It pays to be a night owl. After-hours trading is when the big money is made in the stock market if this week was any indication.
Big tech stocks were victim to wild swings and volatility along with their earnings this week. For example, Snap was down 23.6% during the day on Thursday and up 62% after their earnings announcement, and Amazon was down 8% during that day and up 14% after-hours (to put things in perspective, that is ~$200b of market value).
The real profits for investors have come when the market is closed for regular trading, according to stock market analysis by Bespoke Investment Group. Separate the daytime and the after-hour returns and calculate them cumulatively, as Bespoke has done, and it turns out that all of that price gain since 1993 has come outside regular trading hours.
For 25 years, in other words, the daytime has been a net loss. Some speculate that it is driven by the “Quant” funds, powered by algorithmic or systemic strategies to take advantage of the bigger impact that trades can have when markets are closed and liquidity is thinner. They aggressively buy shares they already own, driving their price higher.
Will exchanges (like their crypto counterparts) allow for all-day (and night) trading? One trading platform trying to do that is 24 Exchange, starting with FX and eventually offering more asset classes.
If you are a day trader, best to follow Ray Charles’ advice: Night time is the right time.
Night Time Is The Right Time
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