What is the after hours market
After-hours trading starts at 4 p.m. U.S. Eastern Time after the major U.S. stock exchanges close. The after-hours trading session can run as late as 8 p.m., though volume typically thins out much. Feb 20, · In technical speak, after-hours trading is defined as the trading of financial securities after the standard exchange trading hours (that's a.m. to 4 p.m. EST in the U.S. for the New York.
There's so much interest in securities trading that major exchange officials long ago determined that extra "after-hours" trading was needed - and the idea has taken flight ever since. In technical speak, after-hours trading is defined as the trading of financial securities after the standard exchange trading hours that's a.
EST in the U. Technology is driving after-hours trading, as buyers and sellers don't really how to block youtube videos in cyberoam an exchange to trade what is the after hours market. Millions do so via digital-based after-hours trading via electronic communication networks ECN that match up buyers and sellers and help execute trades.
Securities-wise, the major difference with standard day trading and after-hours trading is that stocks and exchange-traded funds trade regularly but not as much as during the day after hours, but more exotic financial instruments like equity option puts and calls trade significantly less widely. That's because demand for after-hours trading in the options market just isn't that extensive. Additionally, more complex futures and currency contracts don't need an after-hours trading session - there is enough demand that can keep those contracts trading on a hour basis.
It's also worth mentioning that after-hours trading and early morning trading, while often bundled together as "extended trading sessions" aren't the same, as one starts before traditional market trading and the other begins after standard trading sessions end.
For example, the convenience factor is highly useful to busy investors who can focus better on securities trading at night. Night-time trading gives investors the freedom, timetable-wise, to make good trading decisions.
Additionally, trading after hours allows investors to react to news events that impact the price of stocks and funds and generate trades to take advantage of, or deploy a defensive strategy in response to market news.
While after-hours trading does allow for standard exchange buy and sell orders, trading levels can be so thin that market makers have had to adjust the rules for after-hours trading. Additionally, the weaker volume demand has led market makers and brokers to reset their trading mandates.
Some stock orders, for example, can't be completed via traditional stock buy and sell orders. Instead, they can only be transacted via stock limit orders, which have their own set of trading rules i.
The seeds planted for after-hours trading were planted in the mids, when several select U. After-hours trading really what is the after hours market to take off in the s, when the New York Stock Exchange green-lit institutional trading after 4 p.
As ECN-based trading platforms began to emerge around the same time, the NYSE and other major financial trading exchanges extended their after-hours trading, ultimately arriving at the 4 p. As advances in technology make digital trading easier, after-hours trading has become more common. That doesn't what does cell mean in science terms after-hours trading is risk-free.
In fact, the U. Security Exchange Commission has warned investors to be aware of the risks of trading securities after hours. Specifically, the SEC has issued the following alerts to average investors considering after-hours trading:. You may not always get access to the best possible displayed price on a trade when buying and selling stocks and funds after hours.
It's highly advisable to contact your broker or trade execution team and ask how trades are handled after hours. The goal is to make sure your trade is steered to the best available price. In after-hours trading, there's also the risk of weak liquidity meaning there aren't enough buyers and sellers available to get a good price on a trade. That's not the case in regular trading hours, when the market is full of buyers and sellers and there are plenty of trading partners, thus increasing the chances of getting your preferred trade price.
As the SEC points out, with lower trading liquidity, Main Street investors run the risk of higher trading costs, higher uncertainty about prevailing security prices, and experiencing problems executing trades.
In after-hours trading, the lack of securities traded and lower demand for trading can lead to larger quote spreads the difference between the bid and ask price on a stock.
That leads to lower odds of getting your buy or sell order executed and not getting the trade price you expected on the transaction, compared to standard trading hours.
It's simple Wall Street math, but the fewer securities available to trade after hours translates into more dramatic price what does hdr do on iphone camera relative to virtual villagers how to play traded in traditional day-time trading sessions.
In fact, investors looking to trade securities after hours can depend on trading prices being significantly different than during regular trading hours, mostly due to high volatility. As noted above, brokerage companies only allow limit orders to be executed after hours - at the limit price or better, as the SEC puts it.
This scenario isn't necessarily a huge trading risk, but after-hours investors should understand that if the price drifts away from the limit order, that trade will be taken off the table and not be transacted. Another word of caution. If an after-hours trade remains unexecuted overnight, the investor should check with the brokerage firm and see if it will be automatically executed the next trading day, when the markets re-opened for business.
In the after-hours market, regular Main Street investors are competing against skilled, better-informed and professional traders. As the adage goes, buyer and seller beware when going up against professional traders.
While after-hours trading is open for any investor to trade, that doesn't mean it's a good idea if you're a buy-and-hold, long-term investor, and can't afford to take excessive risks with their investment portfolios.
If you do go ahead and decide to trade in after-hours trading, first make sure to clear that securities trading in a post-market environment is okay with your trading platform. It's also highly advisable to check with your broker or trading platform and ask about any special rules and regulations that could apply to your trading practices when trading after hours.
