Online trading after hours
Anyone who has ever witnessed the ringing of the iconic opening and closing bells at the NYSE is aware that the trading day lasts from 9: However, there is plenty of trading activity happening both before and after the bell as well.
The market has both extended premarket and post-market trading sessions. The premarket session lasts from 4: There are a number of potential benefits to taking advantage of these extended market hours, but there are also plenty of risks. One of the major benefits of trading in extended hours is that it allows retail traders to trade major market-moving news events online trading after hours real time. Companies typically report major news items, such as quarterly earnings reports, either before the regular trading session begins or after it ends.
Extended-hours traders can react to an earnings miss or beat in real-time rather than waiting for the next session to open. In addition, after-hours trading can be ideal simply because of its convenience. For some traders who work other jobs, the extended-hours trading sessions may offer the only convenient opportunity for distraction-free trading.
Finally, for traders using technical analysis-based online trading after hours strategies, technical signals often occur during the after-hours session. Even for technical signals that rely on opening and closing prices, a trader can use the premarket trading action to anticipate when a signal will likely occur after the open online trading after hours get in ahead of the rest of the market.
While there are certainly benefits to extended-hours trading, the SEC wants to make sure that all traders are aware of the risks as well. The biggest risk associated with after-hours trading is a severe lack of liquidity in most stocks and ETFs. That lack of liquidity frequently results in huge, wild swings and big jumps in share prices during extended online trading after hours. That gap means that extended-hours traders must first bridge that spread before turning a profit in the extended hours.
Another major disadvantage to trading after hours is that the vast majority of extended-hours traders are professionals. That means that the zero-sum game of short-term trading is much more difficult in the extended hours. Finally, some brokers charge additional commissions on extended-hours trades on top of their regular commission, potentially online trading after hours it much more expensive than regular-hours trading as well. Navigating Taxes as an Active Trader.
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