ETFs, or exchange-traded funds, are diversified investments for which shares are traded on the market similar to stocks. The price per share changes based on the trading volume and the price of the securities that an ETF holds within it. Traders buy and sell ETFs in large quantities when the market is open during weekdays. However, can one buy or trade ETFs on the weekend, when the market is closed?
You can buy ETFs on the weekend even if the stock market is closed. The trades will be made at the current price when the market reopens, usually Monday morning, except for holidays. Since you don’t know the price on weekends, buying when the market is closed can be risky.
This article will explain how ETFs trade, when they trade, and how you can manage and place ETF trades over the weekend. You can also use some resources in this article to learn more about ETFs, stop orders, and how to trade and use them. So, without further ado, let’s jump right in.
IMPORTANT SIDENOTE: I surveyed 1500+ traders to understand how social trading impacted their trading outcomes. The results shocked my belief system! Read my latest article: ‘Exploring Social Trading: Community, Profit, and Collaboration’ for my in-depth findings through the data collected from this survey!
Table of Contents
How Are ETFs Traded?
ETFs are a type of investment that has gained popularity among investors over the past couple of decades.
Here’s the definition of an ETF from Investopedia:
“An exchange-traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other asset but which can be purchased or sold on a stock exchange the same way a regular stock can.”
ETFs trade on an exchange, so you need to open a brokerage account or something similar to buy and sell them.
Since ETFs trade like stocks, you’ll have to buy shares of the ETFs to invest in them. The minimum investment for ETFs is one share, but you can buy as many as are available.
You can also trade your ETFs as much as you want, but it must be during market hours. If you trade outside of market hours, your trade isn’t complete until the market reopens.
You may pay transaction fees every time you trade. These fees are based on the brokerage you trade with. They can vary depending on how much you trade and what you’re trading.
The price per share of ETFs is dependent on the volume of trading. As shares are bought and sold throughout the day, the price per share will change. This price system is similar to how stock prices change as they trade.
The share price of an ETF is very similar to the price of the securities within it, although there will be some slight differences.
When you buy an ETF, there’s a 2-day settlement period between the sale or purchase and the actual finalization of the ETF trade.
When Do ETFs Trade?
In the United States, ETFs can only trade on business days, Monday through Friday; usually, 9:30 AM to 4 PM eastern time. You can’t buy ETFs on the weekend or during bank holidays.
However, if you’re buying ETFs from other countries, the market times will vary. Market times always follow the local time, so if you want to trade shares when the market is open on the other side of the world, you might need to stay up late at night or wake up early in order to trade.
In other countries, similar to the United States, the market days are almost always weekdays from morning to night, local time, and are closed on holidays.
You can buy and sell anytime the market is open, but it’s good to avoid investing at the very beginning and end of the day. Market prices tend to fluctuate more in the first and last 30 minutes of the day, and therefore you can see a big increase or decrease in the share prices.
If you want to trade at the beginning or end of the day, you can use stop orders to control the price you pay for each share. Stop orders are explained in the next section, as they’re also useful for managing your weekend trades.
You can technically purchase ETFs on the weekend, but your order won’t be finalized until the market reopens, usually on Monday morning, except for holidays.
Trading volume is low on weekends compared to when the market is open. The low trading volume can result in some volatile prices when the market reopens on Monday. This volatility is why it can be risky to trade on weekends.
How To Manage Weekend Trades?
Weekend trading is risky, but there’s one way in which you can make it slightly less risky if you must trade when the market is closed.
If you want to trade on weekends, you can use a stop order to keep the price you pay from being too high or the price you sell from being too low.
You can place stop orders when you want to automatically buy a share or a certain number of shares when the price reaches a certain price. If the price per share hits the price you set a stop order at, your trade will be executed automatically, and you’ll have your shares at your set price.
If the price never reaches the price that you set the stop order for, or your stop order expires, you won’t be able to automatically buy the shares with your order. Or, you’ll have to make the purchase yourself or set a new stop order, whether at the same price or a different one.
