As GameStop’s (GME) stock price fell, the once-active meme stock trade became quiet again, only to be heard in whispers. But if there’s anything to learn from this second round of meme mania, it’s that 24/7 can be a consideration for markets (^DJI, ^IXIC, ^GSPC) and avid retail traders The question is whether or not.
Yahoo Finance Markets reporter Josh Schafer discusses the types of market access that certain platforms offer, such as Robinhood Markets’ (HOOD) 24/5 model, and the pros and cons for investors.
For more expert insights and the latest market trends, click here to watch the full episode of Market Domination.
This post was written by luke carberry morgan.
video transcript
As meme trading ends a week of volatile price swings during trading hours, stocks like GameStop and MC quickly post big gains before reversing throughout the week.
But what happens when the traditional 6.5 hour trading changes?
Yahoo Finance’s Josh Shaffer joins us further.
In other words, we are talking about 24-hour, 24-hour trading.
Yes, I’ve been asking a lot of people in this field about that over the last month.
Now, if you’ll excuse me, the Financial Times reports that the New York Stock Exchange is surveying investors about 24-hour trading and general interest.
The New York Stock Exchange hasn’t actually announced anything like a transition to something like that, but we’re just speculating about what that might look like.
right?
And one of the exchanges we track has already introduced some version of 24-hour trading.
This means that Robinhood has what is called 24 5 trading, which means you can trade 24 hours a day on Robinhood, five days a week. Back to meme stocks from earlier this week.
On Monday, they said 12% of the action at GameStop actually took place before the opening.
So in that 24-hour trading period, strategists and exchange folks generally seem to think that if people are still trading during the day, this is what happens.
This is actually a play for two different groups of people.
One would be foreign investors.
We’ve specifically looked at companies that are in the S 500 and P 500, which are the big companies that we always talk about.
People living outside the United States want to invest in these companies because the majority of their revenue now comes from the United States.
Exchanges basically take the opportunity to meet that demand and operate during those hours.
Another aspect of this is that you can now do anything on your phone 24 hours a day. And now a younger generation of investors is coming in. Specifically, his group of 20-somethings who have only just grown up so far. We should communicate everything over the phone and remember our business, right?
If there is a demand for 24-hour trading, exchanges will want to meet customers where they are.
And we feel that our younger generation of customers are always on their phones, and we want to be able to provide them with access to trading and investors.
Josh, what are the pros and cons of this?
Yes, I mean professionals.
Josh, I think, like I said, from an organizational standpoint, it just gives you more access.
Well, CME Group told me that when they see an opportunity to hedge risk before the market opens, they look at it from a risk perspective. What you are looking at now is the daily volume. E mini NASDAQ 100 non-US time.
This has increased since 2019 and remains relatively stable.
It’s an interesting development that news happens overnight so people can react to it, but kind of the downside is, what happens if there aren’t enough people in the market at 2 a.m. Eastern time, right?
And how does that affect liquidity?
Some strategists I spoke to didn’t think it was that big of a deal.
But we haven’t really gotten there yet, so I don’t think we can see it a little bit yet. What happens when we fully open this up and allow trading at 1 a.m. ET?
The concern is that if the trading volume is low, no one will come to buy the stock if you try to sell it at a certain price. Spreads are quite narrow when the volume is high.
If you are trading during periods of low trading volume, those spreads can widen significantly.
