What is After Hour Trading?

After-Hours Trading (AHT) is stock trading that happens outside the conventional hours of trading at major exchanges across the world such as New York Stock Exchange and NASDAQ. In United States, regular trading hour have been from 9.30 A.M to 4 P.M EST, Monday to Friday. Two ways of AHT: Pre-market trading, which occurs from 7 A.M to 9.30 A.M and Post-market trading, which occurs from 4 P.M to 8 P.M. on every normal day. The dawn of Internet has facilitated this kind of trading, which before 1990’s was only available to high-net individuals or Institutional Institutions.

How is it done?

Extended hours’ trading is made possible by electronic communications networks (ECNs), which are automated systems that match buy and sell orders.  ECNs are channels through which individual investors can access the market after the trading day.  Interested individuals can gain access through these networks by employing a brokerage firm that has institutional access to the exchange. Two of the largest ECNs in US are NSDQ, which is owned by NASDAQ, and NYSE Archipelago (ARCA), which is owned by the New York Stock Exchange.

Brokerage Firms who facilitate after-hours trading

Broker ECN Trading Hours Commissions
E*TRADE NSDQ 8am-9:30am
4pm-8pm
Regular + $0.005 / ECN fee
Fidelity ARCA 7am-9:15am
4pm-8pm
Regular
Firstrade Internal routing system 8am-9:25am
4:05-5:30pm
Regular
Interactive Brokers Varies Varies Varies
Merrill Edge ARCA 7:30-9:30am
4:01pm-8pm
Regular
OptionsHouse Internal routing system 8:00-9:30am
4pm-5pm
Regular
OptionsXpress ARCA 7am-9:30am
4pm-8pm
Regular
Schwab Internal routing system 8am-9:25am
4:15pm-8pm
Regular
Scottrade Internal routing system 7am-9:28am
4:02pm-8pm
Regular
TD Ameritrade ARCA / NSDQ 8am-9:15am
4:15pm-8pm
Regular
TradeKing ARCA 8am-9:30am
4pm-5pm
Regular
Vanguard Internal routing system no pre-mkt
4:15pm-6pm

Regular

Do it or not?

One can make huge capital gains due to huge shifts in the market in a very short time. Our recommendation to self-directed investors would be to stay away from the after-hours trading. It looks like a lucrative market but is less liquid, highly volatile and volumes are thin, which can turn to high losses very quickly. Most of the after-hour trading is done within 1-2 hours after the market closes.

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