Q: What is after hours trading in the stock market?
A: After hours trading is one of the extended hours sessions of trading, along with pre-market trading, according to a post by Lee Bohl, a chartered market technician with Charles Schwab.
Before the stock market was digitized, trades could really take place only during the stock exchange’s normal hours between 9:30 a.m. and 4 p.m. Eastern Time, Bohl said.
Now that computers take part in the process, orders to buy or sell can be made after the normal hours close on electronic markets.
After hours trading doesn’t work exactly like trading during regular hours though, Bohl said, and there are some pros and cons to consider.
Some people do benefit from the convenience of extended hours trading so they can choose a time that works better for them to make trades, Bohl said.
After hours traders can also react more quickly to major changes in a company by buying or selling stock without having to wait for the market to open in the morning.
After hours trading is more volatile though, Bohl said. Since fewer people trade outside of regular market hours, there are fewer options or ways to get the best price on your stock.
There is also a chance the order will not go through — if no one has the stock you want for the price you offer, the order won’t be completed.
— Shelley K. Mesch