There are more ways to trade on the stock market than you might think. From day trading to long-term investment, there’s something to suit almost every financial plan. One option that you may not have considered yet involves trading in the times when the markets aren’t typically running. This is known as after hours trading.
After hours trading is the act of trading in the time after the market closes, this after-hours trading session only lasts for a limited period, so it’s essential to know exactly when you can buy and sell securities in your part of the world. For instance, some brokers can support after-hours trade in America between 4:30 pm ET and 8:00 pm ET. Here, we’re going to discuss what after-hours market trading is, and whether it’s available to you.
Who Can Trade in After Hours Sessions?
Until the 1990s, after hours, trading sessions were reserved exclusively for people known as “institutional” investors. These people bought and sold securities on behalf of bigger companies and corporations. However, electronic and digital trading methods like ECNs became more available in the 90s, which meant that it was possible for individuals to get involved in the after hours and pre-market trading sessions too.
In recent years, the act of trading in the extended periods after the official stock market closes has become increasingly popular. There are many popular brokers that provide after-hours trading as part of their services.
While after-hours trading has its benefits, it’s important to remember that it also comes with risks. For instance, there are far more sellers and buyers when you’re trading during typical hours, which means that the market is more liquid. In after-hours trading, it can be harder to convert your shares into money. The after-hours trading market is usually considered to be more volatile than the typical market too. Prices can fluctuate very quickly.
Should You Consider After Hours Trading?
With an after-hours broker, traders can take advantage of a range of benefits, including the option to trade with fresh information, react quickly to breaking news stories and more. If you’re paying attention to what’s happening in your specific industry, after-hours trading can help you to get ahead of other people who will wait until the official opening times to start buying and selling.
Additionally, after hours, trading can be particularly attractive to people who don’t have the time to focus on the markets during the typical hours until 4:00 pm ET. After hours trading gives you more flexibility when it comes to when and how you spend your money.
Like any other trading strategy, only you can decide if after-market trading is right for you. Some people will find that the risks are too significant, and they’ll have a much easier time making money in the typical trading hours. Others will enjoy the convenience and opportunities that after-hours trading can provide. The best thing you can do is do your research into your chosen market, and make a decision based on how much risk you’re willing to take.
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