What You Need to Know About After-Hours Trading

Kiplinger has the support of its audience. When you buy through links on our site, we may earn an affiliate commission. Here's Why You Can Trust Us. After-hours trading is a type of stock trading that occurs outside of regular market hours.

It allows investors to buy and sell securities outside of normal trading hours for a variety of purposes, including responding to news or data releases that occur after the close. While before this type of negotiation was only accessible to large institutional buyers, today brokers such as Fidelity and Charles Schwab facilitate this type of negotiation. Commodities such as oil, gold and wheat are traded electronically starting at 18:00. The usual trading hours on the competing Intercontinental Exchange are starting at 8 p.m.

m. Investors interested in what international stock exchanges are doing in real time may need a cup of coffee at night, depending on the country they're following. These are the trading hours of some of the world's largest stock exchanges. All times represent regular business hours, Monday through Friday, and are shown in Eastern Time.

Cryptocurrencies operate 24 hours a day, seven days a week. From Bitcoin to the smallest altcoin, if you get stung, you can scratch it whenever you want. However, not all stocks declined. Netflix, Procter & Gamble and United Airlines rose after profits. Meanwhile, the NAHB housing market index fell sharply in October. Bank of America and Bank of New York Mellon reported surpassed earnings in the third quarter.

Big bank stocks, on the other hand, gained ground after reporting well-received gains in the third quarter. Major indices faced heavy losses to start the day, but ended the session with significant gains. The recently improved Amgen (AMGN) kept the head of the Dow out of the water. The path of least resistance remained lower for equities due to concerns about rising rates and nervousness. The most reliable source of financial calendar reference data.

The best credit cards with a balance transfer Many of the offers that appear on this site are from advertisers, from which this website receives compensation for being listed here. These offers do not represent all available deposit, investment, loan or credit products. Not all of these holidays are federally recognized, which most banks recognize. These are the additional holidays when most banks close, meaning you may not be able to place an order on those days. In addition, the New York Stock Exchange offers trading outside office hours, which normally end around 8 p.m.Technically, you can also trade on weekends in international markets, where time differences may allow you to place orders.

However, you cannot place orders on holidays or weekends when the stock market is closed. Operating outside business hours has advantages over operating during normal business hours. Convenience and flexibility allow investors to react more easily to news that could affect companies. Since companies post their profits after regular trading hours, you can also use that figure to better plan the orders they place. But you should also consider the limitations of after-hours trading.

On the one hand, you can only place limited orders during this time, meaning that you would buy or sell shares at a limited designated price. And because, in general, fewer stocks are traded during these hours, there is more volatility in terms of stock price and liquidity - the differential between the highest selling price and the lowest selling price. Every day, get new ideas on how to save and earn money and achieve your financial goals. After-hours trading refers to the trading of stocks and ETFs that occurs after the regular market closes. It allows investors to buy and sell securities outside normal trading hours for a variety of purposes, including responding to news or data releases that occur after the close. Operations in the after-hours session are carried out through electronic communication networks (ECN) that connect potential buyers and sellers without using a traditional stock exchange. These platforms tend to be less liquid than full stock exchanges, leading to more volatility and greater price movements with a lower trading volume. This presents both opportunities and risks which we discuss below. After-hours trading has existed for a long time but it was once only accessible to high-net-worth investors and institutional investors such as mutual funds.

However, with the emergence of ECNs individual investors can now participate in trading outside office hours. Members of FINRA (Financial Industry Regulatory Authority) may voluntarily enter quotes during after-hours sessions but must comply with all applicable rules for protection and viewing of limited orders (the Manning Rule and SEC Order Management Regulations). Markets before and after opening hours work similarly as normal markets since stocks are traded between parties at an agreed price. In other words, the price you will receive is what someone in the after-hours market or pre-market is willing to pay for it. Investors can only place limited orders (and not market orders) when buying or selling shares in the after-hours market. The ECN then compares these orders based on prices set for limit orders. The use of limit orders reduces risk of them being “liquidated” at an unwanted price which is an important consideration in after-hours markets due to lower trading volumes and therefore relatively wide supply/demand differentials. The flip side is that investors may not execute their orders if stock is not trading at price specified in limited order. Because there are fewer participants in after-hours markets than during regular market hours there is more volatility in terms of stock prices and liquidity - meaning there is greater risk involved when investing during these times. It is important for investors to understand these risks before entering into any trades outside regular market hours.

Willis Pankiw
Willis Pankiw

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