, extended hours quotes are typically displayed automatically. On Schwab.com or Schwab Mobile, when viewing a stock quote outside of regular market hours, you'll often see "After-Hours Price" or "Pre-Market Price" if available, usually with a different timestamp than the regular market close.
How to Avoid Risks When Trading Overnight on Charles Schwab?
Always use limit orders to control your execution price, be mindful of lower liquidity and wider spreads, monitor news announcements, and consider smaller position sizes. Practice with paperMoney® before trading with real capital.
How to Know Which Stocks Can Be Traded Overnight on Charles Schwab?
On thinkorswim, over 800 popular stocks and ETFs are available for 24/5 trading, including most S&P 500, Nasdaq 100, and Dow 30 components. For general pre-market and after-hours on other Schwab platforms, most listed and NASDAQ securities are eligible, but availability can vary based on trading interest.
How to Handle Unexecuted Overnight Orders on Charles Schwab?
Unexecuted extended hours orders (except for GTC EXTO orders) are automatically canceled at the end of their respective session. You will need to place a new order if you still wish to trade. GTC EXTO orders on thinkorswim will remain active for up to 180 days.
How to Tell if My Account is Eligible for Overnight Trading on Charles Schwab?
Generally, any standard brokerage account at Schwab is eligible for extended-hours trading. There are no special requirements beyond having a funded account. However, accessing the 24/5 trading feature requires using the thinkorswim platform.
How to Differentiate Between Pre-Market, After-Hours, and 24/5 Trading on Schwab?
Pre-market is before the regular market opens (7:00 AM - 9:25 AM ET). After-hours is after the regular market closes (4:05 PM - 8:00 PM ET). 24/5 trading is a continuous session (Sunday 8:00 PM ET to Friday 8:00 PM ET) exclusive to thinkorswim, covering both pre-market and after-hours periods, and the "overnight" hours in between.
How to Change or Cancel an Overnight Order on Charles Schwab?
You can attempt to change or cancel an extended hours order as long as its status is "Open." Access the "Order Status" or "Account Details" section on your Schwab platform to modify or cancel the order. Be aware that once an order is filled, it cannot be canceled.
How to Practice Overnight Trading without Risking Real Money on Charles Schwab?
Utilize the paperMoney® simulated trading application available on Charles Schwab's thinkorswim platform. This allows you to practice placing extended-hours trades with hypothetical funds using real-time market data.
