What is the Taiwan Stock Exchange Night Market? Definition and Core Value

The Taiwan stock night trading session (also known as after-hours trading or electronic trading) is an extended trading period launched by the Taiwan Futures Exchange in May 2017, covering from 15:00 to 05:00 the next day (a total of 14 hours), forming a nearly 19-hour trading window when connected with the day session (08:45 - 13:45). Its core purpose is to respond to the 24-hour fluctuations in the global financial market, especially the overnight gap risk of the Taiwan stock market due to the opening of the US stock market, allowing investors to hedge in real-time or seize opportunities brought by international events.

Key Differences Between Night Trading and Day Trading

1. Market Characteristics

• Liquidity: Due to fewer participants in the night session, trading volume is usually lower than in the day session, and the bid-ask spread may widen. Large orders can easily trigger price Fluctuation.
• Fluctuation: Affected by the opening of US stocks and European markets (such as US CPI data and Federal Reserve policies), price fluctuations are often higher than during the day, especially between 21:00 - 02:00 (the active period for US stocks).

2. Rule Differences

• Forced liquidation exemption: Night trading is considered a "exempt commodity," and if the equity ratio is below 25%, it will not be forcibly liquidated, while day trading may trigger it.
• Margin: Night trading does not support halving the margin for day trading; the full amount must be paid (for example, trading the Taiwan index futures requires 148,000 TWD).

3. The trading products for the night market cover stock indices, crude oil, exchange rates, and gold futures, but some products such as electronic futures and financial futures are limited to day trading.

##How to Operate the Night Market? Practical Strategies and Market Observation Skills

Step 1: Determine the 3 main criteria for the night market trend

1. Foreign Capital Daily Market Trends

• If TSMC's daily fluctuation exceeds 1%, and two or more leading electronic stocks are included among the top 20 foreign purchases/sales, the probability of continued strength/weakness in the night market is high.
• Principle: Foreign capital influences night market futures through spot chips, facilitating operations for the next day.

2. US Stock Futures Correlation: The Taiwan Index night market is highly correlated with the Dow Jones and Nasdaq 100 futures (correlation coefficient over 0.8). For example, on August 12, 2025, when the US stock market opened down by 1.5%, the Taiwan Index night market simultaneously fell by over 100 points.
3. Economic data schedule: Pay attention to the release times of U.S. non-farm employment, CPI, Federal Reserve meetings, etc. Data exceeding expectations may trigger significant fluctuations.

Step 2: Night Trading Strategy

• Swing Trading: Use 4 - 5 minute K-lines, combined with KD + MACD indicators. For example, go short when KD enters the overbought zone (> 80) and then drops below 80; increase positions in the opposite direction when MACD forms a death cross.
• Hedging for Risk Avoidance: If you hold a long position during the day and encounter negative news before the U.S. stock market opens, you can open a short position in the night session to hedge against potential losses from overnight gaps.

Step 3: Technical Analysis Considerations

• Due to low liquidity, technical indicators may deviate. It is recommended to complement with observation of buy and sell order book depth to avoid placing orders when the price difference is too large.

##Risk Management for Night Trading: Two Principles That Must Be Followed

1. Liquidity risk control: Avoid placing large orders between 00:00 - 05:00 (low trading period) as the slippage risk is higher during this time. If you need to close a position, you can set a cloud conditional order in advance.

2. Fluctuation Risk Response

• Set a stop-loss point: For example, preset a stop-loss of 50 points after entering the market to guard against sudden fluctuations in the US stock market.
• Position Control: The funds for a single transaction should not exceed 10% of the total margin.

Who is suitable for trading night sessions?

• Office workers: Use after-work hours to operate, especially during the 15:00 - 21:00 period where fluctuations are relatively smooth, suitable for practice.
• Experienced investors: need to be familiar with the interconnectedness of international markets and be able to quickly digest news events.
• Risk-averse investors: Those holding spot Taiwan stocks hedge overnight risks through night session futures.

##Conclusion: Is the Night Session an Opportunity or a Trap?

The average daily trading volume of the Taiwan stock market's night session reached over 500,000 contracts in 2025, accounting for more than 50% of the daytime trading volume, making it a battlefield that cannot be ignored. Its core value lies in "risk transfer" rather than "high-frequency profit"—by extending the trading window to mitigate overnight gap risks and providing the ability to respond flexibly to international events.

For beginners, it is recommended to start with the "Mini-Taiwan Index" (margin 37,000 TWD) and accumulate experience in the small fluctuations before the opening of the US stock market. After all, the beauty and danger of the night market are hidden within the K-line that fluctuates with the pulse of the world.