Exchange trading on the weekend: Trading is possible continuously with restrictions
Trading in stocks in Europe is usually limited to business hours. Trading in Frankfurt runs on weekdays between 8 a.m. and 8 p.m. and the opening times of the Berlin Stock Exchange, in Munich, Düsseldorf and Hanover, are also adjusted to these times.
Only Stuttgart keeps the gates open two hours longer in the evening.
But if you really want to, you can also buy or sell securities at night or on the weekend. Digitization and online trading have created opportunities in recent years to trade outside of the official opening hours of the stock exchange. If you use the time differences, you can use the business hours of the stock exchanges worldwide and commute between New York, Tokyo and Sydney. Although trading is still characterized by low volumes, especially on weekends, some brokers are recognizing the potential and keeping their programs running between Friday evening and Monday morning. Currency pairs in the Forex market in particular benefit from more flexible trading hours. And the new cryptocurrencies can be traded at night and on weekends without a break.
Over-the-counter trading
To be precise, trading in securities, currencies and other financial instruments on the weekend is no longer an actual exchange trading. Precisely because the exchanges are not involved. This is why we speak of over-the-counter trading, direct trading or OTC trading (over the counter). The processes remain the same, however, the conditions can shift a little.
Some brokers charge a premium to offset their increased staff costs. In addition, not all assets are available. It does not matter whether you trade at night or on the weekend. OTC trading also means that state supervision does not intervene in this type of business. Nevertheless, the statutory provisions for securities trading remain in effect.
How does trading outside of the exchange work?
In OTC share trading on weekends, the broker mediates directly between buyer and issuer. The buyer makes a request to find out the price of a financial product. If the issuer or market maker has named this, it usually has to be decided within seconds whether this offer will be accepted. If the market maker is accepted, he will be informed and has the option of accepting or rejecting the offer. If the purchase offer is accepted, the online broker concludes a contract with the issuer and becomes a commission agent between both parties. So he buys securities in his own name, but for someone else’s account.
OTC trading offers good opportunities to fill the weekend profitably. In the Corona period, it experiences an upswing, as many people have an excess of time and are looking for external sources of income.
It offers advantages for dealers in the dark pool.
There, listed securities are traded anonymously. In addition, securities are used that are not admitted to the conventional stock exchanges. In addition to cryptocurrencies, financial derivatives are a popular trading object.
Organized securities markets for over-the-counter trading are now widespread, and the trend is rising. Well-known trading platforms are Lang & Schwarz, which are active in both on-exchange and over-the-counter trading. The same applies to Tradegate Exchange. Other well-known providers are BDSwiss, iq option and CATS-OS (Citibank). But global players such as BNP Paribas, Goldman Sachs and J.P. Morgan have now discovered the business field.
Advantages and disadvantages of over-the-counter trading on the weekend
Primarily, there are fewer costs involved in OTC trading. The stock exchange is left out, so there are no third-party fees. Likewise, no brokerage commission or other stock exchange fees have to be expected. The trade is compact and takes a few seconds. Workers and employees in particular have more time and leisure to deal with securities trading at the weekend, as they are busy earning a living at normal opening times.
The disadvantage is a lower level of market transparency. There is no view of the order book, so that one does not have an overview of supply and demand. A reference rate cannot be obtained outside of regular business hours, so the trader is limited in his valuation potential. The biggest disadvantage, especially for beginners, is likely to be that there is no supervision that regulates trading activities.