ANSWERS: 1
  • After-hours stock trading has become very popular during the last decade, and it gives investors the opportunity to trade stocks before and after the normal trading day of 9:30 a.m to 4:00 p.m Eastern Time. Investors who trade after hours must be aware of several rules and risks associated with after-hours trading.

    Type of Orders Allowed

    Only limit orders are accepted in the after-hours trading sessions. This means a trader must specify the most he is willing to pay when buying a stock and the least he will accept when selling a stock. Market orders, or orders that buy or sell a stock at the current price, are not allowed in the after-hours sessions.

    Stocks that Trade After Hours

    Investors can trade any listed stock during the after-hours sessions. The stocks that have breaking news, those that just released earnings reports, and stocks that were just upgraded or downgraded by analysts typically trade with the most volume during the after hours.

    Non-Executed After-Hours Trades

    Most brokers will cancel an order if a trade is placed during an after-hours session. An order will typically not carry over to the next regular trading session. It is best to check with your broker to confirm whether they automatically cancel non-executed trades.

    Risks

    After-hours trading involves unique risks. Stock prices can be volatile because of very light trading volume during after-hours trading sessions. Also, the spread between the bid and the ask can be wide, which may be disadvantageous to traders.

    Finding a Broker

    Many online and discount brokers offer after-hours trading to their clients. The exact hours of available after-hours trading vary from broker to broker. Also, as a result of the risks involved with after-hours trading, many brokers require their clients to fill out a special application for after-hours trading and to acknowledge that they understand the risks involved.

    Source:

    U.S. Securities and Exchange Commission

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