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Are you aware of the stock market? Do you know the closing time of stock exchanges? Did you ever hear about ‘After Hours Trading in stock exchanges? In this article, we will share with you what After Hours Trading is. It will help you to know more about stock exchanges and the benefits of trading between 4 P.M to 8 P.M. US Eastern Time. 

What is After Hours Trading?

Usually, people trade with stock from 8 A.M. to 4 P.M. After 4 P.M., the stock exchanges close, and after-hours trading starts. During this session, the volume of trading thins out. The after-hours trading session remains open till 9 P.M. Moreover, people can trade through this session via electronic communication networks (ECNs).

Are you interested to know more about the mechanics of after-hours trading? Keep on reading to find out more about the spark, volume, price, and participation of after-hours trading. It will help you understand how people can trade during after-hours. Also, it will make it clear how after-hours trading impacts the stock exchanges of the United States.

The Spark

Sometimes the organization related news break after the closing of the stock exchange. Such news or event create a spark amongst traders and investors. In this situation, the after-hours trading proves to be highly helpful for them.

Also, they make effective decisions regarding stock investments and either buy or sell a stock. In this way, the stock exchanges remain active during after-hours trading, even after the closing of their official opening hours.

Volume

Usually, the amount of the stock remains thin after the official hours of the stock exchange. Very few investors or traders buy or sell the shares during after-hours trading. However, due to the release of exclusive news regarding stocks, the volume of trading may spike.

Moreover, several risks are associated with buying and selling during after-hours trading. That is why people usually don’t prefer to invest after official hours of stock exchanges.  Resultantly the volume of trading slows significantly after 6 P.M. US Eastern Time.

Price

After the official hours of stock exchanges, the volume of the trading thins out. It leaves a profound impact on the costs of stock. The bid and the ask prices are profoundly affected due to fewer shares trading. During after-hours trading, the buying and purchasing of inventory occur only due to reasons. These reasons may be personal or official.

Participation

The stock exchanges face a fall during after-hours. The reason behind this fall is people’s intention not to participate after official hours of stock exchanges. Most of the investors and traders are of the view that it is always risky to invest during after-hours.

Some expert traders do not purchase stock during after-hours, even after the release of exclusive news. They find it dangerous to invest during after-hours and wait for the morning. That is why the stock exchanges show a rise after 9 A.M.

Real-Life Example

Recently in February 2019, Nvidia Corporation showed a fluctuation in its stock rates. The stock of the company umped in price to nearly $169 from $154.50 after the release of the news. The volume of stock trading remained steady for the first ten minutes and dropped after 4:30 P.M.

Moreover, during the after-hours, the amount of trading slowed down to only 100,000 shares. Finally, the stock price stopped at $164. The next morning, again, 2.3 million shares traded. The stock trading started from $164 and slowed down during after-hours and ended at $157.20. This example makes it clear that most of the investors do not prefer to trade during after-hours.

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