If you are a busy mom, a working professional, or simply multitasking but want to invest or trade on your own time, this stock market concept will blow your mind. Let’s see : what is after hours trading? when does after hours trading end? How to place the order?
So, What is after-hours trading?
The process of purchasing and selling stocks outside of regular market hours is known as “after hours trading.”
People who have access to the markets overnight, on weekends, and on holidays engage in after-hours trading. They usually can trade a variety of financial assets, including stocks, bonds, commodities, options, futures, currencies, and more.
Simply put, you can place your order at any time, even after the market has closed. When the market opens, these pending orders will be filled.
How after-hours trading work?
After-hours trading takes place through electronic communications networks ((ECNs)) rather than stock exchanges.
Unless there is a major driving force, such as the earnings announcements, global market news etc, volumes are typically low after the market closes.
How to do after-hours trading?
The most effective way to use AHT is online platforms. You can trade around-the-clock using online platforms without worrying about being away from home.
Automated systems also works well for AHT. With automated systems, you may establish settings and let them take care of themselves.
Steps
1. Perform a thorough market analysis. If you want to know the movers after market hours, you can use screeners or keep track of a company’s earnings announcement date and trade accordingly.
2. Log in to your demat account after regular trading hours and the post-close session.
3. Put in an order to buy or sell any asset of your choice like equity, derivative, currency or commodity, just like you would a regular order.
4. Place your order by selecting AMO or the respective name in your region.
Example video on Zerodha platform
When the market opens the next working day, the broker will take your order and send it to the stock exchange.
The ideal way to implement AHT is with stop loss orders. Stop loss orders stop you from suffering a greater loss than your initial investment.
Advantages & Disadvantages to trade after-hours
Advantages
You have constant access to markets
The nicest part about trading after hours is that you have access to markets every day of the week, 24 hours a day. You can trade whenever you wish throughout the day. The market’s operating hours are unrestricted.
No need to get up early
To go to work, you don’t need to get up early. Anytime you want, you can trade. If you are late for the opening bell, don’t worry.
There’s no need to wait for the market to open.
You can begin trading before the market even starts. You can start trading right away.
There’s no reason to stay up late
You can still trade even if you are exhausted. You are not under any obligation to remain up late. You are free to nap whenever you like.
There is no haste
There is no reason to rush. There are no deadlines for you. Make sure everything goes smoothly by taking your time.
Useful for investors
Investors with a long investing horizon are the ideal candidates for AHT.
Investors who don’t have time to trade during market hours can use After Hours Trading. the most.
Useful for Overseas traders or investors
If you want to trade your market from another country, you don’t have to stay up late at night waiting for it to open. You can certainly place an AMO order.
Time to Analyze the market
You have plenty of time to analyse the market and place an order, particularly if you are a swing trader or investor.
Disadvantages
After hours trading is a risky business, and there are a number of risks that you need to be aware of.
First, after hours trading can lead to market volatility, which can damage your portfolio. Second, after hours trading can lead to market manipulation, which can result in bad decisions. Finally, after hours trading can lead to loss of capital, which can leave you in financial ruin.
If you are considering engaging in after hours trading, be aware of the risks, and make sure that you are fully prepared for them.
There are numerous drawbacks to after-hours trading.
First, figuring out whether a security is being traded at its genuine value can be challenging.
Second, it could be challenging to locate a trustworthy broker who deals after business hours.
Third, because they don’t know how to use these services, investors can find it challenging to trade after business hours.
Finally, it could be challenging or impossible to find reliable information on the stocks that are traded after business hours.
Type of order in after-hours trading – AMO
During after-hours trading, you can only use one type of order, known as an After Market Order, or AMO. You cannot trade using the standard order type.
In addition, depending on the features offered by your broker, you can use market, limit, and stop loss orders in the Aftermarket order.
When does after hours trading end?
So, when does after hours trading end?
US stock market
4 P.M – 8 P.M E.T
Indian stock market
3.45 P.M – 8.57 A.M IST for BSE
3.45 P.M – 8.59 A.M IST for NSE
3.45 P.M – 8.59 A.M IST for currency trading
3.45 PM – 9.10 A.M IST for futures and options
You can check your local market timings on google!
Difference between post-closing session and after hours trading
The time between regular trading hours and after market hours is referred to as the post market session. You cannot trade during this session, which typically lasts 1-2 hours.
It also depends on the market in which you trade. So, before trading, double-check the timings.
When does post-close session end?
Indian stock market
3.40 P.M – 4.00 P.M IST
You can check your local market timings on google!
Does after-hours trading affect stock market prices?
Yes. Factors affecting stock market are earnings announcements, activity in global markets, FII and DII, price, volume etc.
Every trade, regardless of when it occurs, has the potential to move the price. However, not all stocks are available for trading after hours. If there is little interest in stocks, it is possible that there will be no after-hours trading.
Who is allowed to trade after hours?
Anyone, whether institutional traders, retail traders, or investors, can trade after hours.
My experience
I began by swing trading. So there’s no reason for me to trade after hours. When I first started trading options, I used AMO to book quick profits when the market gapped down or up. It was an incredible part of my trading journey because I would wake up with massive profits. I now use it to place GTT orders or SL orders to exit trades. This is a very useful feature because without it, more panic and emotional trades would occur during market hours.
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Your point of view caught my eye and was very interesting. Thanks. I have a question for you.