Trading after hours is not really easy, so beginners are not advised to try it. But then again, if you think you already have enough ‘newbie experience,’ then why not, right? If you’re still testing the waters, one of the first things you need to know is when to trade.
Exchanges are just like any other marketplaces. They have opening and closing hours so traders can know when to show up and when to leave.
Trading after Hours
Historically, stock exchanges were open only during the times of business hours in the US, unless you were a fancy, high-net-worth person or an institutional investor. However, the digital time is the thing of the masses and this era of electronic communications and advancements has compelled exchanges to provide everyone with the chance to trade both pre-market and after hours.
There’s also a very good reason why markets are not open 24-7. You only get the true market sentiment when everybody is trading at the same moment, more or less.
After hours trading is the combination of after-hours and pre-market trading. It is everything that happens during the time period before the market opens and right after it closes.
Opportunities in the After Hours
After hours trading offers more opportunities since buying stocks outside the regular trading hours provide chances to hop in in early swings. It may be a little riskier, but it also means that it’s a rewarding venture.
If you are being very careful, you can take advantage of any earnings winners before the rest of the trading world is up and about. A good timing can help you gain more profits and short sell with ease while everybody else is either asleep or just waking up.
You could short Online Stock Brokers on relevant news in extended trade and then buy it back in the morning when it’s down below what you originally bought it for.
Trading after hours can be a great advantage in such situations, though it also entails some risks if you miss some crucial things.
After Hours Trading Rules
The rules are not the same as they are in normal trading hours. It goes without saying that you need to be very careful when you’re out searching for a Financial Brokerage Company. If you’re going to ask a broker’s help in after hours trading, you must ensure that you understand the rules. That’s because every broker follows a different set of restrictions.
Some brokers do not offer after hours trading, while some offer them with some additional fees. Meanwhile, most other brokers offer them for free. You just have to make sure that you understand the rules and restrictions that are imposed on you.
Pros and Cons
There are obvious benefits and risks in trading beyond the regular trading hours.
If you’re trading big stocks, you ought to follow economic indicators. These include GDP, retail sales, weekly jobless claims, and US employment reports. It can get tricky, however, for pre-market traders, because most of these economic reports come out around 8 am. That means there is not much time to get ahead of the market.