Normally, market participants can buy and sell stocks during regular trading hours established by NYSE, NASDAQ, and other major exchange platforms. However, users also have a chance to complete transactions and place orders earlier or after the exchange is closed. We have previously discussed the major pros and cons of premarket trading, which is the concept of buying and selling assets before the opening hours.
This time, we will discuss the main hits and misses of the strategy called after hours stock trading. It assumes you can either go short or long regular exchange closing time.
As supposed by the strategy name, after hours stock trading considers buying and selling assets when the regular trading day on a stock exchange is over. Generally, a regular schedule takes place between 9:30 a.m. and 4 p.m. However, if you want to perform trades outside this particular timeframe, you can opt for electronic communication networks or digital brokerage service providers that make it possible to act outside the normal schedule.
Unlike premarket trading, when the majority of investors try to enter the market one hour before the opening, after hours stock trading does not have limits. Actually, you are free to take any actions after the official trading day is closed until the next morning. In other words, the strategy makes it possible to purchase and sell assets from 4 p.m. to 8 a.m.
Just like the opposite (premarket trading) concept, the main idea of trading outside normal hours is to quickly react to urgent news and announcements. A company can make a release or publish crucial news (the CEO is leaving) at 5 p.m. when the exchange is closed. If you want to make the most of this news, you will need to look for a place that lets you trade outside regular timeframes.
Kike any strategy, the concept brings several risks. They generally include the following:
The main benefit of after hours stock trading is the fact that it is possible. It helps traders react quickly to specific news, earning reports, and releases that can influence the stock price greatly. Furthermore, market participants will always have a chance to execute trades outside normal hours, which brings enhanced strategy and timing flexibility. On the other hand, you should always be aware of risks as well as the fact that the price can be even better the next day.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.