2019 Robinhood after hours trading fees, broker surcharge, and extended hours time period. How to enter pre market and after market orders on Robinhood.

Extended Hours Trading on Robinhood

If you have a Robinhood Gold account, you should be aware of extended hours trading, which is one of the advanced features that come with your Gold account. This article will go over what exactly extended hours trading is and when and how you can take advantage of this Gold feature.

Robinhood Extended-Hours Trading Overview

The U.S. stock market is open for six and a half hours for five days a week, from 9:30 AM to 4:00 PM EST, Monday through Friday. If you are a Robinhood Gold member, you have access to the markets outside of its normal operating hours. Robinhood’s extended trading hours start at 9:00 AM, giving you an extra half hour of trading time in the morning, and end at 6:00 PM, giving you an extra two hours to trade after the market closes. Combined, Robinhood’s extended hours give you an extra two and a half hours of trading time each day.

Robinhood Gold Account

In case you are not familiar with Robinhood’s Gold account, it is basically a subscription-based margin account with added perks. Each month, Gold members pay a flat $5 for Gold access, regardless of whether or not they use any of the Gold features (this contrasts with the standard Robinhood account, which is free). This gives them access to extended hours trading, $1,000 of extra buying power, and instant availability of new deposits (instead of needing to wait the usual three day settlement period for ACH transfers).

On top of this, Gold members also have access to additional buying power, or margin capital, that Robinhood lends them for an additional interest charge. Robinhood offers a flat 5% interest rate for margin borrowers, which is cheaper than most brokers charge and is also unique because most brokers charge tiered rates based on how much money you borrow. The 5% annual interest rate is calculated daily based on the amount you borrow and is charged to your account each month.

How to Enter Extended-Hours Orders on Robinhood

During extended hours trading, Robinhood will only allow you to use limit orders. This is standard practice across most brokers, and is in your best interest since liquidity is much lower outside of the normal market orders and therefore the bid/ask spread is generally much wider. If you submit a market order during pre-market trading, Robinhood will automatically convert it to a limit order. Limit orders placed in a Gold account are automatically active during normal and extended market hours. Stop orders, however, cannot be used during extended hours.


Robinhood After Hours Trading


Ups and Downs of Trading During Extended Hours

There are additional risks associated with trading outside of normal market hours, mainly relating to the lack of liquidity during these off hours. Most market participants are placing their trades during normal hours, so the volume and number of participants in the market during extended hours are much lower. This leads to a wider bid and ask spread because it is more difficult for brokers to locate counterparties willing to take the opposite side of your trade. As a result, volatility outside of normal market hours is also often higher, meaning your extended hours trade could be executed at a price that is far away from the average price that develops once the market opens.

On the flip side, the main benefit of extended hours trading is that you are in a position to act more quickly than others when important news is released outside of normal market hours. You can buy or sell stock if breaking news comes out whereas traders without extended hours trading will have to wait until the market opens again to react to the news, and at that point the stock price could be very different.

Comparison

There are many other brokers that also offer extended hours trading, some for free and others for an additional charge. TD Ameritrade, for example, offers extended hours trading from 8:00 AM to 8:00 PM and even 24 hour round’ the clock trading for some ETFs at no additional charge, but they do charge a commission for most trades whereas Robinhood doesn’t. E*Trade also offers extended hours trading, but they impose a $0.50 charge for trades that are executed outside of normal market hours.

Robinhood's top $0-commission competitor, Firstrade also offers extended hours trading at no additional charge, and just like Ameritrade, their extended trading hours start an hour sooner than Robinhood’s (8:00 AM) and end two later than Robinhood’s (8:00 PM).

Robinhood Extended Hours Trading Summary

So while Robinhood Gold’s extended hours come with a small subscription fee and are a bit shorter than some rivals, one must also take into consideration that these other brokers charge commissions for most trades, while Robinhood does not. Depending on how much of an active and frequent trader you are, traders looking for extended hours trading could make an argument to go with Robinhood Gold or one of their competitors.


Firstrade


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