What is After-Hours Trading?
After-hours trading allows investors to buy and sell securities outside of regular market hours. The NYSE after-hours session runs from 4:00 PM to 8:00 PM Eastern Time.
Key Features of After-Hours Trading
- Extended Access: Trade for 4 additional hours after market close
- React to News: Respond to earnings releases and breaking news
- Electronic Trading: All trades executed through ECNs (Electronic Communication Networks)
- Limited Participation: Fewer traders mean different market dynamics
After-Hours Trading Risks
- Lower Liquidity: Fewer buyers and sellers can make it harder to execute trades
- Wider Spreads: The difference between bid and ask prices is often larger
- Price Volatility: Prices can swing dramatically on low volume
- Limited Order Types: Many brokers only accept limit orders after hours
- Competition: You're trading against professional and institutional investors
Trading Sessions Overview
Session |
Hours (ET) |
Key Features |
Pre-Market |
4:00 AM - 9:30 AM |
Early reactions to overnight news |
Regular Hours |
9:30 AM - 4:00 PM |
Full liquidity and all order types |
After-Hours |
4:00 PM - 8:00 PM |
Earnings reactions, limited liquidity |
Who Should Trade After Hours?
After-hours trading is best suited for:
- Experienced traders who understand the risks
- Investors reacting to specific news events
- Those who cannot trade during regular hours
- Traders comfortable with limit orders and wider spreads
Brokers Offering After-Hours Trading
Most major brokers provide after-hours access, including:
- TD Ameritrade (until 8:00 PM ET)
- E*TRADE (until 8:00 PM ET)
- Fidelity (until 8:00 PM ET)
- Interactive Brokers (until 8:00 PM ET)
- Robinhood (until 6:00 PM ET)
After-Hours Trading Tips
1. Use Limit Orders: Protect yourself from extreme price swings
2. Start Small: Test with smaller positions until you're comfortable
3. Watch the Spread: Check bid-ask spreads before placing orders
4. Stay Informed: Monitor news that might affect your positions
5. Know Your Broker: Understand your broker's specific after-hours rules