The Stock Market Works by Day, but It Loves the Night (Published 2018) (2024)

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The Stock Market Works by Day, but It Loves the Night (Published 2018) (1)

The daytime is for losers. Overnight is when the big money is made in the stock market — not by trading but by getting a good night’s sleep.

That’s because of a gap between daytime and overnight returns in the American stock market. The real profits for investors have come when the market is closed for regular trading, according to a new stock market analysis by Bespoke Investment Group.

The Bespoke data builds on the findings of academic researchers, who have documented the existence of the gap, without being able to entirely explain its cause.

“We can show that the gap exists,” said Huseyin Gulen, a finance professor at Purdue University who has written about the issue. “But at this point we don’t know exactly why.”

Simply put, the gap may be defined as the difference between stock returns during the hours the market is open, and the returns after regular daytime trading ends. How the gap is calculated may not be intuitively obvious, though.

One set of returns is straightforward: It is based on prices at the start of trading in New York at 9:30 a.m. to the market close at 4 p.m. The second set is, essentially, the reverse: It is price returns from the 4 p.m. close to the market opening at 9:30 a.m. the following day.

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The Stock Market Works by Day, but It Loves the Night (Published 2018) (2024)

FAQs

How accurate is overnight trading? ›

However, after-hours price changes are often more volatile than regular-hours prices, so they should not be relied on as an accurate reflection of where a stock will trade when the next regular session opens.

Does the stock market gain more when it's closed than open it's literally night and day? ›

It's Literally Night and Day. If only traders could make money in their sleep. Well, it turns out, that's exactly when most of the money in the market is made .

What happens to stocks overnight? ›

Outside of normal market hours, which for the U.S. stock exchanges is usually 9:30 a.m. to 4 p.m. ET, liquidity is typically lower. 2 This means fewer participants, larger bid-ask spreads, and potentially erratic price moves, and high volatility.

What was the largest one day drop in the history of the American stock markets occurred in a 1929 b 1987 c 2000 d 2001? ›

Oct. 19, 1987, also known as Black Monday, marked the largest one-day stock market decline in history.

What is the overnight option strategy? ›

Those who believe in keeping an overnight position often hold their positions overnight, then sell, or trade, them as close to the opening bell as possible in the morning. By trading early, stocks and traders are fresh, and any potential negative aspects of the previous day's market have cleared the account.

Is it better to trade at night or day? ›

The opening period (9:30 a.m. to 10:30 a.m. Eastern Time) is often one of the best hours of the day for day trading, offering the biggest moves in the shortest amount of time. A lot of professional day traders stop trading around 11:30 a.m. because that is when volatility and volume tend to taper off.

What time of day is stock highest? ›

With that, the best time of the day, in terms of price action, is usually in the morning, in the hours immediately after the market opens up until around 11:30 a.m. ET, or so. That's generally when most trading happens, leading to the biggest price fluctuations and chances for investors to take advantage.

Is it better to buy stocks at night? ›

You might get into a stock after hours and benefit from that spike in price, but you're also exposing yourself to risk when the market opens the next morning,” says Campos. If the previous day's good news begins to trend not-so-good the following day, you could be looking at a big dip in price and incur losses.

How often does spy move 2%? ›

Table 1.
SPY Price Change (%)Number of Days% of Total Sessions
2 – 3%191.23%
1 – 2%15510.00%
0 – 1%62840.52%
0%563.61%
15 more rows

Do stocks usually go up at end of day? ›

Volume tends to pick back up at the end of the day, as institutional investors look to close out positions or enter new ones.

Why do stocks go up when I sell? ›

If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall. Understanding supply and demand is easy.

Can you sell stock on the weekend? ›

While you can't directly sell your stocks on the NYSE or NASDAQ over the weekend, you can submit your sell orders. Like buy orders, these sell orders will not be fulfilled immediately. Instead, they will be in a queue waiting for the markets to reopen on the following Monday.

Has the Dow ever hit $40,000? ›

The Dow Jones Industrial Average topped the 40,000-point level at Friday's close for the first time in its history. Originating way back in 1896 and often considered a barometer of the overall U.S. economy, the index tracks the performance of 30 blue-chip companies.

Has the Dow ever dropped 1000 points in a day? ›

With stocks falling sharply, the Dow recorded its worst single-day points drop ever, plunging 2,997 points – nearly 13 percent – on March 16, 2020.

What president had the highest stock market? ›

And the shocking leader of the bunch? President Calvin Coolidge, who took office in 1923, whose stock price performance change was a whopping 208.52%, for an average monthly return of 1.74%. That's the largest for any president since the start of the 20th century.

Is overnight shipping reliable? ›

USPS overnight shipping is a highly efficient and time-sensitive delivery service provided by the United States Postal Service (USPS). This expedited shipping option is designed to meet the needs of businesses and individuals who require fast and reliable delivery of their packages.

How accurate is after-hours trading? ›

After-hours trading can have a significant impact on stock prices. Price volatility can be more pronounced during after-market trading due to lower volumes. If a company releases strong earnings after the market closes, its stock price may surge in after-hours trading as investors react to the news.

Do overnight trades count as day trades? ›

Positions held overnight ≠ Day Trade

If you hold a position overnight and close it the next day, and then open the same position that same day, then that is not considered a day trade unless you close it again that day.

How guaranteed is overnight shipping? ›

Overnight shipping is a delivery service that guarantees shipments will be delivered the next day by a certain time. If your shipment is 150 lbs. or less, we offer three different delivery options for overnight delivery, depending on when you need your package to arrive.

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