24-hour stock trading: Unlock new opportunities with US share CFDs

These ‘extended’ hours allow equity traders to react and manage positions over US quarterly earnings, key US economic data and central banks speeches – however, there is still an 8-hour period where they close, and traders are subject to possible gapping risk on the re-open of the pre-market session.

Pepperstone’s 24-hour US share CFDs change that dynamic – offering a continuous and liquid price to traders through the US cash equity session, the pre-and post-market and the traditionally closed period through Asia.

US equity CFD traders will always be drawn to trade through US cash equity trade, as they will the post-market session (4pm EST to 8pm EST) - when four times a year US companies report earnings, with the one-day percentage changes (in reaction to earnings) typically 3 to 4x that of non-reporting days.

However, with an increasing amount of impactful market-moving news being announced throughout Asia trade, traders now have access to over 100+ US 24-hour share CFD’s, increasing the efficiencies to execute and manage risk, real-time and at any time through the trading week.

The evolution of technology and trading on Pepperstone’s mobile app also enhances a trader’s reaction function.

Crunching the Numbers - The Gains in US Equity Explained by Moves in ‘Overnight’ Trade

When executing a trading strategy it’s typically the underlying market environment that dictates when they execute a trade. For example, certain trading strategies perform more optimally in periods of range expansion, a trending or mean reverting state or in higher/lower volatility.

With that in mind, I worked with our quant/data science team to review the data to see if there were any observable trends in the performance in our US 24-hour share CFDs for a set period of trading day.

Test Parameters:

For the test, we specifically split the full 24-hour trading day into two periods: US cash equity trade (09:30 to 16:00 EST) and the ‘overnight’ session or the period that falls outside of US cash equity trade (16:01 EST to 09:29 EST).

Exporting 1-minute price data since March 2024 (when Pepperstone launched US 24-hour share CFDs) for the NAS100 index and for some of the most popular US 24-hour share CFDs, we analysed the data to understand the total percentage change in the instrument, the cumulative percentage change for the hours defined by US cash equity trade, and the cumulative percentage change for overnight move.

We also looked at the cumulative performance in the 1-hour period just after the US stock market closed.

The results were surprising and offered a perspective on why US 24-hour share CFDs give traders a unique vehicle to execute a specific strategy at a time when traditional US equity CFD pricing could be closed.

NAS100 Index

Before digging into moves in individual US equities, we started the review at an index level.

• Since March 2024 the NAS100 index has gained 20.1%.

• Gain/Loss attributed to intraday cash trade - If a trader had bought the NAS100 on the Nasdaq cash exchange open and sold at the close, each day, from March 2024 to 11 February, they would have recorded a 1% cumulative loss.

• Gain/Loss attributed to ‘overnight’ trade - Interestingly, if the trader had bought the NAS100 index just after the close (4 pm EST) and subsequently closed the position just before the open of the Nasdaq cash equity open (09:30 EST), each day, through the same period, they would have recorded a 21.1% cumulative gain in ‘overnight’ trade.

The results on individual US 24-hour equities are also very telling and we apply the same logic here:

Nvidia

• Total gain +64.8%

• Gain attributed to intraday cash trade +11.7%

• Gain attributed to ‘overnight’ trade +53.1%

• Gain/Loss attributed to the first hour after the Nasdaq cash exchange close +0.9%

82% of the cumulative gain in the Nvidia 24-hour share CFD has come from the overnight session.

Tesla

• Total gain +70.7%

• Gain attributed to intraday cash trade +1.6%

• Gain attributed to ‘overnight’ trade +69.1%

• Gain/Loss attributed to the first hour after the Nasdaq cash exchange close +3.2%

97% of the cumulative gain in the Tesla 24-hour share CFD has come from the overnight session.

Alphabet (Google)

• Total gain +34.9%

• Gain attributed to intraday cash trade +3.1%

• Gain attributed to ‘overnight’ trade +31.8%

• Gain/Loss attributed to the first hour after the Nasdaq cash exchange close -6.2%

91.1% of the cumulative gain in our 24-hour share CFD has come from the overnight session.

I will caveat that the strong performance seen in ‘overnight’ trade does not apply to all US equities, and we observe that Meta, Netflix, Apple and Amazon have seen a greater cumulative gain (since March) through the US cash equity trade.

US 24-hour share CFDs – Increased Hours Means Greater Control

Of course, many will argue that a degree of the relative ‘overnight’ outperformance in certain US stocks can be attributed to the first hour after the equity exchange closes. It’s in this window where the mega-cap US companies report quarterly earnings, where we note that in the past 8 quarterly earnings reports Nvidia has seen a 1-day (absolute) price move of 9.2%, Microsoft 4%, Meta 7.9%, Amazon 6%, Alphabet 6%, and Tesla 11.3%.

However, while this initial move on the day of earnings may extend and build in the following days, it still essentially encompasses just four trading days. Past performance is not indicative of future returns, but the data trends we’ve observed suggests that for traders whose strategy holds edge in periods of trend and heightened movement, it’s the overnight session that has generated the best returns for the NAS100 and many of the marquee US equity plays. Aside from the complete ability to react at a time of the trader's choosing, this relative performance is perhaps another reason why US 24-hour equity pricing may be the default position for equity traders in the future.