After-Hours Stock Trading

After-hours stock trading was first introduced back in 1999 and makes Wall Street a virtual around the clock, 24 hours a day marketplace. Typically, the New York Stock Exchange and NASDAQ are only opened until 4 pm Eastern Time. This means that trading would be shut down for the remainder of the day until 9:30 am the next morning, or Monday morning on weekends. Many higher net worth investors and institutional investors were permitted to perform after hours trades which allowed them to trade even when the actual marketplace was closed.

After-hours stock trading offers many benefits, one being the opportunity to trade in a stock that you feel is going to fall before the market opens again or purchase a stock that you feel will rise. After-hours markets offer an indicator of what may take place on the next trading day as well. After-hours stock trading however, has not gained in popularity like many felt that it would. There are likely a number of different reasons for its lack of traders. Many prefer the ability to see quotes from other sources and during after-hours trading this is simply not possible. There is also typically a lack of activity that may cause you to pay more for a specific stock than you would pay during market hours simply because the price can fluctuate compared to the price on closing.

Many brokerage firms place order limits and in order to buy stocks through these firms you will need to enter a price at which you want the order to be executed. This means that you will pay no more for a specific stock than your entered price but it also means that you cannot sell for less. This may seem like the perfect scenario but orders are often not filled at all during After-Hours trading because of the lack of activity. Many feel that the very best time to trade is within the first hour after market closing. This is when activity will be at its highest until the market is opened again. Some financial advisors actually recommend not engaging in after-hours stock trading unless you are somewhat of a seasoned professional in the market. Individual investors may simply want to steer clear or if you are planning to invest as an individual then search for a broker firm that offers after-hours trading services.

Different brokers will offer different services for after-hours stock trading. Take the time to speak with the broker or browse their website if you are using an online service and learn which services are offered and which ones are not. You may find that some brokers prefer that their clients not engage in after-hours trading. This again is something that is different with all brokers so be sure that you take the time to learn specifically what services are offered by the brokerage firm that you choose.

Keep in mind that you will not be able to see all of the quotes that are available during after-hours trading. Depending on the system at your brokerage firm, you may actually only have access to one particular quote on your chosen stock. Remember also that you will not have the liquidity that you have during regular market hours. Of course, whether or not you trade after hours depends ultimately on your personal preferences. Take the time to learn what after-hours services your broker firm offers and spend a little time researching after-hours stock trading to learn more about the process as well as the risks and potential gains. There are times when new stories and other events will make it very profitable to trade after hours because a large number of trades will take place. It all comes down to timing. If you time your trades just right then you may see phenomenal returns.

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