Trading After Regular Trading Hours on the Major Exchanges:
While the stock market has standard hours of 9:30 a.m. to 4:00 p.m. ET, there is still some trading that can happen outside of this timeframe. After the market close each day, traders have the option to continue trading for an extended period of time (4:00 p.m. to 8:00 p.m. ET). Trading volume and sentiment for specific stocks have the potential to surge in the after hours due to earnings reports, announcements, or some sort of relevant news (either positive or negative). Due to this fact, there is always risk in holding stocks overnight since the next day’s opening price isn’t necessarily the same as the previous day’s closing price – stocks can gap-down or gap-up for various reasons.
On the flip-side, pre-market trades can also occur before the normal daily market open from 8:00 a.m. to 9:30 a.m. ET. Naturally, whether it’s pre-market or post-market trading, the volume is typically much lower, resulting in wider bid-ask spreads (a.k.a. volatility). Before the 1990’s, after hours trading wasn’t even possible – your average retail trader could only buy and sell stock between the hours of 9:30 a.m. and 4:00 p.m., but electronic communication networks have opened the door for extended trading opportunities. It’s not currently possible to trade at all times of the day, but I wouldn’t count out the possibility in the near future. Rapid technological advances and ever-expanding individual access to the markets can eventually turn “all-hours” trading into a reality.