Frequently Asked Questions

US Extended Hours

 What are some of the general risks involved trading in the US extended hours (pre and post) ?

  1. Risk of Lower Liquidity. Liquidity refers to the ability of market participants to buy and sell securities. Generally, the more orders that are available in a market, the greater the liquidity. Liquidity is important because with greater liquidity it is easier for investors to buy or sell securities, and as a result, investors are more likely to pay or receive a competitive price for securities purchased or sold. There may be lower liquidity during Extended Hours Trading compared to Regular Hours Trading. As a result, your order in Extended Hours Trading may only be partially executed, not executed at all, or may receive inferior pricing.
  2. Risk of Higher Volatility. Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. There may be greater volatility during Extended Hours Trading. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price when engaging in Extended Hours Trading than you would during Regular Hours Trading.
  3. Risk of Changing Prices. The prices of securities traded during Extended Hours Trading may not reflect the prices in Regular Hours Trading. As a result, you may receive an inferior price when engaging in Extended Hours Trading than you would during Regular Hours Trading. Additionally, securities underlying the indexes or portfolios will not be regularly trading as they are during Regular Hours Trading or may not be trading at all. This may cause prices during Extended Hours Trading not reflecting the prices of those securities when they open for trading.
  4. Risk of Unlinked Markets. Depending on the Extended Hours Trading system or the time of day, the prices displayed on a particular Extended Hours Trading system may not reflect the prices in other concurrently operating Extended Hours Trading systems dealing in the same securities. Accordingly, you may receive a price in one Extended Hours Trading system that is inferior to the price you would receive in another Extended Hours Trading system.
  5. Risk of News Announcements. Normally, issuers make news announcements that may affect the price of their securities after Regular Hours Trading. Similarly, important financial information is frequently announced outside of Regular Hours Trading. In Extended Hours Trading, these announcements may occur during trading, and if combined with lower liquidity and higher volatility, may cause an exaggerated and unsustainable effect on the price of a security.
  6. Risk of Wider Spreads. The spread refers to the difference between the price at which a security can be purchased and the price at which it can be sold. Lower liquidity and higher volatility in Extended Hours Trading may result in wider than normal spreads for a particular security.

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