As a trader, you often need to react to news fast; which often involves starting analyzing a stock and placing a trade as soon as you’re ready. This would be impossible if after-hours trading wasn’t a thing. And if you’re a Fidelity customer or you’re thinking about opening an account with them, you might be asking: “Can Fidelity Trade After Hours?”
Yes, you can trade with Fidelity after hours from 4:00 to 8:00 PM. But you can only trade Nasdaq national market stocks. Other restrictions include that you must only place limit orders and you can’t place All or None or Do Not Reduce orders. As for commissions, Fidelity won’t charge you more for after-hours trading.
In this article, I will help you learn how to place an after-hours trade on Fidelity, I will analyze the risks involved with this practice, and we’ll also see some advantages that come with it.
Sounds good? Let’s get to it…
How to Place An After Hours Trade On Fidelity
Let me first show you how to place an after-hours trade, step by step.
First, try to locate the Lookup Symbol if you don’t know what trading symbol corresponds to the stock you want to trade.
Then, select Trade Extended Hours from the table of contents and select your preferred account that you’ll place the trade order with.
Now, enter the trade information and click Preview Order. By the way, if you want to start over just click on Clear.
At this point, you are ready to finalize your order by clicking Place Order. If you want to cancel and go back, simply select Void. If you place the order, you will receive a number that confirms that your order was received.
And that’s it! Not so hard, right?
Now, let’s examine some of the risks of after-hours trading…
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
What Are the Risks When You Trade After Hours?
One of the greatest risks associated with after-hours trading is the lack of liquidity.
You see, most traders trade during normal stock market hours. So, trades can be executed almost immediately most of the time because there will be a higher chance to find a buyer or a seller.
The real risk here is that the spreads may be wider resulting in costing you more money than if you traded during normal hours.
To drive the point home, let’s say that you want to sell 10 shares at $20 each. During normal hours, you might be able to place a limit order and sell all of the shares for the price that you want ($20). That’s because there are more participants in the market.
However, during extended hours, there are fewer traders and the highest bid might be lower than what you’re asking, say $18. If you want to sell fast, you might have to sell at a cost. If, however, you don’t want to do that, you take the risk of your order not being executed completely or at all.
This is the main risk with after-hours trading. But here are a couple of more to keep in mind:
- Prices are more volatile
- There may be stronger competition
- Brokers might impose trading limitation (like Fidelity; see this article’s introduction)
But enough about the negative aspect of after-hours trading. Let’s take a look at the bright side…
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
What Are the Advantages When You Trade After Hours?
As we already briefly mentioned in the intro, after-hours trading allows you more flexibility if you’re an active trader. And that’s the only but still important advantage it offers.
You might also not be a very active trader, but work irregular shifts at your job. After-hours trading doesn’t fill the whole gap that the normal market hours period leaves, for sure. But it greatly extends the trading activity hours.
But to get back to the more common reason for trading after hours, it basically helps active traders respond to news that happens outside the normal market period.
Many public companies release earnings after that time frame, so after-hours trading is the only way you would be able to react to such events as fast as possible. If you had to wait till the stock market opens again, you probably wouldn’t be able to place an order at a price you deemed to be attractive.
But that’s all it is when it comes to advantages. This one won’t apply to all. Long-term investors won’t benefit from that in the slightest, for example. If you apply a buy-and-hold strategy, you won’t care if you buy at $40 or $42.
So, make sure that after-hours trading is for you before you get into it.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
As I already told you, Fidelity does allow customers to place after-hours orders. They will encounter some limitations in regards to the variety of the order types that they will have available, though. But at least, Fidelity won’t charge you more for after-hours trading.
Before you go ahead and use their service, however, make sure that you understand the common risks involved. Extended trading hours tend to be more illiquid than normal market hours. If you’re looking to make large trades, they may be partially executed or at a less attractive price.
Now, did this article answer your question? If so, please share it and let me know what you think in the comments.
Thanks for reading!
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.