After-hours trading refers to the buying and selling of securities outside the standard trading hours of major exchanges. Here’s what you need to know about this type of trading if you are considering it.
Understanding After-Hours Trading
- Extended Hours: Regular trading hours are typically from 9:30 AM to 4:00 PM EST. After-hours trading occurs before and after these times.
- Platforms: Not all brokers offer after-hours trading, so you’ll need to check if your brokerage provides this service.
Pros and Cons
Pros:
- Opportunity: React to news events and earnings reports released outside of regular trading hours.
- Flexibility: Trade at times that may be more convenient for your schedule.
Cons:
- Lower Liquidity: Fewer participants can lead to less liquidity and wider spreads.
- Higher Volatility: Prices can be more volatile due to lower trading volume.
Conclusion
It is often assumed that the professional traders will buy and sell in the pre-market and after-hours trading sessions because they want to be able to react quickly to news announcements that may occur when the regular market is closed. But is there really an advantage to trading during off hours? Read more about after hours trading in this blog post.