If you don’t place a stop order, you’re placing a market order, which means you’ll buy at the current trading price of the ETF. It doesn’t matter if there was a significant change in the price.
If the price decreases, you buy at a discount from what you originally expected, which is a positive outcome. However, the price could also increase, and you’ll be paying more per share than you expected, which can hurt your gains and your investment portfolio.
Learn More About ETFs and Stop Orders
It’s important to learn more about ETFs and stop orders if you want to use them for enhancing your investment portfolio. The books and videos in this section are great for beginners and more experienced investors alike.
The following YouTube video from TD Ameritrade explains the basics of ETFs, how they trade on the market, and the benefits of investing in them:
Here’s another YouTube video from TD Ameritrade that explains how stop orders work and how you can use them to avoid huge losses in your investment portfolio:
ETF Investing (available on Amazon.com) will teach you how to start investing in ETFs. You’ll learn how to:
- Strategically choose ETFs
- Understand market trends
- Make sure your investments are growing
Another great book from Amazon.com is The 8-Step Beginner’s Guide to Value Investing: Featuring 20 for 20 (also available on Amazon.com). Through this book, you’ll learn how to:
- Avoid 3 common mistakes that beginner ETF investors make
- Choose smart investments
- Get started even with a small amount of money
Author’s Recommendations: Top Trading and Investment Resources To Consider
Before concluding this article, I wanted to share few trading and investment resources that I have vetted, with the help of 50+ consistently profitable traders, for you. I am confident that you will greatly benefit in your trading journey by considering one or more of these resources.
- Roadmap to Becoming a Consistently Profitable Trader: I surveyed 5000+ traders (and interviewed 50+ profitable traders) to create the best possible step by step trading guide for you. Read my article: ‘7 Proven Steps To Profitable Trading’ to learn about my findings from surveying 5000+ traders, and to learn how these learnings can be leveraged to your advantage.
- Best Broker For Trading Success: I reviewed 15+ brokers and discussed my findings with 50+ consistently profitable traders. Post all that assessment, the best all round broker that our collective minds picked was M1 Finance. If you are looking to open a brokerage account, choose M1 Finance. You just cannot go wrong with it! Click Here To Sign Up for M1 Finance Today!
- Best Trading Courses You Can Take For Free (or at extremely low cost): I reviewed 30+ trading courses to recommend you the best resource, and found Trading Strategies in Emerging Markets Specialization on Coursera to beat every other course on the market. Plus, if you complete this course within 7 days, it will cost you nothing and will be absolutely free! Click Here To Sign Up Today! (If you don’t find this course valuable, you can cancel anytime within the 7 days trial period and pay nothing.)
- Best Passive Investment Platform For Exponential (Potentially) Returns: By enabling passive investments into a Bitcoin ETF, Acorns gives you the best opportunity to make exponential returns on your passive investments. Plus, Acorns is currently offering a $15 bonus for simply singing up to their platform – so that is one opportunity you don’t want to miss! (assuming you are interested in this platform). Click Here To Get $15 Bonus By Signing Up For Acorns Today! (It will take you less than 5 mins to sign up, and it is totally worth it.)
Conclusion
You can trade ETFs on weekends, but the trade won’t be completed until the market reopens on Monday morning or after a holiday. Weekend trades are risky because you don’t know at what price the shares will be trading when the market reopens.
You can set a stop order if you want to ensure that you don’t pay too much for your weekend trades. Just know that your trade may not be executed if the price ends up being higher than you set your stop order for.
BEFORE YOU GO: Don’t forget to check out my latest article – ‘Exploring Social Trading: Community, Profit, and Collaboration’. I surveyed 1500+ traders to identify the impact social trading can have on your trading performance, and shared all my findings in this article. No matter where you are in your trading journey today, I am confident that you will find this article helpful!
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