Key Takeaways
TD Ameritrade now provides overnight access to 10 additional exchange-traded funds (ETFs) for a total of 24
These additional overnight ETFs give investors a chance to trade tariff news as it happens
Products allow focus on Asia, technology, and finance, with an emphasis on liquidity
Losing sleep over the trade battle with China? Does it seem like lots of market-moving tariff news hits after the sun sets? Well, starting this month, TD Ameritrade will have a total of 24 exchange-traded funds (ETFs)—10 of them newly added to the list—that can give you access to overnight markets, including markets most closely associated with trade issues.
Some of these ETFs provide access to markets overseas outside of normal U.S. business hours. Other new additions include funds covering technology, financial services, and energy, all of which can sometimes move due to overseas events in the predawn U.S. hours.
“We’ve worked with our teams to select products that have sufficient liquidity overnight so you can be confident knowing there are more opportunities 24 hours a day, five days a week, from 8 p.m. ET Sunday through 8 p.m. ET Friday,” said Eric Vicedomini, manager, trader product marketing at TD Ameritrade. “These new additions are also a little more globally focused to allow you to react to news overnight.”
As a primary goal, TD Ameritrade wanted to ensure the new ETFs would have deep liquidity and tight quotes to create an experience as close as possible to what it’d be like to trade in these markets during the day.
“In order to do that, we wanted to try and select symbols that would be correlated to other markets and products that were trading at the same time,” Vicedomini said. “In addition, we also tried to broaden the offering by selecting ETFs that offered different exposure than the 14 symbols that were originally rolled out.”
| Additional ETFs to be included: | |
| iShares Core U.S. Aggregate Bond ETF (AGG) | iShares Core S&P Mid-Cap ETF (IJH) |
| ProShares Short Dow 30 (DOG) | Vanguard Total Stock Market ETF (VTI) |
| iShares MSCI EAFE ETF (EFA) | Energy Select Sector SPDR Fund (XLE) |
| iShares MSCI Australia ETF (EWA) | Financial Select Sector SPDR Fund (XLF) |
| iShares MSCI Japan ETF (EWJ) | Technology Select Sector SPDR Fund (XLK) |
| Existing securities: | |
| SPDR Dow Jones Industrial Average ETF (DIA) | ProShares Short Russell 2000 (RWM) |
| iShares MSCI Emerging Markets ETF (EEM) | ProShares Short S&P500 (SH) |
| iShares China Large-Cap ETF (FXI) | iShares Silver Trust (SLV) |
| SPDR Gold Shares (GLD) | SPDR S&P 500 ETF Trust (SPY) |
| iShares Russell 2000 ETF (IWM) | iShares 20+ Year Treasury Bond ETF (TLT) |
| ProShares Short QQQ (PSQ) | United States Natural Gas (UNG) |
| Invesco QQQ Trust (QQQ) | United States Oil (USO) |
Where the Overnight Action Is
The additional overnight products include securities focused on gold, silver, Treasury bonds, natural gas, technology, financials, emerging markets, China stocks, crude oil, and more. Tariff battles in Asia are one potential area where overnight trading can come in handy. There’s also the volatile Technology sector, where many companies face potential antitrust issues that could cause quick stock price moves.
One of the drawbacks of trading markets only during U.S. business hours is that if news breaks or events happen later on, there’s no way to act on it. But with overnight trading you can, and many traders do—as evidenced recently by heavy trading as the U.S./China spat surged back into the headlines in mid-2019. Brexit hasn’t gone away, either, and remember that it caused extremely heavy volume overnight back in 2016 when the original referendum passed.
On a cautionary note, international and emerging markets investments involve special risks, including currency fluctuations and political and economic instability.
Futures: Another Overnight Opportunity
Aside from the additional overnight ETFs, TD Ameritrade also provides access to trading in the futures markets. Qualified investors can trade more than 70 futures products virtually 24 hours a day, six days a week through TD Ameritrade Futures and Forex, LLC. You can also get access to powerful platforms, technical studies, immersive education, futures trading support, as well as the paperMoney® virtual trading platform where you can test your strategies before putting real money on the line.
But even more important than initiating positions in the overnight sessions is the way futures can potentially be used to help manage risk in an equity portfolio.
When potentially market-moving news breaks outside of normal trading hours, you’ll often see it show up first in the futures market. This early warning signal can potentially be used to help manage risk in a portfolio. For example, if you’re holding a basket of stocks that tracks the S&P 500 Index and news begins to unfold overnight, you could trade /ES (E-mini S&P 500 Index futures) as a way to hedge your portfolio against a down open.
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If you’re holding several energy companies, the same thing could be done with /CL (crude oil futures) or any number of other futures contracts that correlate with your positions. Because futures virtually trade 24/6, they offer an important tool that can help neutralize overnight risk.
On a cautionary note, futures and futures options trading is speculative, and isn’t suitable for all investors. Please read the Risk Disclosure for Futures and Options prior to trading futures products. Also, consider keeping in mind that futures accounts aren’t protected by the Securities Investor Protection Corporation (SIPC).
Potential opportunities may also present themselves overnight. They can be tied to all kinds of financial and geopolitical events, but some of the main ones to watch include interest rate announcements by the European Central Bank (ECB) and the Bank of Japan (BoJ), as well as economic reports coming out of China, most of which are scheduled ahead of time just like in the United States.
You can also look for market-moving news out of Asia when the Tokyo Stock Exchange opens at 7 p.m. CT and in Europe when the London Stock Exchange opens at 2 a.m. CT.
Even if you’re the type who needs eight hours of sleep each night, you’ll still be awake for a good portion of the overnight session, allowing you to trade markets then. And although your primary focus may be on the regular session, it’s good to know that, if needed, you have the ability to take an active part in the markets no matter what time of day—or night—and whether you trade ETFs, futures, or both.
More Things to Know
Here are some additional items to consider if you’re thinking about overnight ETF trading:
– 24/5 trading of ETFs is only available through the thinkorswim® platform from TD Ameritrade and Mobile Trader platforms.
– You need to have “Advanced Features” enabled.
– Trading after normal market hours comes with unique and additional risks, such as lower liquidity and higher price volatility. Your order may only be partially executed, or not at all.
– For additional information, here’s where you can learn more about the 24/5 trading program.
FIGURE 1: THE OVERNIGHT SESSION. This chart plots prices in 5-minute intervals from the time markets close in the U.S. until they open the next day. The blue lines show the trading hours of overseas markets. Chart source: the thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.
