What is After Hours Trading?

February 1, 2023

Trading session refers to the time period during which trading activities are carried out in the stock market. A trading session lasts for one day. The beginning of the trading session is marked by the opening bell, indicating that the market is about to open, and the meeting ends with the closing bell, indicating that the transaction has been completed that day.

After-hours trading occurs after the market closes. Investors can buy and sell securities outside the typical hours of trading hours. In this process, traditional stock exchanges are not used. Instead, stockbrokers use an electronic system called an electronic communication network (ECN), which involves matching potential buyers with potential sellers.

Who can participate in after-hours trading?

The practice of after-hours trading was initially limited to high-net-worth investors through traditional stock exchanges or institutional investors such as mutual funds. However, since the emergence of ECN, everyone can trade after hours, which is good news for individual investors.

During this time, there are few active traders, because most people choose to trade during the day when the market is full of opportunities and things are heating up. Therefore, unless there are major events such as late-night breaking news, company announcements, company earnings releases, and political turmoil, the transaction volume during this period is usually very small.

Types of after-hours trading

After-hours trading is classified by time of day


Pre-market trading requires trading before the market opens, usually before 9.30 in the morning.

Post-listing trading

After-hours trading occurs after the market closes that day, usually after 4pm to 8pm.

What are the benefits of after-hours trading?

Some of the benefits of after-hours trading include:

1. Convenience

After-hours trading allows you to buy and sell securities without waiting for the next day. This is especially important when major news breaks out after the trading session is over, or the company releases earnings or makes important announcements.

2. Attractive stock price

During inactive hours, opportunities for good pricing opportunities increase. Although the stock price fluctuates a lot during this period, you can use this feature when there is news. When a company's stock price rises briefly after get off work, traders can buy or sell without having to risk a price fall the next day.

What are the risks of after-hours trading?

There are also some potential risks in after-hours trading:

1. Reduce liquidity

After get off work, the lack of active participants means that the trading volume of your stock is quite low. This means that demand and supply decrease during these times, and it is more difficult to convert stocks into cash.

2. Unfavorable prices

Due to the low transaction volume, it is difficult to find buyers or sellers who agree to your asking price. There is a wide gap between the buying price and the selling price.

3. Fierce competition

Since after-hours trading was initially prepared for institutional investors, individual brokers will face fierce competition when facing these large companies.