Next Gen: Robinhood eyes 24/7 stock trading
Robinhood cautions that price swings can be "exaggerated'' after hours, so you may find you’ve sold at a much lower price or bought at a much higher price than you expected. Credit: AP/Patrick Sison
Busy millennials and Gen Zers often complain there isn’t enough time in the day to get everything done. If one of those undone tasks is buying and selling stocks, Robinhood is extending your investing day. But don’t get overextended.
Most stock trading in the United States is done between 9:30 a.m. and 4 p.m. when the New York Stock Exchange and the Nasdaq are officially open. With the recently added extended-hours trading on the Robinhood app, customers can now buy and sell stocks as early as 7 a.m. and as late as 8 p.m.
The new extended-hours trading is just the beginning. Robinhood says it is “working towards offering 24/7 investing” with the goal of allowing stock trading anytime, any day.
Robinhood said its customers, most of whom are younger, newer investors, told them they are “juggling a lot, from full-time jobs to school, families and side gigs” and extended hours gives them “more opportunities to manage their portfolio at a convenient time.”
But convenience comes with caveats. Because there are far fewer people trading during extended hours, stock prices can gyrate wildly. Robinhood notes this “may cause an exaggerated and unsustainable effect on the price of a security” and you could receive “an inferior price.” Translation: When your order is executed, you may find you’ve sold at a much lower price or bought at a much higher price than you expected.
And the Securities and Exchange Commission warns that many extended-hours traders are “professionals with large institutions” using sophisticated trading methods that can also have an exaggerated effect on stock prices.
