Ally Invest

Robinhood Extended Hours Trading (Pre Market and After Hours)


Robinhood extended hours trading fees, surcharge, time period. Entering broker pre market and after market orders in 2017.



Robinhood Extended-Hours Trading Time and Fees


Besides buying and selling stocks and ETF’s during regular market hours, which are during the week from 9:30 am until 4:00 pm, EST, Robinhood clients can also trade during extended hours. The broker does require a Gold account to receive this privilege, however.


Hours


Robinhood’s pre-market session begins half an hour before the regular market opens. The broker’s after-hours period lasts from market close until 6:00 pm, EST. These sessions combined produce an extra 2½ hours of trading.


Gold Account


Robinhood requires investors who want to trade in these special periods to have a Gold account. This is a unique margin account, which differs from the margin accounts of other brokerage firms.

Instead of charging a percent of the dollar amount borrowed, Robinhood charges a flat $10 every month. This gives the account the ability to borrow a maximum of $2,000. The ability to borrow $4,000 costs $20 every month. So essentially, traders at Robinhood who want access to the extended-hours periods must pay at least $10 per month.

A Gold account also comes with instant reinvesting. This service allows traders to use the proceeds from a stock sale to immediately purchase other securities. The Gold service also offers instant deposits, where ACH transfers can be used right away, instead of after the normal three business-day wait. These are nice features that other Robinhood traders don’t have.

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Trading During Robinhood’s Special Periods


Robinhood only accepts limit orders during the pre-market and after-hours sessions. If you submit a market order, the broker-dealer will automatically convert it to a limit order, and add a 5% collar to it. If you place a market order after the evening session closes, it will be sent to the regular period the following morning, bypassing the pre-market session.

Limit orders placed in a Gold account are automatically valid for the regular period and the extended-hours periods. Stop orders are not valid during extended hours.


Ups and Downs of Trading During Extended Hours


Robinhood reminds its clients that trading before the market opens or after it closes incurs additional hazards. These include lower liquidity, which can make it difficult to find a counter-party. Volatility is also often a problem. This can cause order fills to be further away from the stock price compared to the regular sessions.


Comparison


Other brokers don’t charge anything for trading during extended hours or require a special account. TD Ameritrade is one example. On the flip side, Robinhood doesn’t impose any additional commissions for pre-market or after-hours trades. E*Trade imposes a 0.5¢ surcharge on these orders. Since Robinhood is already at $0 commissions, some investors may decide that the broker still offers the best value, even with a $10 monthly fee.

Robinhood’s pre-market session is shorter than Ally Invest’s, whose early period opens an hour before Robinhood’s.

Although Robinhood has some disadvantages here, it nevertheless does better than some brokers. Capital One Investing, for instance, doesn’t provide any extended-hours trading.


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Recommendations


If you are beginner in online trading, then Ally Invest is the best place to open brokerage account.

TradeStation is the best investment firm for active traders that need the lowest price, and to practice trading without risking real money (paper trading). Read full TradeStation review.

Open account with TD Ameritrade, if you only want to invest with one of the most recognizable, safest and largest discount brokerage firms in the country. Read full TD Ameritrade Review.





Situations When Extended-Hours Trading Is Especially Beneficial


Corporations release earnings outside of the regular session. If there is a major surprise, either positive or negative, the stock price is sure to respond. If you only have access to the day session, you will miss the stock’s movement.

The government also frequently releases economic data reports outside of normal market hours. If investors decide that the information is significant, stock prices can change dramatically. Having access to either the pre-market or after-hours period or both creates investment opportunity that’s not available to other traders.


Risks of Trading Outside of Normal Sessions


Although there are clearly benefits of extended-hours trading, there is also substantial risk. Volatility is oftentimes higher during these periods, compared to the regular session. Increased price movements can cause orders to be filled far from current prices.

There is also wider bid-ask spreads during the special sessions. A larger bid-ask spread increases the cost of buying and selling, which means trading during these times is more expensive with any broker.


Updated on 10/10/2017.



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