Trading strategies

After Hours Trading and How it Benefits You

What is After Hours Trading

More specifically, what is after hours trading?

It refers to trade made between the closing and opening auctions of a financial market.

What are the implications of investing in stocks during this time period?

The market is typically more reactive because many stock prices will have responded to losses or gains during the previous trading day as well as announcements from company executives. Investors would usually invest not just for speculative purposes, but also for hedging purposes like reducing portfolio risk or diversifying.

Investment theory suggests that later trades are more volatile than earlier ones because investors are reacting to moves in the market’s on-going.

What is the Difference Between Regular and After Hours Trading?

-One advantage of after hours trading is that they offer advantages to traders because they are able to buy and sell at any time of day or night.

-After hours trading was commonly introduced as an additional market for companies so as to be prepared in case something would happen before or after the market closed.

-Another moniker that some people use refers to “repo” which stands for “record.” That is, a trade can be executed but not settled for 3 days and still be recorded on your books.

Is There Anything Different About My Order After I Make it?

You might want to hold off on investing until their next opening or trading day. To actually buy a stock, you need to complete the transaction and log in with your account (register if you don’t already have one).

Transactions you make during those hours usually get processed just the same during their business hours the next day. The new order has this tag next to it “closed at the time.” If you’re looking at an order and it shows time as of midnight UTC, that means we’re referring to Eastern Standard Time. If you see it UTC-4:00 with no DST on, then that means eastern daylight savings time — which will technically be tomorrow morning.

Stock Market Volatility in After Hour Trading

There are more trades made in the after hour trading than there are during the regular market, according to Nanex, an exchange millisecond data vendor. There is a correlation between more trades made and increased volatility.

The reason for more volatility in after hours trading is unknown, but there are theories that point to motivated techniques called “dark pools” and liquidity pools to explain why it increases. Other markets such as foreign currency or equities have found less of this volatility even with dark pools and liquidity pools.

Marc Richer

Marc Rich (born Marcell David Reich; December 18, 1956 – June 26, 2013) international commodities trader, hedge fund manager, financier, and businessman.

Related Articles

Back to top button