Robinhood investors will now have the opportunity to partake in 24-hour investing in 43 of the most active U.S. exchange-traded funds.
- Some of the most active exchange-traded funds like Tesla, Amazon, and Apple will be accessible to Robinhood investors any time of the day.
- Customers can now place and execute orders from 8 p.m. on Sunday New York time to 8 p.m. on Friday.
- Robinhood is following in the steps of Interactive Brokers Group, which recently allowed overnight trading of 79 stocks and EFTs, Bloomberg reports.
- Robinhood CEO Vlad Tenev says the change “allows our customers to better manage their risk and take advantage of opportunities, no matter what time of day they arise.”
Why it’s news
Robinhood has gained somewhat of a reputation for leading the charge into the new era of commission-free trading—something some investors have been hesitant to embrace. Other brokerages will be watching to see how successful Robinhood’s latest move is.
Critics point out concerns about traders’ mental, physical, and financial health if inexperienced investors have around-the-clock access to stocks. However, others argue that a change like this is long overdue.
Time-zone differences make trades difficult—especially when many of the largest U.S. companies are based in the West Coast, but East Coast time zones rule the stock market. For West Coast investors, the day ends at 1 p.m.
During COVID, interest in day trading rose, and the demand is sticking around. On-demand trading could become the new norm among investors.
However, there are downsides to such a system. Like any 24-hour service, some times of the day will likely have better customer service than others. Overnight, the stock market can take on greater volatility than during the day. Already after-hours sessions with fewer buyers and sellers can lead to abrupt changes in the market. An investor can end up buying a stock at a temporarily distorted price, Bloomberg reports.
An off-exchange alternative-trading system called Blue Ocean ATS will process all overnight transactions from Robinhood users. Interactive Brokers also plans to start using Blue Ocean to process orders. Boats only provides limited orders—transactions where the customer sets a maximum and minimum price. During market volatility, this should prevent Robinhood customers from experiencing extreme losses.
Still, liquidity during the overnight market will be lower than during the day. While other brokerages may start to offer extended hours, big-money investors will likely stick to traditional trading times.