- You can buy and sell stocks after hours if your broker offers extended trading. The exact times differ between brokers, so you will need to check with your broker to find out how late you can continue to trade after the market closes. Typically, most brokers that provide access to after-hours markets allow you to trade for two hours before the market opens and two hours after it closes.
- Because the exchanges are closed during after-hours trading, it is necessary to have access to an electronic communications network (ECN) in order to trade when the markets are not open. An ECN is a computer system that helps match buy orders with sell orders. A broker must either own its own ECN or have access to another broker's ECN in order to provide its clients extended trading hours.
- The stock market is a giant auction service that prices stocks based on all information available at any given time. When the markets are closed, information that may affect the value or at least perceived value of a company's stock continues. For example, a company may report its earnings after the market closes. Having access to after-hours trading allows you to react to earnings without having to wait for the market to open.
- Far fewer traders participate during after-hours trading, so trading activity is relatively low, making it difficult to quickly buy or sell your stock without significantly raising or lowering the price you wish to pay or receive. In addition, you may only have access to the prices available from the ECN your broker uses and may not see the activity taking place on other ECNs. This can make it difficult to see what people are willing to buy or sell stock for and can cause violent price swings. Due to the lack of transparency and liquidity during extended trading hours, it is likely that you could get a better price by waiting for the market to open.
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