What Is Night Trading?

Night trading can be done anywhere by anyone.

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Night trading is the after- or before-hours sale and purchase of stocks. Night trading was not legal until 1999, when the Securities and Exchange Commission legalized it. If you have a computer and access to an electronic communications network or an after-hours exchange, you too can engage in night trades.

Night and Day

Although it may be nighttime in the U.S., night or after-hours trading occurs during the day in the foreign markets where those trades take place because of different time zones. When Wall Street shuts down for the day, trading hums along in different time zones throughout Europe and Asia, thanks to smaller specialized exchanges. Essentially, night trading provides access to foreign markets from a remote location so that trades can be carried out via the Internet, and investors can be engaged in the process 24 hours a day if they so desire.

Night Owl Advantage

With markets opening and closing around the world at different times, night trading allows traders to make moves based on real-time developments overseas. For example, say there is a major natural disaster in China during the American overnight hours. As a night trader, you will be able to sell off the stocks that may be negatively affected, and purchase shares in companies that may benefit, all before U.S. markets open. With 24-hour access to the marketplace, investors are able to react quickly to make and save the most with each trade.

Commodities and Currency

Futures brokers and investors are one of the groups that most frequently engage in night trading. Because the market for commodities such as grains and crude oil can change at a moment's notice, these traders watch global events day and night to stay on top of the trends. Forex traders are also avid users of the night trade system, as foreign currencies fluctuate during daytime hours overseas.


The dynamics of night trading are significantly different than traditional day trading. According to the SEC, night traders must navigate a sea of obstacles to trade safely and profitably. For example, U.S.-based traders cannot see real-time prices on domestic stocks, and the actual price for trades made overnight may differ significantly from the posted night trade rate. Other possible obstacles can include a limited selling platform because most traders are not engaged during the nighttime hours, as well as technical issues that can cause costly delays or errors in trading.