What is after-hours trading?
As a means of meeting the demands of the modern world, after-hours trading involves the ability to engage in the trading of stocks and securities after the regular hours of operation of the market has passed for the day. Here are some examples of how individual investors can engage in the buying of securities, as well as the selling of securities, in between the closing times of the world markets and before they open for the next business day. Traditionally, after-hours trading has been more closely associated with any type of trading that took place after the exchanges located in the United States have closed for the business day. Prior to 1999, this type of after-hours trading tended to be limited to large scale trading conducted by trading professionals and institutional investors. An electronic trading network, often called an ECN for short, was the main process whereby after-hours trading was conducted. As a private network, access to an ECN was rigidly controlled. Individual inve
After-hours trading (AHT) refers to the buying and selling of securities on major exchanges outside of specified regular trading hours. Both the New York Stock Exchange and the Nasdaq National Market operate from 9:30 a.m. to 4:00 p.m. EST. At one time limited to institutional investors and individual investors with high net worth, AHT is now an option for the average investor as well. The emergence of electronic communication networks (ECNs) ushered in a new era in stock trading. An ECN is an interface that not only allows individual investors to interact electronically, but also lets large institutional investors interact anonymously, thereby hiding their actions. The development of AHT offers investors the possibility of great gains, but you should also be aware of some of its inherent risks and dangers: • Less liquidity – There are far more buyers and sellers during regular hours. During AHT there may be less trading volume for your stock, and it may be harder to convert shares to
It is simply the trading of stock after the markets close. Traditional stock trading takes place during business hours because it involves a middleman–the broker or trader–who matches buyers with sellers. (That’s what all those people shouting on the floor of the New York Stock Exchange do–but they only work weekdays from 9 to 4 Eastern time.) In the past two years, investors have begun to make trades without a middleman by using electronic communications networks, or ECNs. With computers making the matches, ECNs–such as Instinet, MarketXT and Datek Island–can extend their hours. Many allow trades as late as 8 p.m. Eastern, and at least one plans to offer 20-hour-a-day trading by the end of the year. Theoretically they could allow trading around the clock.
Individual investors once could only buy and sell stocks during the regular business hours of major stock exchanges. In the US Markets regular business hours is typically defined as 9:30 AM – 4:00 PM. Trading before and after regular exchange hours became available in the 1990s for major institutional players and high-net worth individuals. The rise of online investing in the late 1990 s led to demand from a wider range of individual investors for after-hours trading.
