Ask The Experts: How Can Price Action Traders Benefit from Extended Trading Hours?
Leading commission-free investing and trading app Robinhood recently broke new ground with the introduction of 24/5 trading for select stocks and ETFs. This innovative feature opens the doors to extended market access, allowing traders to interact with global equity markets well beyond traditional market hours.
Extended-hours trading offers never-before-seen flexibility. The change is expected to revolutionize trading norms, and allow traders to develop greater strategic depth. For price action traders, these expanded trading hours have a wide range of implications—both advantageous and risky.
Here are the top insights for price action traders looking to profit from extended trading hours.
Global Access and Flexibility: Price action traders can use the 24/5 trading feature to trade international stocks and ETFs without the limitations of traditional trading hours. This is particularly useful for trading specific patterns that might complete or begin forming outside of regular trading hours.
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Utilize Extended Hours for Risk Mitigation
Gap Risk Mitigation: Gap risk can be a significant issue for price action traders who might have open positions that are vulnerable to overnight news events or economic data releases. Robinhood’s 24/5 trading allows for real-time adjustments to positions, which can be a way to minimize this risk.
After-Hours News: Price action traders can capitalize on after-hour news to either enter or exit trades based on their strategies. Quick action following news events allows traders to potentially benefit from initial market reactions.
Implement Advanced Strategies
Risk Management: The extended trading hours give price action traders more time to adjust their positions in light of unexpected market developments. This is particularly beneficial for those who use stop-loss or take-profit levels as part of their trading strategy.
Hedging Strategies: With the additional trading hours, traders can implement more complex hedging strategies that are harder to execute within regular trading hours. This might include delta hedging, gamma scalping, or other advanced techniques.
Diversification: 24/5 trading allows traders to diversify their portfolios across various time zones and global markets. For a price action trader, this means more patterns, trends, and setups to cash in on.
Be Cautious of Inherent Risks
Inherent Risks: While extended trading hours offer many opportunities, they also come with risks like low liquidity, wider spreads, and increased volatility. Price action traders must adjust their strategies to account for these factors.
Keep an Eye on the Future
The Future of Trading: Robinhood’s 24/5 trading feature might become the new standard. Price action traders should stay updated on such industry trends as they can influence trading volumes, market dynamics, and ultimately price action itself.
Price action traders, like all traders, shouldn’t overlook the benefits and risks of 24/5 trading and should consider how to integrate this feature into their existing strategies for maximum benefits.