When you do start trading after the regular exchange sessions are over, begin with small trades in small cash allotments and examine the lay of the land for a few weeks before diving in any further. Above all else, consult with a skilled financial adviserbroker or other investment specialist and go over the potential risks and rewards that come with after-hours trading. The fact is, the best way to go into an after-hours trading experience is with your eyes wide open and with both hands on your wallet.
The risks involved are abundant relative to the benefits of trading after hours and the sooner investors realized that - the better. It's never too late - or too early - to plan and invest for the retirement you deserve. Get more information and a free trial subscription to TheStreet's Retirement Daily to learn more about saving for and living in retirement.
We've got answers. Receive full access to our market insights, commentary, newsletters, breaking news alerts, and more. I agree to TheMaven's Terms and Policy. What Is After-Hours Trading? There are good reasons to trade securities after hours - if you know what you're doing. Limits on After-Hours Trading While after-hours trading does allow for standard exchange buy and sell orders, trading levels can be so thin that market makers have had to adjust the rules for after-hours trading.
Risks Associated with After Hours Trading As advances in technology make digital trading easier, after-hours trading has become more common. Specifically, the SEC has issued the following alerts to average investors considering after-hours trading: 1. Trade Order Handling You may not always get access to the best possible displayed price on a trade when buying and selling stocks and amy what you gonna do new country song after hours.
Lack of Liquidity In after-hours trading, there's also the risk of weak liquidity meaning there aren't enough buyers and sellers available to get a good price on a trade.
Wider Trade Quote Spreads In after-hours trading, the lack of securities traded and lower demand for trading can lead to larger quote spreads the difference between the bid and ask price on a stock. Trade Pricing Volatility It's simple Wall Street math, but the fewer securities available to trade after hours translates into more dramatic price fluctuations relative to securities traded in traditional day-time trading sessions.
Limit Orders Only As noted above, brokerage companies only allow limit orders to be executed after hours - at the limit price or better, as the SEC puts it. You're Up Against Experienced Traders In the after-hours market, regular Main Street investors are competing against skilled, better-informed and professional traders.
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Jan 30, · After hours trading is simply the buying and selling of shares following the close of the regular stock market session. The stock market opens at a.m. ET, and closes at 4 . Mar 31, · After-hours trading takes place after the markets have closed. Post-market trading usually takes place between p.m. and p.m., while the pre-market trading session ends at . Coverage of post-market trading including futures information for the S&P, Nasdaq and NYSE.
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Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. After-hours trading starts at 4 p. Eastern Time after the major U. The after-hours trading session can run as late as 8 p. Trading in the after-hours is conducted through electronic communication networks ECNs.
After-hours trading is something traders or investors can use if news breaks after the close of the stock exchange. In some cases, the news, such as an earnings release, may prompt an investor to either buy or sell a stock. The volume for a stock may spike on the initial release of the news but most of the time thins out as the session progresses. The amount of volume generally slows significantly by 6 p.
There is a substantial risk when trading in illiquid stocks after-hours. Not only does volume sometimes come at a premium in the after-hours trading sessions but so does price. It is not unusual for the spreads to be wide in the after-hours.
The spread is the difference between the bid and the ask prices. Due to fewer shares trading, the spread may be significantly wider than during the normal trading session. In some cases, certain investors or institutions may choose simply not to participate in after-hours trading , regardless of the news or the event.
This means that it is quite possible for a stock to fall sharply in the after-hours only to rise once the regular trading session resumes the next day at a. Because volume is thin and spreads are wide in after-hours trading it is much easier to push prices higher or lower, requiring fewer shares to make a substantial impact.
Since after-hours trading can have a significant impact on a stock's price , it's not a bad idea to put a limit order on any shares you intend to buy or sell outside of regular trading periods. Nvidia Corp. NVDA earnings results in February are an excellent example of how after-hours trading works and the dangers that come with it. Nvidia reported quarterly results on February As the chart shows, volume was steady in the first 10 minutes and then dropped quickly after p.
However, volume slowed materially with just , shares trading between and From a. Nearly all of the after-hours gains had evaporated. Trading Basic Education. Day Trading. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data.
We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. What Is After-Hours Trading? Key Takeaways After-hours trading starts at 4 p. Stocks are not as liquid during after-hours trading. The spread between the bid and the ask may be wider in after-hours trading.
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Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Related Terms Extended Trading Definition and Hours Extended trading is conducted by electronic exchanges either before or after regular trading hours. Volume is typically lower, presenting risks and opportunities.
Volume is typically much lighter in overnight trading. Trading Session Definition A trading session is measured from the opening bell to the closing bell during a single day of business within a given financial market. Closing Quote Definition A closing quote reflects the final regular-hours trading price of a security and indicates to investors and listed companies interest in the security.
Close The close is the end of a trading session in financial markets, the process of exiting a trade, or the final procedure in a financial transaction. Pre-Market Definition Pre-market is trading activity that occurs before the regular market session; it typically occurs between a. EST each trading day. Partner Links. Related Articles. Investopedia is part of the Dotdash publishing family.
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