Aftermarket stock trades can be some of the most lucrative you can make if you know what you’re doing. Trading during this time also carries with it some inherent risks. While the he volume is lower since fewer are buying and selling stocks, but this makes volatility higher, which results in significant profit potential but also plenty of high-risk along with.
What is After Hours Trading?
The regular trading hours for the US stock market are between 9:30 AM EST and 4 PM EST. The NASDAQ and NYSE see most of their activity during that time, as well as most banks and brokerages. While you’ll find most trading occurring between these times, pre-market and aftermarket trading does happen. Pre-market hours are from 4 AM for NASDAQ and 7 AM for NYSE, while between 4 PM EST and 8 PM EST is spent on after-hours trading.
What’s the Point of Trading Outside Hours?
Both pre-market and aftermarket trading serve their purpose in a healthy economy. Stocks in the millions of volumes per day usually have some aftermarket activity each day. Some still seek to move in or out of positions during these extended hours. Earnings may occur during these times, which could see significant jumps in a stock price as those seek to move to capitalize. Day traders can capitalize on this earnings volatility by anticipating the moves of those who seek long-term, look for quit entry and exit points to turn a quick profit.
How Do I Find Good Aftermarket Trades?
Finding a stock that will jump in the aftermarket hours means looking at the upcoming earnings chart. To find out when a company will be releasing earnings and whether it will be after hours, you can find all of these listings on Yahoo! Finance. Some stock screeners also offer aftermarket stock screeners to show which stocks are most active during those hours. Well-known and established companies typically provide the best trading opportunities during these times. Both price movement and volume are required, which is most often met by established companies.
Pros & Cons of Aftermarket Trading
The main point of after hours trading is the hope there is less competition. With fewer active traders, you may be able to find more favorable entry and exit points for your stock. Unfortunately, this smaller population bring with it a few downsides, too. With less volume comes more erratic price moves that can be harder to predict. You can find favorable prices in the after-hours market, but wild price swings could also result in a loss and cause a quick exit.Trading after hours may appear to be easy when looking at a company’s stock chart, but it may not always be practical. Big moves can be tough to get in on, and you could be left out as once earnings and price predictions have finally settled. Seasoned traders usually have better luck in the after-hours market than novices, so consider that point. Beginners may want to stick to regular hours to learn the ropes.