Extended-Hours Trading (Definition)

If you are interested in invest in the stock market, you must know its trading times. People typically have no idea that the stock market remains active even after its closing hours. Moreover, Trading in stock varies with the variation in stock timing. The official hours of the stock market start from 9 A.M and end at 4 P.M

Do you know the market also works before and after the official hours?

You can enjoy stock trading even after the official hours of the stock market. The pre-market hours and after-hours trading help the traders to trade anytime between 6 A.M and 9 P.M. Moreover, stock trading that happens either before or after the trading day of a stock exchange is known as “Extended-Hours Trading.”

Usually, people trade with stock during the official hours of stock exchanges. Some people are not aware of the stock engagement during pre-market hours and after-hours. The pre-market hours start before the opening of the stock market. Similarly, the after-hour trading starts after the close-up of stock exchanges. It merely means that any stock engagement before 9 A.M and after 4 P.M is extended-hours trading.

During the extended-hours, the volume of trading thins out. For example, the pre-market hours start from 4 A.M and close at 9 A.M. On the other hand, the after-hours trading session remains open between 4 P.M and 9 P.M.

Electronic Communication Networks (ECNs)

People can trade through these sessions via electronic communication networks (ECNs), such as the Nasdaq market. The ECN eliminates the restriction of trading from 9 A.M to 4 P.M. Further, it enables investors to buy or sell their stock before and after the official hours of the stock exchanges.

You must be wondering why do people trade during extended hours?

Due to some special news release, traders prefer to engage in stock dealings during the extended hours. Even though many traders prefer extended hours, some experienced traders prefer to buy or sell between 9 A.M. and 4 P.M. They find it risky to take any stock related decision before the time. They wait for the official opening of the stock market and then go with the flow. That is why the volume of stock trading remains thin during extended hours.

Along with some risks, there are several benefits of extended-hours trading. The volume of trading thins out before and after the official hours of stock exchanges. It leaves a profound impact on the prices of stock. The bid and the ask prices are profoundly affected due to fewer shares trading.

During extended-hours trading, the buying and purchasing of stock occur only due to reasons. These reasons may be personal or official. However, this sometimes leads to a fall in stock prices. In such a situation, you may invest more money in the stock market. Keep this investment for a long time and enjoy massive profits at the right time.

We will always recommend taking stock exchanges related decisions after an in-depth analysis of the market. Only by understanding well the market and learning how it works, you can decide whether you should buy or sell stocks. Why? Because any not well thought decision may result in a considerable loss.