Investors who want to take advantage of opportunities outside regular market hours often turn to after-hours trading. Fidelity, one of the leading brokerage platforms, provides this feature through its app, allowing users to trade during pre-market and post-market sessions.
If you’re wondering how to enable after-hours trading on the Fidelity app, this guide explains everything from understanding the basics of after-hours trading to activating and using it effectively.
What is After-Hours Trading?
After-hours trading occurs outside the standard market hours of 9:30 AM to 4:00 PM (Eastern Time) in the United States. Fidelity offers extended trading hours as follows:
- Pre-Market Trading: 7:00 AM to 9:30 AM (ET).
- Post-Market Trading: 4:00 PM to 8:00 PM (ET).
This extended access allows investors to react to earnings reports, global events, and other market-moving news.
Why Trade After Hours?
After-hours trading provides several advantages:
- Timely Reactions: You can act on news and events that occur outside regular trading hours.
- Extended Market Access: Access opportunities in different time zones and markets.
- Potential for Better Pricing: Catch price movements before they’re reflected in the next day’s trading.
However, it also comes with risks, such as lower liquidity, higher volatility, and wider spreads.
Steps to Enable After-Hours Trading on the Fidelity App
To participate in after-hours trading on Fidelity, follow these steps:
1. Open a Fidelity Brokerage Account
Before enabling after-hours trading, you need an active Fidelity brokerage account. If you don’t have one:
- Download the Fidelity app from your app store.
- Create an account by providing your personal details, such as your name, email, Social Security number (SSN), and employment information.
- Fund your account through direct transfer, wire, or check deposit.
2. Log into the Fidelity App
Once your account is set up, log into the app using your credentials.
3. Navigate to the Settings
After logging in:
- Tap the Menu (three horizontal lines) in the top-left corner.
- Go to Settings or Account Preferences.
4. Enable Extended Hours Trading
In the settings section:
- Look for the option labeled Extended Hours Trading or a similar term.
- Read and accept the terms and conditions for after-hours trading. Fidelity outlines the risks involved, such as limited liquidity and volatility.
- Confirm your selection.
5. Place After-Hours Trades
Once enabled, placing after-hours trades is straightforward:
Search for the Stock: Use the search bar to locate the stock or security you want to trade.
Select Trade Options: Tap the Trade button.
Specify Order Type: Choose the type of order (e.g., limit order, market order). Note that Fidelity only supports limit orders during extended hours for increased control over pricing.
Set Trading Time: Under the “Time in Force” section, select Extended Hours or a similar option.
Review and Submit: Double-check the details and submit your order.
Best Practices for After-Hours Trading
Use Limit Orders
During after-hours sessions, always use limit orders to ensure you control the price at which your trade executes. Market orders may result in unfavorable pricing due to lower liquidity.
Monitor Market News
Stay updated on news and events that might impact stock prices, such as earnings releases, economic reports, or geopolitical developments.
Be Aware of Volatility
After-hours trading can be more volatile than regular hours due to lower trading volumes.
Understand the Risks
Read Fidelity’s guidelines on after-hours trading to familiarize yourself with potential challenges like price swings and reduced access to market participants.
Common Questions About After-Hours Trading on Fidelity
1. What securities can I trade after hours?
Fidelity allows trading of a wide range of U.S. stocks and ETFs during extended hours. However, mutual funds and certain other securities are not available.
2. Are there additional fees for after-hours trading?
Fidelity does not charge extra for after-hours trading. Standard commission rates and fees apply.
3. Can I trade on margin during extended hours?
Yes, margin accounts can be used during after-hours sessions, provided you meet the margin requirements.
4. Why did my order not execute?
During after-hours trading, orders may not execute due to:
- Insufficient liquidity.
- Limit prices not being met.
- Restrictions on certain securities.
Benefits of After-Hours Trading with Fidelity
User-Friendly Interface: The Fidelity app simplifies placing trades during extended hours.
Real-Time Data: Access real-time quotes and updates during pre-market and post-market sessions.
Seamless Integration: After-hours trading integrates seamlessly with other app features, such as watchlists and alerts.
Limitations of After-Hours Trading
While after-hours trading is beneficial, it has its drawbacks:
- Limited Participants: Fewer buyers and sellers can result in difficulty finding counterparts for your trade.
- Wider Spreads: The difference between bid and ask prices tends to be larger, increasing transaction costs.
- Market Gaps: Prices may change significantly between after-hours trading and the next regular session.
Tips for Success in After-Hours Trading
Start Small: If you’re new to after-hours trading, begin with small investments to understand the dynamics.
Track Market Trends: Use Fidelity’s research tools to stay informed about market trends and potential opportunities.
Set Alerts: Use the app’s alert feature to monitor price movements and trade when conditions are favorable.
Conclusion
After-hours trading on the Fidelity app opens up opportunities for investors to react quickly to market news and access global markets. By enabling this feature, you can take advantage of extended trading hours to maximize your investment potential. However, it’s essential to trade cautiously, understand the risks, and use tools like limit orders to manage volatility effectively. With a well-thought-out strategy, Fidelity’s after-hours trading feature can become a valuable part of your investment arsenal.