Can You Trade When the Stock Market Closes?
The stock market is just like any other market in the world – meaning it has hours when it’s open, and times when it’s closed (and don’t be thinking this article isn’t for you – we’ve written before about the most successful women in the stock market. If them, why not you?). Although the stock market officially closes at 5 pm Eastern Time in the United States – that doesn’t mean that trading necessarily has to stop. Some people believe that they get their best deals with stocks and investments after the official market has closed its doors. Making transactions after the market has closed is a process that’s known as after-hours trading. Importantly, not every broker will offer this as an option to their customers, and the ones that do might have different opening hours for the after-hours depending on who you work with. If you’re interested in outside of the standard day trading schedule, read on.
How Does After Hours Work?
Back in the earlier days of stock market trading, after-hours would have been impossible. This was because all that were made would need to be established in-person on the floor. Once broker officials went home, and the stock market closed, there was no way to buy and sell shares or securities.
However, in the digital world, it’s much easier when the rest of the stock market is still asleep, using something called electronic communication networks. Electronic communication networks or ECNs ensure that anyone can trade if they discover news that’s relevant to their stocks or security when the stock exchange is closed. In some cases, an earnings release or recent update will prompt an investor to buy or sell stock. Usually, the after-hours market will open between 4 pm and 8 pm, giving people more of an opportunity if they haven’t finished making the most of their investments during the day.
How Do After Market Stock Prices Change?
Crucially, trading after hours isn’t exactly the same as during the typical opening hours of the stock market. There are more risks and concerns to be wary of if you decide to go into this part of the trading world. For instance, after-hours markets usually have more volatility to think about, and less liquidity, because there are fewer people around for you to trade with. At the same time, there’s far less volume in the after-hours space than there is in the regular market.
The differences between the after hours and the regular market can have a huge impact on the way you manage your buying and selling risks. Most people will stick stringently to sales limits and limit orders when they’re acting outside of the normal hours. This can reduce your risk of losing more than you want to or spending over the odds for a stock. Additionally, it’s worth noting that once the regular market opens for the next day after an after-hours session, that stock might not open at the same price, it was trading in in the other market. This means that you could find that the price of the stock isn’t as good to you as it was in the hours before.