Get ready, because Wall Street could soon resemble your local Waffle House—yes that’s right, open 24/7. The New York Stock Exchange is mulling over the idea of keeping the stock market running non-stop. 

(Source: Schwab Network)

So, if you ever find yourself counting sheep, remember, you could be counting losses instead.

Retail investors, those brave (or maybe a tad reckless) souls using platforms like Robinhood and Interactive Brokers, are already diving headfirst into nocturnal trading. It's like giving a toddler unlimited candy—exciting at first, but tears are inevitable. Joseph Saluzzi from Themis Trading LLC warns, “We’re only going to have trouble in the middle of the night when things are so illiquid.” 

With markets operating around the clock, the potential for manipulation looms large, and retail investors could find themselves in turbulent waters without a life raft.

Since the pandemic, amateur investors have fueled a boom in overnight stock trading. Platforms like Robinhood and Interactive Brokers allow trading American shares 24/5. Even the notorious “pink sheet” market, home to the riskiest companies, is joining in.

As overnight trading becomes a new norm, industry veterans like Joseph Saluzzi are concerned. He recalls a puzzling 20% surge in GameStop on a Sunday evening in June, fearing manipulation in the quiet hours. It's like leaving a fox in charge of the henhouse—dangerous and likely to end with missing feathers.

(Source: Themis Trading)

Beyond potential market manipulation, there are broader worries. The impact on mental health from a non-stop trading day is significant. Who needs sleep, right? Plus, there's the risk of US stocks draining capital from struggling overseas markets. Regulators are eyeing applications for a 24-hour stock exchange cautiously, citing fraud concerns. The NYSE, which sparked this debate in April, is still navigating the logistics.

Currently, US equities trade from 9:30 AM to 4 PM, with limited pre-market and post-market sessions. Overnight platforms extend this to trading starting at 8 PM on Sunday, aiming to cater to global demand. Brian Hyndman, CEO of Blue Ocean Technologies, predicts, “In a couple of years, this will be mainstream,” citing convenience as a key driver.

(Source: Tabb Forum)

Overnight trading appeals to those wanting to react instantly to market shifts, especially retail and international investors. Interactive Brokers saw a 308% surge in overnight trading volume this year, driven largely by clients from Europe and Asia.

At Blue Ocean, nightly transactions hit 40 million shares in May, a milestone in their journey towards potentially handling up to 1 billion shares. However, risks abound. With most trades involving illiquid stocks, overnight trading can feel like tightrope walking without a safety net. Steve Sanders from Interactive Brokers advises caution, urging investors to compare risks and spreads.

While Wall Street is accustomed to 24/7 trading in currencies, Treasuries, and cryptocurrencies, applying this to stocks presents unique challenges. Firms like 24 Exchange, backed by billionaire Steve Cohen (who’s know stranger to manipulation himself), are pushing for a 24-hour stock exchange, promising to revolutionize—or potentially destabilize—the market.

So, trading stocks at 3 AM may seem tempting, but caution is paramount. The market may be open around the clock, but remember: the house usually wins. As we approach a potential 24-hour trading reality, tread carefully. Trading at odd hours might seem thrilling, but unless you enjoy watching your portfolio dance a financial cha-cha in the wee hours, think twice before hitting that buy button late at night.

Stock.News does not have positions in companies mentioned.