What Is an After-Hours Trading?

What Is an After-Hours Trading?

By Charles Joseph | Editor, Financial Affairs
Reviewed by Corey Michael | Senior Financial Analyst

After-hours trading refers to the buying and selling of securities outside of the standard trading hours of the major exchanges (such as the New York Stock Exchange and the NASDAQ Stock Market). Regular trading hours typically run from 9:30 a.m. to 4 p.m. EST. However, after-hours trading can occur as early as 4 a.m. and last as late as 8 p.m. These trades are conducted on ‘Electronic Communication Networks’, which match potential buyers and sellers without using a traditional stock exchange.

While after-hours trading allows more access, it also comes with increased risk. There are often less liquidity, wider spreads, and higher volatility. It’s generally recommended for experienced traders who understand these risks.

Related Questions

1. How can I participate in after-hours trading?

By utilizing an online trading platform, traders can buy and sell stocks during after-hours trading sessions. Make sure your brokerage allows for after-hours trading, as not all do.

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2. Are the rules the same for regular and after-hours trading?

No, there are often different rules for after-hours trading, including the types of orders allowed. For example, some platforms may only allow limit orders during after-hours trading.

3. Is after-hours trading riskier than regular trading?

Yes, trading after hours typically has more risks. This is due to less liquidity, larger spreads, and more price volatility.

4. Can all stocks be traded during after-hours?

No, not all stocks are available for after-hours trading. The availability depends on the specific stock exchange and brokerage.

5. Why would someone want to trade after hours?

Traders might choose to trade after hours in order to respond to news events that occur outside of regular trading hours, or to take advantage of expected price movements.